Whoever said “time is money” must have worked in the rental business. With dozens of items on our to-do lists and only so many hours in a day, is it any wonder we’re always looking for ways to save time?
Unfortunately, some landlords still insist on doing things the way they’ve always done them, even if that means wasting time! This attitude isn’t that of a traditionalist—it’s a risk to your investment if you insist on inefficiency. Ask yourself these questions: How serious are you about growing and scaling your business? Are you willing to try different strategies to automate tasks that threaten to burn out landlords and property managers?
Being a landlord is never an entirely passive investment (as much as we would like it to be!), but there is a continuum between active and passive investments. The way to make our investments more passive is to find the right tools that will automate as much as possible.
What follows is a list of the biggest timewasters for landlords, not because these tasks aren’t necessary, but because the way we perform them can be costly. We’ll take a look at how “the way it’s always been done” is inefficient and at the end, we’ll suggest some tools to solve these problems.
Related: Top 10 Tips for New Landlords
You may be wondering why collecting rent is on a list of landlord timewasters. This is payday! This is what you’re in the business for!
It’s true, but it can also waste your time depending on how you collect.
For landlords who collect checks, you’re looking at taking at least 12 trips to the bank every year. In reality, it will most likely end up being more, because as much as we would like them to, not all tenants pay on time. If you have multiple properties, you may not have the lease terms expire at the same time. This means new tenants will come at different times, perhaps even in the middle of the month, with their security deposits and first month’s rent. So, 12 trips to the bank is a conservative estimate.
Some landlords write this off as the cost of doing business, but there are more efficient ways to collect rent, especially when it can be automated through free online payment systems. Compare 12 trips to the bank versus 0 trips, and you’ll begin to see why adopting traditional methods for tradition’s sake will make you a less effective investor.
Checks aren’t only a timewaster; they can be dangerous. For tenants with insufficient funds, they can still send you a check and all will seem well until it bounces. Checks can get lost in the mail, and you as a landlord never know when your tenants have sent payment. Furthermore, in cities like San Francisco, accepting a rent check from someone not on your lease means that person is automatically a subtenant! Without having screened them or even knowing who they are, they are now on your lease (and most likely living on your property) because you weren’t paying attention to the name on the check.
Perhaps this is enough to make you consider something like direct deposit, but even that has major drawbacks. One is that it’s hard to keep good records since the transactions aren’t always labeled. Another drawback has to do with state laws for evictions. In some states, including California, direct deposit can be used by tenants to pay partial rent and delay eviction proceedings. Accepting a partial payment in these states means a landlord must start the eviction process over again from the beginning. This not only cuts into your profits, but it can easily become a nightmare if you don’t have a way to block partial rent payments. Some tenants have been known to play this game for months, living essentially rent free during that time. Don’t give them the option; find a better way to collect payments.
Tenant Communication and Repairs
The current system for communicating with tenants is inefficient. Emails are overly formal for simple requests and may be difficult to find. Text messages aren’t searchable or backed up. Phone calls involve voicemails and phone tag. In-person conversations have no documentation and are easy to dispute.
What’s needed is a centralized platform where everything can stay in one place so that you don’t have to go hunting for pieces of communication. You need a written documentation in case of disputes so that everyone knows what was agreed upon. It’s also important to have your data backed up so that you never lose anything.
Although tenant communication as a whole can do with an upgrade, the area we feel this most is with maintenance issues. As easy as it can be to let them pile up, we should remember the number one tenant complaint is not having a manager or landlord who is responsive to repair requests. If we’re serious about protecting our investments and reducing turnover, this is an area where we need a plan of attack.
The biggest slowdown is in coordinating with third-party contractors and trying to schedule a repair. Too often landlords end up acting as the middleman, going back and forth between the tenant and the contractor, suggesting times to meet, or relaying information about the repair. Add a few games of phone tag into the mix, and you’ve wasted hours of time. This isn’t how you want to be managing your business.
A better system would involve a messaging platform where you could add the contractor to the conversation with the tenant. Your tenant can explain the situation with photos and notes so that the contractor understands the issue before even setting foot on the property. The contractor can coordinate with your tenant directly while you still keep tabs on the conversation. No more middleman, no more timewaster.
Related: Tellus Features: Communication
Logging Income and Expenses
Keeping track of each expense is crucial for claiming the right tax deductions and having an accurate view of your cash flow and rental yield. Everyone has a different system, but not all systems are created equal. For example, not everything can be automated, which means you’re at the mercy of your filing system. Will you organize receipts in a filing cabinet? A spreadsheet? Will you drop everything and log the expense the minute you get home? In tracking expenses, you’ll also need to add your rental income, any late fees, pet rent, or other sources of revenue. This takes time each month unless you have a system in place to record these recurring incomes automatically.
Even if you feel like you have a good system, managing with a co-owner, property manager, or another team member can sometimes muddy the waters if you don’t have good communication. If a team member forgets to notify you about a purchase they made for the property, then the numbers you have for your cash flow are inaccurate. Inaccurate cash flow means inaccurate rental yield, which means inaccurate view of the profits.
Most management teams try to overcome this hurdle by meeting once a month to reconcile receipts, but this takes time. A better solution would involve a system where everyone could add expenses and have the data refresh in real time so that everyone could stay up to date.
