How Do We Make Real Estate Leasing Hassle Free In The Coming Years?

Leasing is one of the important aspects in real estate. Prominent across all the four segments – land, commercial properties, residential properties and industrial spaces – leasing is preferred by a majority of the population, who feel leasing a space or a property is more convenient than renting it out.

As far as commercial leasing in the US is concerned, it was valued at around $216bn in 2019. The reason why we’ve predominantly mentioned commercial leasing is because most business owners look to fix on a space or property for a longer tenure. Retail stores, commercial complexes, shops and other spaces are often leased for a minimum of ten years in a majority of the cases.

However, the duration and the rent are probably the last of the concerns in this space as every stakeholder in the cycle involved faces troubles before coming to talk about contract terms and amounts.

Like you would have read in one of our previous posts on the challenges in the rental space of our Digital Transformations in Real Estate Series guide, the hurdles start right the moment someone intends to lease a space or property out for diverse requirements.

A lot of the problems are common and similar between renting and leasing a property and to help you give a better idea of what they are about, we will break them down for you.

We will walk you through the challenges faced by owners, by tenants and by real estate agents like usual. So, all you have to do is keep reading to find out if your concerns are addressed in this guide and solved with the assistance of technology.

And if you haven’t been following us so far, we recommend getting started with the first post of the series to get a comprehensive picture of the subject, the challenges and the solutions we are dealing with.

So, let’s get started.

Challenges By Owner

Unlike renting a space, leasing involves long-term commitment. And because of this extended duration of occupancy, the gamble and the stakes are higher for owners and tenants alike. But for an owner, this appears to be a little more tedious as it’s the property’s infrastructure that’s at stake. That’s why a lot of owners are hesitant about offering their spaces in a lot of scenarios and take their own sweet time to get back with a response. And this is exactly where we are going to start identifying our challenges from.

Resident Screening

There is no way an owner gets to know the person, at least on a superficial level, before they could offer their property on lease. While job security, identity numbers and cards, payments and more can be shown on papers, no owner could gauge the attitude of a tenant and predict if they would be vulnerable to any discomfort during the entire period of stay. An owner’s mind is mostly wary because of this uncertainty.

Criminal Screening

Like we mentioned, landlords hardly have any idea of the background of a potential tenant. From their social circles to any criminal history, it’s hard to uncover details about them to actually decide if they could lease their property to them. But with the help of criminal screening processes such as thorough background verification, landlords can determine if their potential tenants have earlier involved in violence, vandalism, sex offence, financial crimes or more.

Fraud Prevention

Most owners realize they’ve had an encounter with a fraudulent incident after they’ve had that encounter. Such instances are mostly retrospective in nature and what follows are only guilt of not having been able to study the tenant or the occupant better before letting the property on lease.

So, in most cases, frauds such as fraudulent documentation, transactions, activities and behaviours are never identified by owners unless they’ve lost a little something in the process. This not only takes a financial toll on them but mental and emotion too.

Online Payments

The leasing sphere still operates on an old school canvas with no tech advancements or implementations whatsoever. Most owners still don’t encourage online payments or there are still no leasing management platforms to streamline processes associated with leasing. That’s why tenants still have to resort to cash or cheque-based payments for as long as their contract is valid.

Search For Genuine Tenants

One of the most common concerns faced by landlords is finding genuine tenants who would not only take charge of the management and maintenance of the property but have a good rapport with landlords as well. Genuine tenants are hard to find and when found, they are either floating populations who stay for a quick few month. Such short visits also increase expenses from an owner’s perspective. These aspects make it tough for landlords and make them involuntarily be skeptical in letting properties.

Process Standardization

Like we mentioned with payments, a lot of processes are still executed using age-old mechanisms and tools. Most of the tasks such as documentation, property visits and more are manual and time consuming. Also, they are chaotic with no proper sequential progress. They are mostly ad-hoc, giving little clarity to all stakeholders involved about the next step. With no checklists or standardisation, the leasing sphere has tons of scope of improvement which when done can make the lives of everyone simpler.

Constraints During Change of Management Or Resources

Because leasing is a long-term association, commercial or industrial spaces are often subjected to management changes. By management changes, we mean the property or brand tenants had leased under has either been changed or acquired. And because of this, new managers, stakeholders and others come into the operation and management aspects. With these changes, the new management is often clueless of previous transactions, details, and insights and takes more time to settle in than actually required. There is no knowledge transfer happening or worse, there’s no portal or space for the new management to look for details and records maintained by previous owners.

Lease Terms

Lease terms dictate the details associated with

• The duration of association
• Payment methods
• Payment tenure
• Specified amount
• Termination clauses
• Security deposits
• Responsibilities of the landlord
• Due date for rents
• Breach of agreement consequences
• Address and other vital details.

Once a contract is established, the lease terms mostly cannot be changed for as long as they are valid because any changes during the tenure is a tedious process involving re-initiation of paperwork and procedures. This remains one of the major hurdles in the leasing space till today.

Besides, there are different types of leases as well. For instance, double-net leases, gross leases, single-net leases and triple-net leases are some of the leasing types in the commercial leasing segment. And when you start thinking, you would realize that each leasing type comes with its own set of details, inclusions, exclusions and terms.

Advertisement

Advertising is all about letting the world (or at least the locality or city) know about the availability of a particular property in the market. When a property is made available, interested and potential tenants can reach out to the owner to initiate a contract. But this process of letting the world know comes at a price with its advertising expenses.

