“Boots on the Ground”
The Benefits of Leveraging a Property Services Provider
By Andrew Nolan
While consumer home sales show signs of slowing, the single-family rental (SFR) market remains strong. According to John Burns Real Estate Consulting, the SFR industry typically benefits from rising mortgage rates as the for-sale market cools with some potential buyers moving to the sidelines and current SFR tenants staying in place longer.
For buy-and-hold investors in the SFR space, this bodes well for their strategy. Not only does it point to an ample pool of renters, but also provides a growing inventory of additional housing stock — especially for all-cash or low-leverage investors — for those seeking to expand their SFR holdings over the next 18 to 24 months.
As fast as the SFR industry has grown in just the past few years, it has been a challenge for owners and operators to have all the knowledge, skills, manpower, and bandwidth to handle the many facets required to successfully grow and operate a profitable portfolio. Investors have varying degrees of experience in each aspect of the industry while others have experience at the corporate level but not the local level.
This has led to property services providers like MCS entering the SFR market to become an extension of SFR owners and operator’s teams, providing a variety of “boots-on-the-ground” services that might otherwise be challenging for investors to handle on their own without a large — and potentially expensive — team in place covering multiple markets around the country. In some cases, property services providers leverage a network of vendors and subcontractors to perform the work, while others self-perform the core functions with their own team of employees.
MCS employs a hybrid model to provide maximum coverage across the largest SFR markets. Regardless of the approach, technology, processes, and procedures must be in place to manage work orders, coordinate project management, ensure quality control, and track budgets, among others, adding additional layers of complexity and cost to owning and managing a growing SFR portfolio.
There are four main areas that buy and hold investors can leverage most when partnering with a property services provider.
Inspections
From pre-acquisition through post-moveout, inspections are an integral function for any buy-and-hold investor. It’s imperative to understand the condition of a SFR property, potential rehab time and costs, and extent of any damages when making a purchase decision, as well as decreasing any down time — and lost revenue — of a rental property when preparing for a tenant turn.
Additionally, owners and operators may need home health occupancy inspections, loss draft inspections, and quality control compliance inspections, among others, to ensure properties are maintained and repaired as intended. Detailed and customized inspection reports can be invaluable throughout the lifecycle of a SFR investment.
Ongoing Maintenance
Tenants expect timely and professional service, along with quality work, when repairs are needed. Landlords need to ensure routine maintenance occurs to help protect their long-term investment while providing tenants full value of the homes they are renting. From landscaping to plumbing and electrical to general handyman work, ongoing maintenance becomes a core component of keeping renters satisfied and in place which means uninterrupted and recurring revenue.
Rehab & Repair
Seeing the potential of a property is key to achieving the financial objectives of an investment. That often means undertaking significant rehab and repair work to get a property up to appropriate standards before the leasing process begins. These types of projects can range from installing new flooring, painting and minor repairs, all the way to full renovations or remodels depending on the rental rate.
Additionally, older homes often need new HVAC, roof repair or plumbing overhauls to reduce ongoing maintenance expenses and increase satisfaction after a tenant moves in.
Tenant Turns
As time passes, it’s inevitable that tenants move out. Investors then need their SFR investment prepared for the next renter as quickly and efficiently as possible. These turnover services range from basic repairs to deep cleaning to transferring utilities, as well as painting, re-keying and other basic items to make sure the property is ready to welcome its next occupants. At times, eviction management or security services may also be needed to protect your investment.
Leveraging a property services provider for these and other services can provide several benefits for SFR buy-and-hold investors:
Faster Occupancy
Property services providers have established processes and procedures, existing technology platforms, and accessibility to the necessary trades to complete work on time or ahead of schedule. This can lead to shorter timelines to complete property rehabs or perform tenant turns, allowing tenants to move into a home quicker, resulting in less downtime and more rental income.
Field Presence & Support
Property services providers act as an extension of your team, ensuring projects are completed to established specifications at the agreed upon budget. With property services providers performing the work themselves or leveraging their vendor partners, investors don’t have to source and manage a network of subcontractors, handymen or maintenance staff and can focus on the profitability of their investments.
Qualified property services providers are responsible for quality control throughout the process and should be able to provide visibility and transparency into each assignment through a client-focused technology platform.
Quality Work
Property services providers ensure employees and vendors are trained to complete assigned work with the highest quality that aligns with local code requirements by leveraging proven policies and procedures. Additionally, qualified property service partners handle the required licensing, insurance, and regulatory requirements, reducing your potential exposure.
Purchasing Power
Larger providers leverage the purchasing power of national partnerships to secure materials at lower costs to help maximize your investment.
When evaluating property services providers, investors should make sure that potential partners are able to provide these services and benefits at a minimum, as well as understand who is performing the work — the partner’s team or third parties. Buy and hold investors in the commercial property and multifamily arenas can also find it beneficial to partner with the same types of service providers, increasing the ability to own and operate more properties effectively, efficiently, and profitably.
When employed properly, partnering with an experienced property services provider can expand the capabilities of buy and hold SFR investors regardless the size or location of their portfolio.
To learn more about MCS’s single-family rental offerings, visit mcs360.com/single-family-rental/