Related: Tellus Features: Finances
Showing a unit to prospective tenants is a time sink, especially when there are many people wanting to see the unit, but few who actually apply. Some landlords prefer to coordinate individually with their prospects. This method gives everyone personalized attention and shows the applicant that the landlord is someone who cares. It also requires more effort on the part of the landlord. Other landlords prefer to host an open house and have every applicant come at once. This method fosters a feeling of competition between applicants and requires less effort from the landlord.
The initial showing isn’t the only timewaster. Each time a tenant moves in or moves out of the unit, the landlord needs to inspect the property. After a few times, you will know what you’re looking for and will be able to create a detailed checklist to save time. Taking photographs of the property before the tenant moves in may take a few minutes, but it can prevent drawn-out arguments later if your tenant tries to claim the damage was pre-existing. Having the checklist and photographs help ensure any tenant-related damage doesn’t come out of your pockets.
The unfortunate part of showings and inspections is they require you to be present, but that doesn’t mean there aren’t ways to save time. Some landlords choose to outsource the job to a property manager or someone who helps out just with showings. Others won’t show the property until they’ve had a chance to talk with the tenant and see if they’re serious about renting. Installing a lockbox may also be a possibility if you don’t want to be present. Although this timewaster is more difficult to automate than the others, reducing your tenant turnover will make it so you don’t have to do this often.
Lease Drafting and Signing
Drafting a bulletproof lease doesn’t happen overnight. You need to make sure your lease is state specific, that it’s comprehensive, and that it covers everything you need it to in relation to your property. For example, if you have certain expectations for tenants (lawn care, snow removal, pool maintenance) then it’s important to spell those out in the lease. Once you have a good base for your lease, you will save time in the future for new properties and future tenants.
Signing a new lease or lease renewal usually requires meeting in person, at least the first time, so that the tenants can review the document and ask any questions. While you definitely want to be available, there should be ways to digitize this process so that you don’t have to schedule meetings at every signing. Meeting in person may be manageable if you have few units, but it’s not scalable. As you consider growing your business and adding more properties to your portfolio, think about ways you can shave off minutes by automating whatever you can.
Let’s review the common timewasters landlords face and how these tasks can be streamlined for optimal efficiency.
Collecting rent – We need to be able to collect rent online, block partial payments, automatically enforce late fees, and let tenants schedule recurring payments.
Tenant communication – We need a centralized platform with searchable, written communication. All conversations should be backed up and delivered with read receipts.
Maintenance – We need a system where we can easily loop in a contractor to coordinate repairs with the tenant, monitoring the conversation without acting as the middleman.
Expense tracking – We need a mobile platform that will allow us to log expenses as soon as we get receipts. This platform should also add all regular rental income automatically and be able to produce financial reports for a reliable view of our cash flow.
Showings – We need a more efficient way to show the property, with checklists and photographs for inspections.
Leases – We need leases in a digital format, where changes can be made and approved without having to meet and sign in person.
As daunting as managing properties can be, you don’t need to do everything yourself when there are free solutions in place.
We’ve already established the old ways of property management take too much time and do not deliver the results we want. But there is a difference between taking up time and investing time. Spending time on property management tasks isn’t an investment. Spending time figuring out how to automate these tasks is.
For leases, landlords can obtain state specific leases through their state’s Association of Realtors©. Having a solid base document you can use over and over helps automate the process of drafting. For digitizing, using something like DocuSign or HelloSign allows your tenants to sign your lease electronically, eliminating the need to meet in person.
For tracking expenses, Rental Income Express lets you track income, expenses, and generate financial reports. Some landlords prefer using QuickBooks, Expensify, or Excel to keep everything organized. Others like using a mobile app like Tellus to track expenses as they go by taking pictures of receipts.
For communication and maintenance, some property managers use a residents web portal to take all service requests. Some landlords prefer an app like Manager Plus or Proper to track scheduling and work orders.
For showings, outsourcing the job to a property manager, neighbor, or local real estate agent would make it easier, but there is usually some cost involved. Some landlords prefer not having anyone there at all and using a company like Rently where prospective tenants show themselves the property through accessing a lockbox.
For collecting rent, direct deposit may be fine if your property is in a state where partial payments do not halt eviction proceedings. Other landlords use Zelle for fast transfers, but there are transfer limits and it may not work with every bank. Other landlords prefer PayPal or Venmo, but there are also transfer limits, which is problematic if you own multiple properties. Furthermore, none of these platforms are great for record keeping.
Read More: The Best (and Worst) Ways to Collect Rent
An All-in-One Solution
You may like a couple of the above ideas, but most investors prefer to have an all-in-one solution that will cover all their needs. One possibility is a property management app called Tellus that automates most rental tasks, including rent collection (with blocked partial payments), financial tracking, and maintenance tickets. It keeps all communication centralized and backed up, so you never have to worry about losing anything.
The app is free to download and use, so the only cost is the 15 minutes you spend getting set up and taking it for a test drive. Again, spending the time figuring out the best way to automate these timewasters is an investment in your business that will lead to a larger portfolio.
However you decide to manage your properties, having a system in place to automate rental tasks can save landlords hundreds of hours each year. Just because something has always been done a certain way doesn’t mean there isn’t room for improvement. And technology is paving the way for a more simplified rental experience for everyone involved.