Landlord’s and real estate investors operate in a world of tight margins. The difference between a successful rental property investment and one you wish you could take back is often only a few percentage points. For this reason, more than ever, landlords and property managers seek various ways to increase efficiency, both as it relates to the time they spend with their properties and to their finances. Property management software is an increasingly essential tool in any good rental property manager’s tool-belt.
Below are four ways property management software can increase the ROI of your rental property investment.
One of the primary reasons landlords first consider property management software is for the ability to collect rent online. These landlords understand that online collections are quite a bit more convenient for both them and their tenants, minimizing trips to the bank and allowing tenants to pay in ways they want. These are great reasons to start using online payments, but landlords often overlook the impact it can have on their bottom line.
Property management software typically includes a notification system that will automatically remind your tenants of upcoming payments. The best systems will handle send notifications before rent is due, the day its due, and when it’s late. Oftentimes, you can send additional messages quickly and easily as needed.
What’s more, good rental management software will permit tenants to sign up for autopay, ensuring they never miss a payment again. And the very best platforms also offer tenants a mobile app, a convenience that 85% of consumers prefer.
Making it easier for your tenants to pay makes it more likely that they will. Reminders, simplicity, and access to payments all combine to result in more money collected each month and less effort by landlord’s to make it happen.
A bad tenant is an expensive tenant. They result in wasted time, wasted money, and in the worst-case scenario, an eviction. Even if you are able to part with your tenant without involving the courts, tenant turnover is costly. Innago reports average tenant turnover costs of $2500 nationwide (after adding up lost rent and the time and materials required to flip the unit). Your area may be more or less, but the bottom line is that it is not cheap.
It may sound obvious, but the best way to avoid a bad tenant is to find a good one. Fortunately, property management software can help. Many rental management platforms allow you to easily list your property on a wide variety of advertising platforms with just a few clicks. Be sure to choose those that tend to get the most activity and (don’t forget to track this part), produce the highest quality applicants.
What’s more, you will likely be able to easily screen your tenants through your software. A credit, criminal, and eviction report can be your best defense against poor tenants. Of course, some due diligence is required on your end as a landlord, such as calling references and previous landlords, but much of the process will be automated and easy.
Docusign, Hellosign, DotLoop – these platforms have revolutionized document signing, making it ever simpler and more convenient to complete contracts and provide your signature. For many, gone are the days of printing, signing, scanning, and mailing documents back and forth, sometimes across the country just to lease a property.
Conveniently for landlords, many property management software platforms integrate with these eSignature solutions or offer something similar of their own. Electronic signatures are just as enforceable as traditional signatures (or “wet signatures” as they’re called). And they’re much easier to collect from your prospective tenants or guarantors.
What’s more, some of the conveniences mentioned above regarding listing your property and screening applicants pair perfectly with digital lease signing. Property management software houses all these features in one place, making the entire leasing process significantly easier and less time consuming.
As a result, you’ll reduce time between renters, lowering your annual vacancy rate and creating a direct, positive impact on your bottom-line as a business.
For many landlords, late fees have always been a toothless threat, a tool to be used to attempt to extract rental payment from tenants with little actual efficacy. The main reason for this challenge is a scenario you’re probably oh-too familiar with. Here’s an example:
Your tenant John is five days late. Your late fee is $50 after five days, so you call him up and let him know he needs to pay you the $500 rent he owes plus the $50 late fee in the next twenty-four hours or you’ll be drawing up eviction paperwork. John recognizes a serious threat when he hears one, so he cuts a check and drops it off right away. Good – the threat worked; unfortunately, when you open the check, you see it’s just for the $500 in rent and doesn’t include the late fee. Oh well, at least he paid. The problem is, you’ve just set a terrible precedent and created a bad situation for yourself. Now John knows he never has to pay late fees, he can pay five days late with no penalty, and you will actually call him to remind him to get his rent in when the time comes. John has become a bad tenant because your late fee didn’t have any real backbone to it.
This is where property management software and online collection is so powerful. In most rental management platforms, late fees are automated. Your tenants will receive a notification that let’s them know they’re late without any effort from you. Late fees will be added to the total due, and your tenant won’t be able to make future rental payments until all past rent and all late fees are fully paid. Even if John skips his late fee this month, he’ll be forced to pay it next month or face another fee. Finally, your late fee has teeth.
While incredibly enticing, you may walk away from this list thinking that most property management software that offers this breadth of features will wipe out any ROI it produces with a high price tag – but that’s not the case. Modern offerings have found ways to provide landlords tools for very little. You’ll even find companies providing free property management software without skimping on any of the above features.
Do some digging and you’ll find there are plenty of offerings out that that will make sense for your business. And remember, it is a business decision. You’re looking for a platform that makes your rental business more efficient and ultimately, brings you a higher return on your investment.