How To Make Your Real Estate Rental Venture Profitable By Fixing Existing Challenges Through Digital Transformation?

Did you know that around 25 to 50% of the average household’s income goes into paying house rent?

Yes! To add another layer to the statistic, let us share that the monthly median rent for an unfurnished apartment in the US is $1,588. And because of the increasing demands in the renting space, close to 43% of the people cannot afford a home today.

Today, renting a space is one of the most complex tasks. With a lot of factors involved – from budget to finding the right locality, owner, living conditions and more – renting a space has become one of the most daunting tasks.

And by space, we mean any space associated with real estate – apartments, commercial complexes or even industrial spaces such as warehouses or factories.

But if you zoom in to the concern, it’s actually two sided. The challenges associated with renting is a spectrum that also includes the concerns faced by property owners as well. A lot of factors overlap between the two and in fact, both the parties experience individual and distinct concerns at different levels.

And this write up is all about identifying every single challenge encountered and endured by them and pointing out how technology is an ideal solution in eliminating most of them. This second part of the Digital Transformation in Real Estate Guide Series will enlighten you on these aspects and make you understand how implementing an airtight tech infrastructure, deploying enterprise software applications, automation features and other digital aspects can help you seamlessly find your ideal space or tenant.

To get an idea of what the guide is all about and how it would help you optimize your real estate business, we highly recommend getting started with the first chapter of the series if you haven’t already.

But if you’ve been following us closely, it’s time to get started with the topic for today.

When we say rental property hunting, the human mind generally assumes we are talking about residential spaces such as villas, duplex houses, condos, studio rooms and more. But rental spaces could be anything like we mentioned before and the way we approach finding rental spaces entirely depends on the type of property we are looking at.

When it comes to residential spaces, the process generally starts with word of mouth, where we get in touch with our friends and families and tell them about our moving out plans. From the place being too far from work to sudden rise in the rent, we quote our reasons and ask our friends to notify us about any available property that would interest us.

While most people successfully find a space in this process and move into their new rental apartments seamlessly, a majority of them fail to find one.

That’s when traditional approaches dictate us to contact brokers, agencies and middlemen who would be well aware of vacant houses in our preferred areas.

And one of the more contemporary ways of finding rental residential spaces is looking up for properties online. There are several websites and portals that serve as listing sites and help us find ideal spaces depending on our tastes and preferences. These are doing a great job at streamlining a lot of factors like scheduling property visits, reviews and more and letting us make informed decisions.

Commercial spaces are diverse. You could be looking for a new place to start your restaurant or a retail store or you could be looking for a space in a mall or a shopping complex. Regardless of the location, what you are looking for is a commercial space. And finding commercial rental spaces are more complex than finding residential spaces as you also need to consider the location of your space, the amenities provided, terms and conditions, consumer protection laws and more before you sign those papers. As far as finding commercial spaces are concerned, the general approach is making use of word of mouth or online assistance.

Unlike commercial and residential spaces, moving an industry isn’t easy. The duration of settlement is generally longer in this niche as you cannot afford to frequently move into a new space or move out of one with all your machinery and equipment.

That’s why renting industrial spaces is all the more complex. In this case, industrial networks arrive as ideal life-savers for owners to get details about new space availability. It’s only after this fails that they resort to websites or listing spaces or even local newspapers’ classifieds sections to find a new space for their factory or warehouse.

So, if you notice, challenges begin at the first step of the process and sometimes prolong even after we’ve moved into our respective spaces. If you think, finding a space is daunting, let us share with you some unique challenges in the rental spectrum we have been facing for a really long time without actually looking for ideal solutions.

Like we mentioned before, the challenges in this spectrum are faced by all the stakeholders in the cycle. That’s why we have classified the challenges into multiple fragments to help you connect better with what you are relatively going through currently.

Let’s look at them individually.

First things first, property owners face as many inconveniences as do tenants but this is mostly an unpopular opinion. The conversations are mostly one-sided but let’s not go there and only focus on the challenges faced by property owners.

One of the first concerns property owners face is deciding how much rent to charge to their tenants. Rent calculation is a systematic approach and requires the consideration of a lot of factors such as locality, facilities provided, trending rental amount in the neighbourhood, the number of members and more.

