Why you need Tech oriented Property Management for your rental property
Why Property Management?
If you own a property, chances are you bought it as an investment. Possibly you manage it by yourself to keep costs low and ensure a fast ROI, but how much are you really saving?
Is it even worth to manage your own property?
Short answer, NO.
If you plan to invest on more properties and build your own family office dedicated to asset management, then it's good as you will focus only on managing properties and assets. But if you don't want to transform your investments into a fulltime job, then it's an awful idea to manage your own property to save money.
You need a property management company.
How much it cost to have a property manager?
Their business is simple, they set your property for guests, you get paid by the guests, you pay the property management a fee. Normally, a management company would take a % from the rental fee, plus a flat monthly fee for maintenance or as retainer and a fee for cleaning.
Now, let’s explore an example where you as a property owner can rent your property for, let’s say US$100 per night, an average percentage for management is 20% of the rental, plus an average monthly maintenance fee of US$150 and in average US$40 for cleaning.
So for a 7-day booking, you would get US$700, from which you would have to pay US$180. If in that month you don’t get more bookings, you still have to pay the maintenance fee of US$150. So in the end you pay US$330 to the property manager and you get US$370. Doesn’t seems right, right? So even if having a property manager reduces your workload, you still have to forfeit a sizable portion of your rental income.
Why Property Management so expensive?
The problem in property management is scalability. This is a business that only scales by hiring more. If you want to clean more properties, you need more cleaners, if you want to maintain more properties, you need more handymen and if you want to communicate with more guests you need more customer and sales reps.
But what if I told you that there’s an alternative that helps you achieve the ROI you want without forfeiting your income?
What other property management option is there?
The new kind of property management combines digital solutions with traditional practices to optimize how teams use their time and reduce operation costs. At Buenbnb we call this new practice Enhanced Property Management.
The Enhanced Property Management
By combining technologies from manufacturing and automation, it is very simple to scale the property management business, reducing the costs for property owners to a mere fraction. Enhanced Property Management can allow hundreds of properties to be managed by teams of only 3 or 4 people.
Why (most) property managers don’t evolve to it yet?
The real estate industry is renown for being a slow innovator. There’s a big knowledge gap in the property management field, where managers and their teams are not prepared to work with these new technologies. This causes that you as an owner stay stuck paying high fees that cover the inefficiencies of traditional practices.
Enhanced Property Management allow us to offer value for a flat monthly fee, as you would with a software application, instead of a percentage of the rental income of the property. We charge based on the solutions your property needs with a setup fee depending of the hardware required. While a traditional property management company can cost between 20% to 35% of your rental income, Enhanced Property Management cost an average of 3% to 10% of your rental income.
At Buenbnb, we are already piloting our Enhanced Property Management solutions with a private group of companies and owners in the Riviera Maya, Mexico charging a flat monthly fee.
The Tech in Enhanced Property Management
The tech used for this practice varies depending on the property and the skills of the companies delivering the solutions. At Buenbnb, we combine three technologies that enhance our performance which are Artificial Intelligence, Internet of Things and Automation.
Artificial intelligence (AI) is a broad classification of a type of technology that can learn from data and act independently based on data. Internet of Things (IoT) it's broad classification for a mix between hardware and cloud software, that enables constant data logging, process control and analytics. Automation is a type of procedures that uses signal triggers to act, with minimal to no human intervention.
Essentially, you can think of AI as a software solution that learns, IoT as a means to gather data and actuate based on that data while automation is a mean to set control over actuators based on triggers. They work in conjunction to create systems that can serve the house without human interaction.
Your property needs tech oriented management as it will provide lower operation costs and a faster ROI. In following posts we will talk about detailed examples were using tech enables growth for property managers and better results for owners.