Over the last year I have been much more involved in the day to day minutia of real estate investing than ever before. Sure, I have been investing since 1984 but never really looked at the systematic process.
There are lots of inefficiencies in real estate investing. I came to that realization while trying to get groups actual people involved in the process to work just a little more closely.
Buying an investment property is an expensive process. Few small investors understand this and as a result they will spend an inordinate amount of time and effort chasing a minimally profitable deal. They don’t understand the concept of missed opportunity costs and often under estimate their actual sunk costs.
Holding an investment property is an even more expensive process regardless of whether the investor self manages or using a property manager. Marketing and finding tenants, servicing those tenants, collecting rents, processing evictions and other tenant issues. All of these eat up time and money and are often time dependant. Then there are the documents and notices.
The problem anyone faces trying to address these inefficiencies in those incurring the costs don’t understand what their costs really are. They usually focus only on the actual physical dollars without understanding the bigger picture.
This is not a new situation. This is exactly what sales organizations have faced for many years and it is time the same tools in that area are brought to bear in the real estate investing world.
This month, I accepted a new position with a start-up to identify and address a niche in this area. I am heading up the product development and technology areas to bring some efficiency and sanity to real estate investing.
Obviously, these processes and tools aren’t going to be all that helpful to the lone ranger type investor. But, they are a dying breed. The individual investor has a very tough time surviving and thriving in today’s market realities. No matter how much success an individual achieves they will never be able to compete head to head with a well organized team of specialists.
The first series of modules to be released are for property managers. There is an ingrained distrust between investors and fee based property managers. Much of that distrust is valid and comes about due to a lack of visibility and control in the “normal” property management relationship. An investor buys a property, signs and agreement with a management company and hopes they don’t get screwed. Technology can solve this problem for all parties involved. The manager can do their job efficiently and profitably and the investor can retain control where it belongs.
Why would property managers adopt our system? Because it gives them advantage in recruiting and retaining clients. Using this system a property manager is not only able to tell an investor the benefits of dealing with them, they can show those benefits in a very concrete manner.
I am excited to be a part of this new and innovative approach and it couldn’t come at a better time. At every step in the investing process it is critical to control rising costs, falling revenue and increasing financial risk. You can’t do that by sticking your head in the sand or relying on thumbnail guesstimates as to how your properties are performing.
Tags: Technology