But these are generally overlooked by owners and they come up with a very bland and generic rent amount that makes little sense most of the time. That’s why they end up either overquoting or underquoting the rent for their properties. Only a few owners offer a complete breakdown of the particulars of charging their rent, involve square feet calculations and justify the amounts they intend to charge. But the amount of owners with this approach is very, very less.

The term credibility can involve multiple meanings here. It could define the likelihood of tenants paying the rent on time or it could also define how genuine they are in terms of what they do (whether they indulge in illegal malpractices), their background, their affinity towards pulling trouble and more. In a holistic sense, it is a gamble for most property owners when it comes to renting their properties out to new tenants, hoping no bad consequences would unfold to them.

Not everyone has all the documents and paperwork intact. A lot of tenants hardly have the necessary documents that makes it difficult for owners to conduct a thorough background check before giving them the property keys. Sometimes, it could also happen that the information they convey to owners is completely different from what is mentioned on papers. Such discrepancies make it difficult for owners to decide on offering their spaces for rent.

Similar to hotel rooms, a property that is to be let for rent has a depreciation value that gradually increases with increase in time. The longer a space is locked out, the lower its market value. To eliminate this, property owners have to spend a significant amount from their savings or pocket in advertising the availability of the space for rent. And the cost for this depends on the medium they choose to advertise on, the region they live in and the time of the week or month they choose to display the advertisement in. And if it is a social media ad, the prices are volatile again.

Once the advertisements are out and the contact number is displayed, people looking for rental spaces start getting in touch with owners. But not everyone contacts in the same way. While some directly call owners up, some send texts, and some even use instant messaging services such as WhatsApp to enquire about the property. And then there are those who send emails as well.

When instances like these happen, it becomes difficult for owners to collate information from multiple sources and keep track of individual enquiries and schedule property visits accordingly. When the owner is an elderly person, the constraints are tougher.

Whenever a tenant moves out of a rental property, owners have to ensure that the property is again ideal to be put up in the rental market. The apartment or space has to be show-ready and for this to happen, inspections have to be carried out by owners personally. Damage checks, utility bill payments, paint job requirements, wearing off of furniture and upholstery and more have to be assessed . This becomes all the more difficult when owners stay in a different state or a country.

At the other end of the spectrum are troubled tenants, who are already experiencing a mental stress of having been asked to vacate their existing spaces in a short period of time. Let’s look at some of the major challenges they face when hunting for rental spaces.

Similar to how property owners find it difficult to assess the credibility of tenants, this is experienced by tenants as well. From their perspective, several thoughts go inside their minds about the owner on whether they would increase the pricing in less than six months, will they allow a lifestyle that is different from theirs, if immigrants would be treated and accommodated equally, the behaviour of the landlord, their attitude and more. And it doesn’t make sense to go around enquiring about the landlord from their neighbours as well. It’s a gamble for tenants, too.

If you’ve ever rented a space before, you know owners emphasize on security advancements against non-repayment of rents. But in most cases, tenants pay their rents on time. When such tenants intend to move out of the space, they are eligible to receive the full advance they deposited while moving in.

But several landlords out there do not completely refund the entire amount. Some cut down the amount in the pretext of damages done to the property during their stay or simply quote the requirement of a new paint job. It’s always a cat-on-a-wall scenario on whether an owner would completely return the advance or not.

One of the major challenges is the absence of one reliable solution or portal to find our ideal property to move in. Different portals cater to different needs of tenants and owners and there is no sweet spot that brings all the good features together. When tenants look for properties online, the same property is listed on different portals with varying information and reviews. While one would suggest good things about the space, there are reviews on a different platform that claim otherwise. So, a tenant doesn’t actually know if the space is ideal before until they move in and live.

A redundant task, where tenants are required to fill in a new form every time they have to enquire about a new property. From filling out basic details to having to type additional information such as nationality, work details, preferences, lifestyle and more, they need to do this redundant task every single time.

There is no LinkedIn-like feature, where applicants just need to send interest and the portal would pull in details from their profile. With each form they send, what increases is the security risk involved in the submission of your personal details. You never know if the property on the other side is legit or the person looking at your details is actually a property owner. Portals only verify contact details but not the credibility of listers.

We’ve been mentioning instances of immigrants along the write up and that’s a crucial concern as globalization continues to expand on a larger scale. With this phenomenon, some of the most remote locations with potential industries and companies are welcoming people from around the world.

