3 Tips for New Investors Renting for BRRRR During COVID-19

3 Tips for New Investors Renting for BRRRR During COVID-19

2 min read
Palak Shah

Palak Shah (BiggerPockets Podcast episode guest #368) is the founder and owner of Open Spaces Capital and Open Spaces Women. An engineer by trade, after the birth of her two kids, Palak decided to make the move to entrepreneurship to be able to spend more time with her children.

She brought her knowledge and 17 years of experience in building systems, processes, and scaling from her corporate career in engineering leadership to fast track her real estate investing journey. In her first three years investing full-time, Palak purchased, renovated, rented, and refinanced properties creating an almost $5M rental portfolio and generating $1M in annual revenue. It is now her passion to empower other investors to pursue entrepreneurship through real estate investing to live an empowered and financially free life without taking undue risks or over-leveraging through her coaching program Open Spaces Women. Follow her on Instagram @openspaceswomen for tips and motivation for building and scaling your buy and hold portfolio.

Experience
Palak worked in engineering leadership in various industries. She was in the nuclear industry for six years until she joined a startup as a consultant to analyze big data to predict power plant failures. A few years later, she moved over to the management side in engineering at a startup for efficiency measures. She then spent six more years in the pharmaceutical industry, running a specifications department at a glass manufacturing factory.

After the birth of her two kids, Palak realized she needed to create a life of financial independence—one that allowed more time for her family while allowing her to still make an impact. She decided to make the move into entrepreneurship, co-founding and managing Open Spaces based in Philadelphia. Her focus is on renovating deteriorated properties in and around the city.

Palak manages the end-to-end lifecycle, starting from sourcing properties, completing renovations, and renting them out, along with financing and investor relationships. She takes pride in bringing people together to achieve the common goal of empowering a community through real estate development. She believes that profitable growth can be achieved, sustained, and even enhanced by embracing diversity in business partners and by engaging with local communities to foster development that is inclusive.

Open Spaces accomplishes this by providing high-quality rental homes and apartments, with great customer service, at prices that are affordable.

Palak is active on Instagram @openspaceswomen and is passionate about inspiring other professionals.

Press
Palak was honored by Billy Penn in the “Who’s Next Real Estate and Housing” series of 2018, highlighting Philadelphia’s most dynamic real estate, housing, and development professionals under the age of 40. She was also featured in the BiggerPockets Podcast episode #368 and Real Estate InvestHER’s podcast episode #47.

Education
Palak graduated with an MS in Mechanical Engineering from University of Illinois.

Follow
@openspaceswomen on Instagram
OpenSpacesWomen.com

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Continuing our series of tips for new investors to implement the BRRRR strategy, let’s talk about the “rent” aspect. I mentioned in one of the earlier posts that we have rented out five units all within one week of the listings going up, and we have collected 95% of our rents.

Having an engineering background with experience in systems and processes, I have always been fascinated by automation and efficiency. Add two small children to the mix and it stopped being a fascination and became a necessity. I have come to learn that profitability lies behind the unexpected and the unglamorous—being able to effectively run the business with the least amount of work.

Early on in the business, each time I had to do something more than once, I started thinking whether I could:

  1. automate,
  2. eliminate, or
  3. delegate.

And traditional property management had a lot of room for automation. We had incorporated some of the automation features before COVID and it helped to have the infrastructure in place for them. But there were a few things I recommend you consider specifically due to the pandemic.

Related: BRRRR Investing: The Ultimate Guide to the Buy-Rehab-Rent-Refinance-Repeat Strategy, Made Simple!

keys on a keychain shaped like a house laying on a piece of wood

3 Real Estate Renting Tips During COVID-19

1. Self-showings

When you first learn about self-showings, it is natural to be skeptical. Would you be comfortable letting a potential tenant into your property without being there yourself?

During the pandemic, it became a necessity for everyone’s safety. This feature alone allowed us to rent out properties while others waited. We provided instructions on safely entering the properties, created systems for lockboxes where the codes would change every 15 minutes, did a soft background check for potential tenants before letting them in, and lastly, made sure that each appointment was long enough so two parties never ended up at a showing at the same time.

Each point I mentioned above probably deserves its own post. But this allows you to get started.

Related: The Ultimate Guide to Getting a Rental Property Ready During COVID-19

2. Set a great foundation

The biggest question our community members ask us is how our rent collection is going. We are currently reaping the benefits of a great foundation. This foundation is two-fold:

  • a robust screening process in place, and
  • a great track record of treating our tenants well.

With these two in place, we have had great relationship with our tenants who are now paying us rent on time.

Additionally, you consider Section 8. Section 8 allows you to help a family in need while keeping your profitability intact and a major portion of your rent certain each month.

Related: Coronavirus: How to Maximize Rent Collections During a Crisis

3. Go paperless

When we had three properties, I decided I was going to invest time and money into setting our business up to handle 30 properties without too much additional manpower. Call it foresight, ESP, or a crazy idea, it worked really well to keep growing pains at bay when we grew dramatically in the past couple of years. The one I highly recommend is going paperless.

One component of going paperless is a great property management software which includes virtual rent collection, maintenance management, and lease signing. This one thing alone has had the biggest impact on our property management process during the pandemic, allowing us to run operations smoothly allowing us to focus on acquisitions.

Do you have any questions about how to implement these?

Let’s discuss in the comment section below.