Do you agree next-generation landlords will be more engaged with peer-to-peer sharing, purchasing, and funding?
Many like @J Martin and @Brandon Turner are open to AirBnB types of offering, but will progressive landlords take the next step and start using/offering ZipCar, TaskRabbit, and other tools in the Collaborative Economy to increase profitability?
How do you plan to take advantage of the exploding peer-to-peer marketplace?
Services like ZipCar in my humble opinion are just a temporary phenomenon. Once self-driving cars will become mainstream in a few years, fewer people will actually own a car. Mainly because taxi services with self driving cars like über or maybe google will become so cheap it won't make economic sense to own a car of your own.
I already think about this evolution when i invest in real estate. I never pay much for a garage, because i think value of garages will drop significantly in the next decade.
@frederik Lamote, can you envision a multifamily landlord getting a few cars for her tenants to share and pricing her offering so its cheaper than owning you own car?
ZipCar currently rents parking spots from landlords because it's profitable to occupy that location. I bet a landlord could create their own ZipCar, do business with their tenants AND neighbor, and realize a nice profit.
One of my point in an upcoming BP Blog post will suggest that these peer-to-peer companies help landlords to test run various most profit centers before making sizable commitments..
I think it would depend on the scale. I would think that the liability and maintenance issues would be extremely cost prohibitive if not on a grand scale, but I could see the potential in forming a company that provides these type of services (auto, bike, etc.) to many different multifamily units for a set monthly fee, eliminating the need for the smaller landlords to provide the maintenance, insurances or liability issues.
Forcing appreciation value from an economic standpoint by adding creative amenities may be viable in certain markets, but not all. Careful getting into unrelated but complimentary business ventures. What usually happens to small operators is that they become strung out in different ventures trying to make money in unrelated areas without really knowing the other business and capitalizing a venture. There seems to be a tendency to branch out when your business model fails to hit expectations.
Before you venture off in other areas make sure your bread and butter is on auto pilot and performing well. What you know best is usually where your attention should be focused. If you're not careful you'll have a complex and then add a coffee shop, a mini market, a pizza shop and a laundromat, and you'll spread yourself so thin you won't do any of it well.
If you want to rent space, buy a parking lot or rent storage space. I'd not get involved in trying to cater to my tenants to sell them on other services.
I knew (still know him) an insurance agent who owns some rentals. One day he was bragging about being able to approach his tenants for insurance and his success rate in sales. Later on he complained about his vacancies being high, no one stayed very long. I just had to look at him and shake my head. I know he's a pushy type sales guy and doesn't realize when he's a pest.
Most tenants, middle income and upper middle, don't really appreciate leasing from Mr. Heany from Green acres, you take on a different perception as being a wheeler dealer, a Jack of all trades rather than a RE professional.
As to Zipcars, I suppose in congested areas that might be a solution, it won't be in less populated or rural areas. Americans view their vehicles as the anchor of their freedom, you'd have better luck talking folks out of their guns than their pickups. :)
I agree with a lot of what Bill said. I have a short attention span and can easily get sidetracked from my main money making operations. Many people drawn to RE are the same way. I am also an insurance agent that deals with hundreds/thousands of business and property owners so I see a lot of guys that are successful and a lot of guys that are not. While I think improving the tenant experience is a good thing... Most renters are not willing to pay the premium required to justify all the extra "sizzle" items. The huge complexes can pull it off but most small landlords shouldn't attempt it.
My most successful clients find one thing they do well and focus on it. I have a cosmetic dentist that nets about $700hr. That is what he does, he spends as much time as possible hunched over someone's mouth. He is also a big RE investor but he has a broker and PM that do everything. He understands that he may be getting charged retail rates for repairs but it is not worth his time to oversee everything or dig through material suppliers trying to save a few bucks. Even in RE he specializes... 12+ unit properties (to supports on site management) in midtown Sacramento or Portland.
I have other clients that own a construction company, a bar, a racing team and a hodgepodge of rentals. All of the ventures just get by because they can't focus on one thing long enough to make it work.
My opinion is if you have the right team in place that will work on a specific task & over see the ventures associated with the core business, I say go for it. Your business only grows if you are making the upward trend changes with the market to offer what others are not.
But like most of the BP members posted depends on your clients & scale of business. The guys who make the most money are those who know how to build teams for what it is they want to create/add as a business to complement an creative idea, not work at one job, focusing on one thing with no time to think outside the box.
@Al Williamson I like the idea of what you are speaking on. I never heard of these companies until the discussion here on.
All, thanks so much for your comments. You're helping me collect myself. I have an inner-city focus, but what I'm talking about extends to rural areas as a function of population density.
Points to consider:
1 - You don't have to run an internet business to use and save money with Craigslist (a peer-to-peer tool). Similarly, if a housing service provider (HSP) combines vehicles into their offer, they can simply list with RelayRides.com or some other type of web-based car sharing service that handles the logistics, insurance, billing etc. It doesn't have to be complicated to be profitable.
