The Different Approaches To Scaling Your Rental Property Investments

The rental market is a growing and lucrative one. However, the real earnings typically only come when you scale, buying and managing multiple properties. How you acquire the funding to purchase and own multiple properties is one factor to consider but, but beyond that, you have to consider how you handle the responsibilities of managing those properties, as well.

We’re going to look at three approaches that are not exactly mutually exclusive, but represent different ways to handle the increased workload that comes with a growing portfolio of properties.

Finding The Right Software

The biggest concern with scaling your rental property investments is the sheer amount of time it takes to manage the various responsibilities, such as collecting rent, communicating with tenants, tracking and responding to maintenance needs, financial reporting, and so on. If you have one property, doing that part-time is perfectly feasible in many cases. However, for multiple properties, it becomes more than a full-time job…

It becomes harder and harder for one person to do alone.

Using the right software allows you to streamline and automate many of the tasks involved, reducing the admin workload and improving recordkeeping without the expense of hiring someone to do it. However, many new users can find this kind of software difficult to get used to, and it might not be enough to cope with the workload as your portfolio grows larger and larger. 

Working With A Team Of Professionals

For those who aren’t inclined to handle it all themselves, the right help can be a huge timesaver. Professional rental property management teams handle all of the tasks of tenant screening, rent collection, maintenance coordination, inspections, and more on your behalf. Needless to say, this is highly convenient for those with large portfolios or properties that they don’t personally live near.

They also typically offer established relationships with vendors and service providers that help maintain and repair properties. However, they do cost more to work with than using software, and some investors feel they may lose some direct control over the day-to-day handling of their properties and tenants.

That said, if simplifying operations and reducing stress while you scale is your aim, this is the most convenient way to do it.

Building A Business

If you own more than one building (or a building with several rental properties in it), then creating your own rental business is an effective way to give them the time and focus that they need. Hiring staff and building your own systems to better manage tenants, contracts, contractors, and building maintenance established an organized approach to the day-to-day running of the business. This is a more effective way to scale to larger portfolios than using software alone, and ensures that you remain in total control of your properties.

The drawback is that it has a significantly higher cost barrier than outsourcing, especially at the beginning, and also typically demands full-time attention. If you’re not ready to turn property ownership and management into your main career, you may want to reconsider.

As mentioned, you don’t necessarily need to choose one or the other, and many operate with a hybrid approach, such as building a rental property business while also incorporating management software. It’s all about finding the approach that best suits your needs.

This is a contributed post.