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.
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.
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.
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!
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.