Technology Is Crucial to Lower Your Property Management Risk
Relying on a firm that uses modern technology and data not only mitigates risk but also creates significant trust and transparency between property managers and their management firms.
The property management industry has needed a tech infusion for quite some time.
Until recently, the property management space has been inefficient because many companies still manage in a very manual way. They’re mainly reactive, consisting of small and nonscalable teams managing an average of 300 properties and utilizing minimal data and automation. This lack of automation and data results not only in inefficiency but also in increased cost and a high probability of human error.
Inefficiency is the main reason for slim profit margins for property owners. It also contributes to lack of trust and predictability. All of this adds up to a bad experience for tenants, which causes higher turnovers, shorter tenancy terms and extra costs. What does this mean for property owners and investors? Higher risk probability.
A large part of managing risk in the property management industry is understanding data, which is the primary reason why property owners should be looking at property management companies that are moving forward and integrating technology in their management models.
Using the latest technology can streamline communication and enhance the overall experience of both property owners and their tenants.
The key services to look for in a property management firm when you are trying to mitigate risk are:
- Guaranteed income, even when the property is vacant.
- Efficient communication strategies.
- Fixed monthly rates.
- Proactive technology.
- Reliability.
Let’s take a closer look at each one.
Guaranteed Income
According to the latest 2020 industry report by property management software company Buildium and the National Association of Residential Property Managers (NARPM), the No. 1 reason property owners said they want to own rental property is to have an active stream of income. Although most property management firms do not offer guaranteed income, it’s important to seek out the few that do.
A company that provides guaranteed income ensures that
property owners never have the burden of leasing their property to a renter.
This is especially helpful for property owners and investors who live in
another state or even reside outside the U.S. A company that offers
a rent-guarantee program protects a property owner’s income by covering the
rent in case
of vacancy, moving the burden of leasing the property from the landlord to the
property
management company.
Property management firms that offer guaranteed income ensure that the entire investment in real estate is a predictable hassle-free experience for their clients.
Efficient Communication Strategies
Data shows that the top challenge property managers face today is providing efficiency and top-quality customer service. As previously mentioned, for many small management firms, streamlining communication and customer service has become nearly impossible because so many still operate their firms manually. Without integrating technology, it’s difficult for these businesses to provide exceptional service in a world that now demands it, thanks in part to companies like Amazon, Uber and Apple.
According to the report, more than 70% of property owners and tenants feel that it’s important that their property managers are easy to work with and quick to communicate. They want issues and repairs with the home resolved quickly. Property owners desire regular updates on their rental properties, with 43% preferring updates in real time. Enhanced communication between all parties can also improve overall customer service, which more than half of renters consider to be the most important quality of a property manager.
Several tools and technologies are available for removing frustration from the equation. They expedite the communication and repairs processes.
For example, look for companies that provide the option to communicate through an app for convenience and increased efficiency. This is especially useful when tenants request repairs, which according to the industry report, is a property manager’s most requested service. Using intuitive technology to streamline communication between tenants and service providers, all parties can track the entire process of the repair through a real-time mobile video and communications platform to ensure top-quality service and timeliness.
Fixed Monthly Rates
Investors and property owners often take on an exorbitant amount of risk because of unexpected fees. Air conditioning units break, roofs get damaged and pipes leak. Generally, property owners are forced to reach into their pockets to pay for repairs. However, there are some management firms that offer a one-rate monthly fee that never increases, providing a safety net against the inevitable costly repairs.
Mitigate risk with a firm that uses intuitive technology to
provide you with a fixed rate. Some of this technology uses a sophisticated algorithm
that underwrites dozens of different property-
specific data points and generates an all-inclusive, one-rate monthly fee for
each individual property. Such a plan guarantees the net-operating profits for
any rental because it includes a full operating expense protection.
Paying a fixed monthly rate guarantees that the management firm will pick up the tab when claims are submitted. But most important, it also helps to remove the risk of repairs, turnovers, maintenance, advertising, listing and other fees.
Proactive Technology
More and more property management companies are turning to high-tech solutions for predicting repairs and maintenance, which is nearly impossible to do while operating manually. By using high-tech services and aggregating data from the home itself, it is much easier to avoid risk and costly updates.
Some companies partner with smart sensors manufacturers to notify property owners of significant updates or repairs to the home before tenants even notice them. The sensors in the home monitor in real time the vital home systems and provide alerts about any changes that can’t be as easily detected by residents. That includes changes in the vibrations of the air conditioning and heating unit, blockage in plumbing systems, electricity pull and more.
Reliability
All the above can be narrowed down to one significant component that property management companies should have—reliability. The more technology is integrated into a company’s management model, the more dependable and consistent is the company’s communication, maintenance and overall management of the home.
Firms that don’t leverage technology are more difficult to scale. They can’t evolve as property owners and tenants demand efficiency, more and better service, more convenience and affordable pricing.
Turning to a firm that uses modern technology and data not only mitigates risk but also creates significant trust and transparency between property managers and their management firms. Above all, always ensure that your management firm is reliable, consistent and accountable for its actions. After all, these firms are essentially managing the property owner’s most expensive investment and the tenant’s most emotional investment—their home.