This is good but the ground reality is people from different nationalities or even languages have to interact with the locals on a daily basis starting from property hunting. With language being a major hurdle, it is difficult to come to an understanding of each other and establishing a rapport, which is crucial in arriving at a deal for signing up for the space. A lot of crucial details go undiscussed or worse - misinterpreted.

Tenants generally zero in on more than one property to have fallback options. In such cases, they talk with multiple property owners simultaneously. And because of this, they have to send messages all over again and have back and forth communication on paperwork, documentation, identity proofs and more. This is crucial but again a redundant task from the tenants’ side.

While there are tenants that directly communicate with owners, there are also those who resort to brokers or agencies to move their applications forward. In such cases, tenants have to consistently call them up or have a follow up to know about their statuses of applications. There is no real-time automated solution to notify every progress or confirm the allocation of space.

At the other end of the spectrum are troubled tenants, who are already experiencing a mental stress of having been asked to vacate their existing spaces in a short period of time. Let’s look at some of the major challenges they face when hunting for rental spaces.

Similar to how property owners find it difficult to assess the credibility of tenants, this is experienced by tenants as well. From their perspective, several thoughts go inside their minds about the owner on whether they would increase the pricing in less than six months, will they allow a lifestyle that is different from theirs, if immigrants would be treated and accommodated equally, the behaviour of the landlord, their attitude and more. And it doesn’t make sense to go around enquiring about the landlord from their neighbours as well. It’s a gamble for tenants, too.

If you’ve ever rented a space before, you know owners emphasize on security advancements against non-repayment of rents. But in most cases, tenants pay their rents on time. When such tenants intend to move out of the space, they are eligible to receive the full advance they deposited while moving in.

But several landlords out there do not completely refund the entire amount. Some cut down the amount in the pretext of damages done to the property during their stay or simply quote the requirement of a new paint job. It’s always a cat-on-a-wall scenario on whether an owner would completely return the advance or not.

One of the major challenges is the absence of one reliable solution or portal to find our ideal property to move in. Different portals cater to different needs of tenants and owners and there is no sweet spot that brings all the good features together. When tenants look for properties online, the same property is listed on different portals with varying information and reviews. While one would suggest good things about the space, there are reviews on a different platform that claim otherwise. So, a tenant doesn’t actually know if the space is ideal before until they move in and live.

A redundant task, where tenants are required to fill in a new form every time they have to enquire about a new property. From filling out basic details to having to type additional information such as nationality, work details, preferences, lifestyle and more, they need to do this redundant task every single time.

There is no LinkedIn-like feature, where applicants just need to send interest and the portal would pull in details from their profile. With each form they send, what increases is the security risk involved in the submission of your personal details. You never know if the property on the other side is legit or the person looking at your details is actually a property owner. Portals only verify contact details but not the credibility of listers.

We’ve been mentioning instances of immigrants along the write up and that’s a crucial concern as globalization continues to expand on a larger scale. With this phenomenon, some of the most remote locations with potential industries and companies are welcoming people from around the world.

This is good but the ground reality is people from different nationalities or even languages have to interact with the locals on a daily basis starting from property hunting. With language being a major hurdle, it is difficult to come to an understanding of each other and establishing a rapport, which is crucial in arriving at a deal for signing up for the space. A lot of crucial details go undiscussed or worse - misinterpreted.

Tenants generally zero in on more than one property to have fallback options. In such cases, they talk with multiple property owners simultaneously. And because of this, they have to send messages all over again and have back and forth communication on paperwork, documentation, identity proofs and more. This is crucial but again a redundant task from the tenants’ side.

While there are tenants that directly communicate with owners, there are also those who resort to brokers or agencies to move their applications forward. In such cases, tenants have to consistently call them up or have a follow up to know about their statuses of applications. There is no real-time automated solution to notify every progress or confirm the allocation of space.

This is a concern not only faced by landlords but property agents as well. From misaligned tenant information to insufficient documentation and identity proofs, it is simply difficult to gauge a tenant’s application in terms of credibility.

While there are digital systems in place, it is still a manual work for property agents to process every application by themselves. When the tenant application comes from multiple sources and after different stages of handling, it becomes more tedious for agents to process them.

