Logan is the Co-Founder of Landlord Studio, the only complete property management and accounting solution for real estate investors.
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Different real estate areas and investment types have been affected in various ways by the Covid-19 pandemic. Short-term rentals and Airbnbs, for example, have been hit hard and many of those properties have forcibly been liquidated.
Those investors whose strategies revolved around fix-and-flips or BRRRR (buy, rehab, rent, refinance and repeat) have had to bring properties to market during a period when no one is allowed to physically visit them before making purchasing decisions.
Long-term buy-and-hold properties have their own problems, too, with millions of Americans filing for unemployment over the last four months. The single stimulus check received so far was an all-too-temporary relief for many. Thankfully for renters, there are eviction moratoriums across the U.S., but for landlords, this means the weight of the current recession is coming down hard on their shoulders.
To address these challenges now and in the future, one emerging trend is the acceleration of proptech adoption for everything from virtual showings to property management.
My business partner and I started a proptech company after we couldn’t find suitable cash-flow and accounting software to use for our small rental portfolio. My experience in proptech now comes from running this company full-time as we have scaled it to serve over 3000+ landlords.
Behavioral changes may outlast the pandemic.
Throughout Covid-19, humanity has demonstrated once again its veritable adaptability. Enabled with digital tools, many organizations have managed to continue business as usual. However, social distancing measures have put a huge strain on both residential and commercial real estate.
A short deferment of business travel, for example, is a devastating blow to hotels and other short-term real estate — and there is no saying that business travel will ever go back to the way it was. Organizations have moved entire conferences online, and virtual presentations have become the new norm.
Other business travel purposes have been digitized or even entirely removed. For example, governments around the world have implemented strategies to “buy local” with the aim of alleviating distressed supply chains and stimulating local economies. Additionally, a new fear of traveling overseas may pervade after Covid-19, reducing the overall need for holiday rentals.
For investors, the movement to work from home has propagated a change in mindset that should inform future investment decisions. Experts are predicting a move away from city centers as people look for more value for their money, a bit more space and the ability to continue to work from home (at least partially). Based on this trend, I predict that home offices will be the amenity that renters are actively going to be looking for in the future.
How can technology help real estate investors?
Within residential real estate, players that have invested in tech to automate communications with tenants are often less likely to see late rent payments or have them slip by unnoticed. Those that have already digitized their accounting processes with cloud-based software and that collect rent online ultimately face less disruption to their services during these uncertain times. There are even tech services for managing your maintenance requests to reduce the need for physically visiting properties.
Investors that have previously implemented or utilized digital processes, such as virtual open houses using augmented and virtual reality, are suddenly massively advantaged over those who still use paper-and-pen lease signings and manual processes.
Additionally, in this age of instant gratification propagated by Netflix and Amazon, we are also now seeing updated consumer expectations. For landlords to differentiate their rentals, it will take the adoption of digital-first products such as on-demand delivery and concierge services, virtual communities, and contactless access for residents, guests and maintenance staff, according to a McKinsey report on how commercial real estate will adapt to the coronavirus and its lasting impacts.
As McKinsey shares, “These digital offerings will pay dividends in the form of superior loyalty and the ability to create brand new revenue streams while better meeting the needs of tenants and end users.”
Rethink the future of real estate now.
Covid-19 has created a change in mindset, which, supported by humanity’s adaptability and technology, is likely to have long-standing consequences. For real estate, these changes have proved, practically overnight, the importance of digitizing processes.
Proptech was already beginning to pervade every aspect of real estate by streamlining processes and saving people time and money. Now, though, it has become a necessity for many.
It should be no surprise, then, to discover that landlords are thinking ahead. What changes can they implement now that will not only help them survive, but also help them achieve new growth, open new revenue streams and strengthen their holds on financial freedom?
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