Cultivation Profitable Rentals: Harnessing Property Technology for Success
The rental market might be booming, but agents and landlords still need to closely manage their portfolios so that they can identify and turn around underperforming properties. Top rental professionals shared their favourite profit-maximising strategies at the PayProp Roadshow.
Tough economic conditions are boosting the rental market at the expense of sales, with more people now choosing to rent because of the elevated cost of ownership. This situation is putting pressure on the supply of rental properties, which has pushed monthly rental prices up substantially.
While this makes marketing to tenants easier for landlords and agents, it certainly doesn’t mean that they don’t have any work to do. Some properties simply don’t move as easily as others, and can actually end up costing you money because you’re spending a lot of time marketing them and putting in a great deal of effort trying to find the right tenants.
This can happen for a number of reasons, says Myles Kritzinger, CEO of the Transcend Residential Property Fund. Often, people will buy a property and then pigeonhole it, which prevents them from seeing how it could be repurposed to appeal to different types of tenant – perhaps by renovating it or changing how and where it’s marketed.
“When interest is limited and the property is costing you money, it can be helpful to think about things from a different perspective. This entails rethinking your approach based on current market conditions,” he adds. Only once you’ve done this assessment and figured out if it’s possible to frame the property differently can you decide if it’s a loss maker or if there’s a way to repurpose it into something that brings in value.
For Pieter van den Berg, principal property practitioner at Just Property Prosper, these decisions need to be based on a comprehensive financial review. Agents and landlords must do a deep dive into the financial performance of each property to get an accurate picture of their income versus expenses. If you’re managing a number of properties this can be quite a time-consuming process, which is why property portfolio management systems are so important.
Identifying underperforming properties with technology
The right rental property management software keeps your portfolio well organised so agents and landlords know when a property isn’t bringing in the returns it should. Both Just Property Prosper and Transcend Residential Property Fund make use of PayProp in part because of how easy it makes it to see that data. PayProp users can check in on the financial status of every property in their portfolios through in-depth management reports, track maintenance tasks through a dedicated portal, and even benchmark their portfolios’ performance against other local agencies.
“It doesn’t matter how many properties you manage, you need to have an in-depth knowledge of every single one so that you know what maintenance needs to be done, for example, or what an appropriate annual rental increase might be based on different factors,” explains Pieter. “It’s all about being proactive, and equipped with the right data, so that you can do whatever needs to be done to get the property rented as soon as possible.”
That said, sometimes the right call is still to ‘cut loose’ a property, the pair agree. In some instances, a rise in crime rates can mean that a particular area is no longer safe to live in and sending tenants or agents into these areas would be putting them in harm’s way, says Van den Berg. Or a landlord may be unwilling to conduct necessary maintenance, making the property uninhabitable.
Sometimes an informed assessment may mean letting a property go, and other times it demands that you think outside the box so that you can make the property a profitable investment again.
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