There is absolutely no pre-screening options or facilities available currently to assess if a tenant will be able to pay rents on time or check if the tenant is genuine in all aspects. Unlike credit card companies, historic data is not verified to calculate the likelihood of rental payments. The same is applicable to the screening requirements of landlords as well.

Not everyone is used to working on computers or gadgets. Oldschool people still exist and they are particular in sending out handwritten application forms with formal cover letters. In such cases, it becomes difficult for agents to understand the handwriting and process the applications, resulting in either delays or rejection of such applications. As a side note, this is only an injustice to the applying tenant.

Similarly, there are applicants who send in incomplete forms with missing crucial documents as well. An agent has to then take time out of their schedule to manually call them up and ask them to send the documents which further delays the process.

Similar to how landlords have to shell out money to advertise or list their property, agents have to go through it as well.

Emails, instant messengers, calls, text messages, offline forms and handwritten letters are some of the ways agents are contacted and it is on them to compile and keep track of all such enquiries and ensure nobody is left in the void.

If property owners had enquiries coming in from tenants alone, agents and agencies have enquiries coming in from both owners and tenants. Both want to know if their spaces are rented out or if their applications were processed. On an average day, an agent ends up spending a majority of their time handling follow up calls than getting actual work done.

So far, we discussed a range of concerns and shortcomings endured by stakeholders in the rental space cycle. If you notice, these were not concerns that could be easily brushed off. They are real ones that need to be addressed and fixed – permanently to avoid any unnecessary consequence from cropping up.

To those of you wondering if these large-scale concerns could be fixed, we have good news. They can be and with the help of technology.

With the advancement in technology, we today have tools and infrastructure in place to handle and eliminate all of the shortcomings we discussed earlier. These are just one-time implementations that could set most of your process on autopilot.

So, let’s look at the solutions one by one.

Rolling out a global real estate portal for your business is one of the first steps in handling the shortcomings. With a global portal, you make way for a uniform modus operandi for your business that stakeholders across the globe have to follow.

For instance, consider the example of AirBnB. When you are looking for a vacation rental in your country or somewhere abroad, the process of searching for one is the same. And when you look up properties on AirBnB, you know that the services, operations, credibility and more factors would be standard with benchmarking qualities.

That’s the trust established by the brand. And with a global real estate portal you could pull off an AirBnB for your real estate business, where a tenant looking for a rental space in Los Angeles has to go through the same process similar to what one has to go through in Mumbai. And when these two people switch places, the experience would be equally pleasant and familiar.

While the portal will be front-ending your brand’s operations, an agency property management system will take care of all the backend requirements such as managing property listings, eliminating duplication of properties, bringing in automation in application initiation and processing phases and more.

The onboarding of both tenants and owners will be automated and an agent has to actually focus on tasks that matter instead of hand holding users in every stage of the process. This system will also have features where applicants could upload their documents one for easy retrieval.

With this solution, we bring in the practices of a credit card or a banking company. Here, we screen applicants with the help of their CIBIL scores, assess their previous transactions to ensure prompt payment of rents, have a verification of their government identity proofs, company verification and even social scoring to determine the credibility of tenants and landlords.

The best part is that these processes could be automated so there is no manual intervention required at any stage. Once the application is submitted, a series of verification processes are triggered for the system to conduct, record and assess. How simple yet futuristic is that!

As part of the verification process, what agents have to scrutinize are the documents that are shared by tenants in their applications. These documents have to be compliant to the local rules, regulations and protocols prevailing in a precinct or region and the credibility of it matters when it comes to the approval of rental properties. However, even these crucial processes can be automated for scrutiny and assessment, leaving more scope for agents to help tenants in finding an ideal place to rent.

Once the verifications are done and both the parties come to a mutual understanding, initiating a contract is the next process. A holistic system can initiate this process seamlessly as well. Digital contracts can be initiated by the system which is first shared with landlords for their signatures. Once done, the contract is then signed by tenants.

The contract, which sits on the system’s database now, can be easily retrieved by the agent, who then prints out a manual copy for both the parties involved and sends them to their mailing addresses for future reference and usage. This saves time in a lot of aspects and ensures a faster moving in time. Any specifications on bonds can also be specified in this stage and included in the contract.