2 - I'm betting in Landlording 2.0 (L2.0), property owners will finally realize they can do business with the entire neighborhood and drop the self-imposed trade restrictions. A shared vehicle, scooter, bicycle, or anything CAN be stationed on your property so users (residents and/or non residents) can access them. Making that mental shift is a game changer.
3 - @Jay S. mentioned the "team" and he's spot on. With these platforms in the Collaborative Economy (AirBnB, VRBO - short-term rentals, TaskRabbit-Errands, Prosper-Crowd Funding, Car2go -transportation, etc.) the "team" is plug-n-play like never before! We just need to be aware of this new toolbox.
4-So as @Joe Bertolino
I'd love to hear your thoughts on this. I'll take your feedback and flesh out my BP Blog article so it'll be more actionable.
As I pointed out, using your tenants to hit on for other offerings may not work well, I'd have a landlord for a lease on property and that's all I'd want them to be involved with in my dealings.
I don't think you're considering the state of mind or concerns a tenant may have in getting involved with their landlord on other fronts. If they rent cars from you could a wreck lead to issues that would effect their lease arrangement? I don't think it's a good idea to put a customer in a position of greater risk exposures. The perception of attempting to serve in various capacities doesn't play to your identified position, you're my landlord, my insurance agent, my car rental company, my grocery delivery, my utility provider....gosh, I sure don't want to cross you, you're in a position to really mess me up having some control over much of my needs. If I rent a car from Avis and that car fails, I can make demands for them to cure my problem, I can raise hell if need be. Why would I put myself in a situation to rent my car from my landlord, would I feel like I could demand problems be resolved without that effecting my lease relationship? No, you begin being the "company store" look the term up if you're not familiar....as in manipulating your employees to do all their business with you and taking advantage of the primary relationship.
If you want to expand your business ventures and open a car rental, do so to the general public and don't target those you do business with in other areas of your commercial empire.
Your real estate dealings are not the type of business that your customers can walk away from without related problems, they can walk away from buying apples from you but they can't walk away from a lease. That means they are a captured party to a far greater extent than your bank offering travel or investment services. There is nothing wrong with exploiting a captured target market in some industries but there are issues in others.
What if your doctor also sold insurance, would only write a script at one drug store, or attempted to influence where you got groceries by telling you what to eat?
You can't simply look at profit potential in everything you do, you need to consider social implications, legal aspects, public perception and liability trying to be all things to a few customers. While it's a workable model for GM or Ford or GE or Wells Fargo, it's not so good for Joe Blow being Mr. Haney with roll out signs on his truck that meet what ever need the customer may have when the opportunity arises. :)
I am a fan of @Al Williamson 's drive to increase income, to think outside the box, and to generate additional non-rental income. His main points are:
Provided it cheaper, more convenient, and hassle-free - where you can still make extra money on it - and it's a win-win.
I think @Bill Gulley has some good points too about how the tenants feel about having all things provided by the landlord. Conflict issues. If something happens with them, etc.. On the other hand, I think Al is saying that some tenants might prefer to have everything "rentable" easily, instead of having to own a car, bicycle, everything themselves..
I like AirB&B, and due to my conversation with Al the other night, I WILL be adding a bike included in my AirB&B rental, or possible separately for rent, because it works very well with my location next to a beautiful lake w/ bike trail around it, and can take it to downtown SF quickly on BART to ride around, bike to downtown Oakland, etc.
I think the biggest issue I have had with all this is the time commitment. Fortunately, Al will be doing a lot of the exploratory groundwork, to save us some time. But we will still have to figure out how much time vs. how much extra money it will make. I'm closing my 4th deal in just over 18 months right now, and I have to say, if it comes to working on a new project that will make a ton, or implementing smaller projects on individual properties, I will probably take the new project.
Al, I recommend you include or rent a TV to your mid-term tenants, rather than not having one. I think people like it, even if they don't watch it much. I was considering furnishing a rental I have. But then I was just thinking about leaving it empty, then negotiating the "rental" of all the furniture, which I would buy, if they want it.
Same kind of "on-demand" idea where I buy the asset, so they can have a "touch and go" life. Although this isn't exactly the "sharing economy" example..
I don't know if implementing shared-economy exchange with smaller assets such as car, bike, scooter, etc are worth the time relative to other things I could be doing in real estate, but I'm looking forward to being proven incorrect by Al Williamson! And am going to try to help him get there..!
My man @Bill Gulley has defined the bottom of the idea envelope. I appreciate the warning and will steer clear. His point, as always, are valid.
Now it's time to look at the top of the envelope so we can get a grip on this trend.
Regarding his Bill's crash example, if a landlord utilizes Car2go or some other carshare company, and an accident occurs, they a well covered. But understand, I'm advocating that the vehicle be stored at your property so it can be used by your resident OR anyone else who signs up as a carshare member. This may make the most sense if you have a parking lot at your multifamily complex.
To be less theoretical, by catering to my niche med students, I've increase the rent on my 1 bd apt from $625 to $940/mo. Specifically, so far, the net monthly increase is $275.
I'll share the details of how I did it and the costs after I have six months of experience under my belt.
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