When most people consider property investment and management, they likely think of purchasing a property that’s run-down or undervalued and doing some renovations with the goal of either financing or flipping it for a profit, or investing in a new-build property if time is of the essence.
These are valid property management tactics, sure, but if you’re interested in trying something different, you’re in the right place. There are several lesser-known property strategies that can take your property management business to the next level if you know how to properly harness your skills, knowledge and connections. Here are three key strategies that we have employed to scale our property management business – and how you can use them too.
Rent-to-Rent Serviced Accommodation (R2RSA)
Rent-to-rent, or the concept of leveraging someone else’s property by renting it from them and then maximizing a greater return from the property, is a highly effective strategy that has enabled thousands of property management businesses to earn six or seven figures in a matter of months. The best way I’ve found to do this is to rent a property of a landlord and market it for short-term rentals at a nightly rate. Customers can book a stay at the property for anything from two nights to three months.
When it comes to the R2RSA model, your success will be contingent on your research and investment in the property, as well as the standards of customer service and cleanliness needed to protect your investment.
Leverage your experience and skills as a real estate agent to ensure the quality measures needed to create a satisfactory experience for clients, conduct market research to ensure you’re making the right investments in areas that will best serve your clients’ demand, and diversify your portfolio of properties to ensure you always have a cash flow coming in.
Lease Option Agreements
Work with a property owner to agree on a purchase price for their property based on current market value, but instead of purchasing immediately, agree on a time frame (typically 5-10 years), after which you will take possession of the property. In the meantime, you will pay a set sum of money toward the property to the current owner.
If property owners want long-term rental security from a tenant that wants to purchase it (you), they’re more likely to retain the property and have a vested interest in keeping it in livable condition.
This ensures that when you do purchase the property, you won’t be inheriting a problem. The benefit to you is that, for all intents and purposes, you essentially own a property without any upfront costs, and with an agreed-upon value that will likely give room for a significant capital increase over the lifetime of the option agreement.
This isn’t really an investment strategy, but it bears mentioning because it’s a powerful funding strategy that can boost your networking capabilities and allow your other property investment strategies to flourish if used to its full effect.
By leveraging your industry knowledge and connections, find viable investment opportunities (such as an R2RSA or Lease Option Agreement) for other investors, and charge a nominal fee for connecting them to that opportunity. You can easily do this by tapping into your network of former clients, lending officers, fellow real estate agents – pretty much anyone you know and trust to supply you with great opportunities to which you can connect others.
Fees for sourcing usually range from $1,000-$5,000 dollars, depending on the quality of the deal. With one or two sourcing deals a month at this rate, you can replace at least a large portion of your income and really focus on building your property business and portfolio. This is yet another way you can support the scaling of your property management business.
By leveraging these three strategies, along with your industry references and experiences, to grow your property business, you will be able to reap the benefits of an industry just waiting for you to take the reins and begin to turn a meaningful profit. These strategic and growth-oriented approaches will help your business scale quickly and thrive, even during challenging times.
James Murphy, Business Coach and CEO of Opulent Living Companies, strives to offer opportunities for real estate businesses to secure 3-5 year rental agreements. His vision is to offer short-term accommodations that compete with the best in service, design and comfort. James is also devoted to eliminating all of the stress of renting a property and improving profits for the property manager. For more information, please visit https://jameszmurphy.com/