What was once a tedious affair is now simple with automated payments. A tenant can choose to allocate the rent amount on his banking app or the real estate portal, which automatically deducts the rent on the salary payout day or the cutoff day. Even if the tenant rejects this system, they have the option to make digital transactions through UPI systems, internet banking, digital wallets and more payment options. This facilitates instant transaction to landlords who are in a different country.

Remember the LinkedIn approach to documentation we mentioned? Well, this can be implemented as part of your digital transformation process in your real estate business. With this, tenants have to upload their identity documents on the portal and this will allow stakeholders to retrieve them from wherever they are. So, even if they migrate to a new country and begin their property hunting process, they can instantly retrieve the necessary documents hassle free.

For seamless moving in, a sound tenancy management system can be introduced by owners or agencies. This system has all the tasks and processes involved in the letting of a property on rent. From inventory management and conceiving rental agreement to exit check and utility bill payments, these can be moderated and automated for a cost to take the burden off of both tenants and owners.

Housekeeping is one of the major factors in deciding a rental space and in several instances, these features appear only on papers. In reality, they are completely different and misaligned. That’s why integrating them with a digitally deployed system will ensure tenants get to experience features and facilities they pay for.

Depending on their needs, they could schedule housekeeping and maintenance services on demand and even modify the payment structure associated with this. If they don’t want to include a fixed amount in their rent for housekeeping services, they could choose to pay on-demand whenever such services are availed. This is a blessing for working class professionals who hardly have time to indulge in any activities outside of work.

Artificial intelligence and machine learning function at the fulcrum of the entire portal and system and that’s exactly why automation systems function in the first place. These technologies could be leveraged to their complete potential by making use of their predictive analytics features.

With this, tenants’ historic payment data could be studied to assess their consistency in payments. Or, predictive tools could also be deployed to show a glimpse of electricity usage, housekeeping services they are likely to consume and avail in the future and how they could optimize the expenses associated with them.

For landlords, these tools could give applicants an idea of refund of deposits, rapport with previous tenants and other vital statistics. With precise tools, one can even determine how long a tenant is likely to stay in a space as well.

If there’s predictive analytics involved, there would be reporting. Reporting is the way everything makes sense to a layman. Through charts, graphs, detailed breakdowns, these systems could report all aspects of rental administration to your inbox for a specific duration so you could study them and know every little transaction happening.

Established in the year 2006, Zillow arrived as a reliable platform to help buyers find apartments, houses, mortgages and more online. Essentially a marketplace, Zillow redefined the way online real estate was approached.

Zillow’s functionalities and efficiencies made it popular quickly in the market, allowing it to swiftly scale up its operations and offerings. During its peak, it processed almost 3mn property images every day and had a database of over 10mn houses and properties across the US. It easily became one of the most trusted real estate marketplaces online.

To offer its services uninterrupted, Zillow adopted the best of technology through Amazon Web Services for performance and scalability, Qubole for data generation, processing and analytics and more. Through a host of tech integrations, Zillow ensured it boosted its efficiency alongside reducing processing costs, operational expenses, infrastructure costs and more.

While most of the solutions we discussed already seem futuristic, we are envisioning a world that is similar to what you would visualize through a science-fiction movie or a book. The future of the real estate rental spectrum looks supremely promising with the gradual implementation of smart contracts powered by blockchain technology. A decentralized, tamper-proof system, smart contracts allow for optimized security and safety in signing digital contracts by making them airtight and untouchable.

We are also looking at voice search integrations, where people simply have to talk to virtual assistants or smartphone apps to get to know about a property listing and the device would take care of everything from retrieving details to scheduling appointments for property visits.

Taking this a notch higher, we are also sure technologies like augmented and virtual realities will be incorporated into the real estate space in the near future. With these technologies, tenants will be able to get a virtual feel of their property they are interested in and go on a virtual tour without having to step out of their home. This reduces time spent in moving around for property hunting, ensuring the only time you step out is when you actually move out.

Quite exhaustive, right? Well, like we said, the possibilities are endless and things are just getting started in the real estate spectrum. If you want to get a strong hold of the market now, when the deployment of digital transformations is still in its nascent stages, we recommend getting in touch with us today.

We will develop and roll out the most ideal real estate portal for your business that solves all the problems we discussed earlier. We will also tailor your app or portal based on your unique specific requirements.

So, what are you waiting for? Reach out to us today.