Co-Founder & CEO of PlanOmatic.
The single-family rental (SFR) industry is booming. SFR growth is expected to outpace multifamily, office, retail, storage and hospitality growth by 2022, according to a report by Walker & Dunlop. Walker & Dunlop estimates the SFR market to be valued at around $3.4 trillion, compared to the entire multifamily market, which is estimated at $3.5 trillion.
While the multifamily sector has embraced investment technology, the SFR industry has been much slower to adopt it since it’s a relatively new alternative product type. As the SFR space evolves, technology will continue to play an increasingly important role in how investors, owners and operators acquire homes and operate their businesses.
I’ve seen firsthand how leveraging technology can make operations and investment processes more efficient so that SFR investors can grow and scale their property portfolios even faster. Here’s how SFR investors, owners and operators can use technology to optimize their investment strategies and property management processes:
The SFR industry is still acquiring properties in the old manner with a “boots on the ground” approach to due diligence that is largely painful, unorganized, inefficient and inaccurate. With innovation in software services, data accessibility, due diligence scoping tools and 3D, the real estate investing process can be made more efficient.
Real estate accounting software leverages advancements in data collection, integration and storage to modernize the business of real estate investing. This makes the process of owning, leasing and financially managing rental property more efficient and profitable. Blockchain-based applications make the entire real estate process more efficient and transparent while reducing risk for all parties. And many appraisal companies offer virtual inspections and can now appraise properties remotely.
3D tours are another powerful digital tool to help streamline the due diligence process, as they allow investors to see both the exterior and interior of a home from afar. This can help inform decisions and scopes for renovations without having to ever see the property in person.
SFR investors, owners and operators should consider automating the process for all property marketing and operational assets, including the ordering and uploading of property photos, floor plans and 3D virtual tours. By automating the process, SFR investors can increase efficiency throughout the entire property lifecycle and easily scale their marketing efforts to keep up with portfolio growth.
In addition, the use of 3D virtual tour technology to market SFR homes online can capture the interest of consumers, resulting in faster leasing activity. Our most recent study measured the impact of 3D tours on SFR property marketing on the Zillow Rentals platform, which includes Zillow, Trulia and Hotpads. We found that when a 3D tour was published on the Zillow Rentals platform, SFR property leads increased by 40% and days on the market decreased by 30%.
These results prove that consumers are demanding and prioritizing 3D experiences online, and by adding 3D tours to the Zillow Rentals platform, SFR owners and operators can meet that demand with a high-quality virtual experience that their future residents now expect.
Automation, automation, automation — that’s the keyword that all SFR investors should keep in mind. SFR investors who automate their rental properties can make their income and expense tracking faster, easier and more accurate. Apps like Landlord Studio, Cozy, RentRedi and RentTracker can help landlords manage and monitor their portfolios from anywhere at any time.
SFR investors, owners and operators should also consider investing in cloud-based online property management software. Some of the benefits include:
• Reduced operating and IT costs by outsourcing computing, storage, security and administration needs versus doing the work in-house.
• The ability of your property management team to access and update files from anywhere on any device at any time.
• The cloud provides scalability and allows for more storage, bandwidth and computing demands as your property management portfolio grows.
Smart Home Technology
SFR investors should also contemplate incorporating smart home technology into their property portfolios to help increase rent and reduce a property’s days on the market. Smart home technology refers to home devices that can be controlled and monitored remotely using a smartphone, laptop, tablet or voice commands. This can include everything from smart locks and cameras to help with security to smart appliances and lighting that improve quality of life.
And all of these have the ability to attract renters! According to a 2020 Realtor.com and YouGov survey, a large share of consumers would be willing to pay more for a home (renting and/or buying) if it featured additional smart technology devices or systems.
In closing, forward-thinking SFR investors and owners who use technology to streamline their operations and marketing processes while improving the rental home experience for their residents will be best positioned to meet their acquisition and portfolio growth goals in the future.