4 Smart Ways to Overhaul Your Outdated Landlording Business (& Boost Profits!)

4 Smart Ways to Overhaul Your Outdated Landlording Business (& Boost Profits!)

4 min read
Al Williamson

Al Williamson is a former civil engineer with over 24 years of experience investing in real estate, including single family, multifamily, house flipping, commercial, and short-term rental properties. He’s a nationally recognized authority on short-term rentals and has been featured on many podcasts and numerous real estate conventions and REIAs since 2014.

Experience
Al worked as a professional engineer while he purchased and self-managed a small rental portfolio. His goal was to replace his engineering salary, but he got side-tracked.

Al discovered that making money without purpose was unfulfilling. So, he decided that he would only prosper to the extent he helped others. That’s how he ended up assisting an inner-city neighborhood to get back on its feet.

Al learned that landlords could provide leadership as an investment strategy. He talks about this at length on BiggerPockets Podcast episode #8 and in his first book Building Wealth with Inner City Rentals.

After Al’s neighborhood became one of the hippest places in Sacramento, Calif., he switched his focus. He realized that the majority of landlords were not collecting the cash flow they expected. In fact, most were barely breaking even before taxes. So, Al went on a five-year quest to collect ancillary income ideas to supplement his rental income. He publicly documented his journey to pay the monthly mortgage of his eight-unit apartment complex with new revenue streams that didn’t include rents.

Al accomplished this mission in 2015 and placed his findings in his book 40 Ways to Increase the Net Income of Your Rental Properties. Through writing 40 Ways, Al realized that the traditional rental business model was the least profitable way to operate a rental. This insight led him to switch his holdings into a short-term rental mode.

Upon further refinement, he optimized his operation to extended stay rentals (stay of 30+ days), because that business model yielded the same high net income with a lower hassle factor.

Al’s journey resulted in him replacing his engineering salary with income from his extended stay rentals. He “retired” at the age of 50.

Now Al coaches others through his training program, Extended Stays for Landlords, and enjoys inventing new ways for landlords to increase their income and reduce expenses.

Education
In 1989, Al Williamson graduated from the University of California – Davis with a B.S. in Civil Engineering. In 1994, Al graduated with an M.S. in Civil Engineering from the University of Illinois – Champaign-Urbana.

Follow
Instagram @Leading_Landlord
YouTube
Al’s blog LeadingLandlord.com

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Yes, your Betamax cassette player still works! It was such a revolutionary product in 1979. Even today, your Betamax player can still record and play videos. But why bother with it? New technology is so much better.

Your landlord business model might be working fine as well. Buying smart and charging little more than your expenses still makes sense. However, the model of yesterday pales in comparison to what you can do today. Are you overdue for an upgrade?

By “upgrade” I mean accomplishing your wealth building objectives faster and with fewer moving parts.

4 Ways to Upgrade Your Operating Model

Here are four ways to bring your landlord business model into the digital age.

1. Serve a Niche, Not Craigslist

Betamax Landlords strive to net $100 per month per unit. You can easily double or triple this objective by positioning your rental towards serving a niche market (and away from the Craigslist crowd).

Niche communities benefit from living next to or with each other. Niching up allows you to rent rooms to professionals and international students or venture into the lucrative corporate housing space.

Related: 3 Hacks to Help Property Managers Boost Productivity & Reclaim Lost Time

You can easily net an additional 30% by creating a housing solution for a specific group and growing your reputation as the best option in town. Customize your color scheme, furnishings, design choices, lease terms, pet policy, air filtration and accessibility to solve their problems. You’ll have fewer vacancies and more demand — a better approach to landlording.

2. Tap Ancillary Income Opportunities

Betamax-ers never think to tap the endowments within their rentals. They focus too much on acquiring more rentals and not enough on optimizing what they have. Buying more rentals only guarantees you’ll have more expenses. There is a less risky way to net an extra $100 per month.

You can easily net 30% more by opening your eyes to the profit centers that surround you. Your existing rental may be perfectly suited to:

  • Broadcast or repeat a signal. Cell phone repeaters, wifi antennas, live cam feeds — there may be rooftop lease opportunities especially for you. The elevation of your rental’s rooftop and the views from that vantage point are assets.
  • Display political or non profit banners. Check your rental’s fence lines; they are great places to hang banners. You may have the ability to hang advertisements outside of your tenants’ view but within the view of a busy highway. Deploy this underutilized space to increase your bottom line via “in-kind” tax deductions or advertisement revenue.
  • Distribute U-Haul trucks. Your zoning and lot configuration may be perfect for a small, part-time U-Haul dealership. You can set one up for FREE. Just contact U-Haul for details.

3. Exercise Your Civic Leadership

Betamax Landlords dismiss the neighborhoods surrounding their rentals. They classify civic leadership as a “charitable” activity best left to nonprofits and someone else.

If you only serve a luxury market, then your civic leadership, from a landlord’s role, is not needed.

However, if you’re a mid to lower end landlord and you’re dismissing civic leadership, then you’re squandering your income and equity-potential.

Trading something of value (a little of your time) for something of much greater value (improved safety, visual impact, orderliness) is a fundamental investment principle. Why do so few landlords understand this?

Organize a local email directory of property owners and landlords, “inspire” someone to keep your block litter-free, or sponsor an annual block party. These super simple things will lift the lid on your rents.

Long-distance landlords, you have an opportunity here as well. If you can’t physically exert yourself, then financially support a local leader and/or organization that makes good things happen on your block.

If you want a bigger harvest, add nutrients.

4. Experiment With One Unit

Betamax-ing multifamily landlords operate each unit in the exact same way. It never occurs to them that they can mix and match. You don’t need to ask permission. Consider furnishing one unit and experimenting with Airbnb, vacation rentals or short stay housing. How about a boutique unit with high-end furnishings and some razzle-dazzle? Would that spike your income?

Experiment with using RelayRides.com to rent a car to your short stay renters. Or use SpinLister.com to rent bicycles to them. You can create a unique experience that the big corporations can’t match. That’s a lucrative position to occupy.

Jeremiah Owyang keeps a running list of Collaborative Economy businesses. You should follow his work. Emerging app/web-based businesses allow landlords to customize their housing offerings and generate additional income in synergistic ways. Don’t let Craigslist be the only web-based tool you use.

Be adventurous! You might find a sweet spot for your market that is 10x more profitable than your current way of operating.

Parting Thoughts

Come on, BP family — it’s not 1979 anymore! Put away your L-830 video cassette tapes.

You’ve got more (and less risky) options than just acquiring more rentals to grow your net. That Betamax way of thinking derails you from discovering the profitable potential of your current rental holdings.

Related: The “Simple” Technique That Could Revolutionize Your Real Estate Business

You as a manager of cash flow streams have the ability to create endless amounts of value — some of which can be converted into cash flow. But in order to venture out, you have to be brave and willing to leave your comfort zone.

Niche up, tap your endowment, engage your community and explore furnished housing. I guarantee if you use one or all of these tactics, your rental will be 30% more profitable.

Now… are you ready for an upgrade?

Landlords: What digital age features have you adopted in your business?

Share your ideas below!