From print and conventional media to social media, an owner can choose to advertise on any of them, with varying prices and procedures. Usually, the owner shells out from their pockets for advertising purposes, which involves further subtasks like copywriting and designing.

Challenges Faced by Tenants

They say every story of two sides. So far, we’ve been discussing the story from one perspective. Let’s flip the coin now and understand some of the challenges that tenants face when they are looking for a property to lease.

Search for Relevant Property

From a tenant’s perspective, a property is not just an infrastructure, it’s a medium to achieve peace of mind, their ambitions or goals. From the perfect home people dream of setting up after moving into a city to the ambitious shops or stores they intend to launch to make profits and make it big, leasing properties are the first step towards a better life.

But current mechanisms hardly foster a seamless environment for these incidents to unfold. Property hunting is one of the tedious processes in leasing as people find it difficult to find the right property that could fit into their budget, requirements and geographical demands. And with this process involving manual property visits, tenants usually settle for properties after they start feeling exhausted and tired after repeated visits.

Availability of Relevant Information

There is always a disconnect between the information a potential tenant receives and how the actual property turns out to be. The information mismatch could be the property pricing, distance from public transport, terms and agreements, age of the property or anything. However, it is this mismatch that stalls the entire leasing process for tenants as their perception of the property in mind is completely shattered by reality.  This is a psychological barrier that further adds stressful moments in the minds of property seekers.

Online Payments

This is similar to the challenge owners face. There are no convenient ways tenants could adopt to pay their monthly rents and keep defaulting at bay.

Process Standardization

From filling forms every single time and sending valid documents for every visit, tenants have to perform a series of redundant tasks for each property they are interested in. And several intricate processes are unprecedented and chaotic, which further adds to the agony of tenants while hunting for properties.

And because this is a new niche for most seekers, there is also lack of insights or experience in the picture to be familiar with the entire process of leasing. And the intensity of consequences due to the lack of process standardization in leasing increases with the differences in the type of property to be leased. Commercial leasing has more intricacies than residential leasing. And comparatively, industrial leasing is more complex than commercial leasing because of the scale of infrastructure and pricing involved.

Lease Terms

Lease terms are fixed, non-negotiable and linear in most cases, putting seekers in a tight spot during property hunting and visits. These terms cannot be tailored and are often rigid with owners having an upper hand.

Challenges Faced by Real Estate Agents

While every story has two sides, there is also a neutral side. And perspectives are very different from a neutral aspect, which in our case of real estate leasing is the challenges faced by real estate agents. Intermediaries assisting both tenants and owners to connect and come together, these agencies and agents face a different league of hurdles unique to their market segment and operations.

Let’s look at what they are now.

Property and Employee Management

The credibility and the popularity of a real estate agency depends on the arsenal of properties and agents they have with them. The more the properties, the more the options for potential tenants. And the more the agents, the higher the chances of conversion. But all these come at a price and effort. These agencies have to consistently maintain this arsenal of talent and portfolio to be sustainable in the business. And for the maintenance of both involves expenses, recovering which is a gamble by itself. And let’s not mention the amount of paperwork, process and workflows that come in managing both.

Property Management

Elaborating on the previous point, property management is all about maintaining the necessary details of a property for potential seekers. This includes the pricing, locality and other crucial details that help in the decision-making process. Any change or modification initiated by owners should immediately reflect on the details provided. Otherwise, it would lead to information mismatch like we just saw. Property management also includes contacting interested leads, sending information such as brochures or emails, scheduling visits and more.

Commission Payments

A real estate agency can function well only if its agents are taken care of and one of the first stages in this is paying out their commissions on time. However, a lot of agencies still follow obsolete methods such as issuing cheques or making cash payments instead of digital transactions. The process of calculating commissions is also manual for all agents in the talent pool, giving chances to errors and delays.

Process Standardization

Being the intermediary for both tenants and owners, the number of processes agents have to handle and tackle are 2x. They have to attend to the requirements of tenants and ensure the demands of owners are met as well. With the processes in leasing already being chaotic, this just throws everything all over the place for agents. And that’s exactly why at least once agents fumble in their contacting process by calling the wrong number, sending the wrong property details or more.

Global Lease Portfolio Management

While localized agencies find it tough to maintain their portfolio, global agencies have it worse because of their international operations. For an agency that has obsolete systems in place, managing a global portfolio is a nightmare, where agents have to manually contact owners for updates and changes or speak to potential tenants about their preferences and change of mind. This takes up a major chunk of the work time for agents, leaving them with little time to actually indulge in work that matters.

Marketing and Lead Generation

While several real estate agencies have a small team of lead generation and marketing experts today, challenges still persist because of their modus operandi. Increase in the number of team members has little to no impact in getting things done effectively. It’s all about how challenges are approached, leads are generated, campaigns are run, reports are studied and corrective measures are taken. Unfortunately, such systematic approaches are not prevalent in several agencies today. Manual systems are still in place.

Universal Solutions To The Previous presented Challenges

Digitization is the way forward in real estate. Realtors, agencies and companies believe that digitization can tackle and solve most of the prevailing challenges in the space and even predict and stall the cropping up of newer hurdles.

As a first step towards a productive and efficient real estate future, let’s look at some of the most practical solutions available at disposal today.

3D Models and Visualizations

With the help of BIM, realtors and companies can make the entire process of designing simpler by taking them digital. 3D rendering and visualization allows developers to pinpoint and feature every minute detail about a property elaborately for their exact recreation.

From a tenant’s perspective, 3D models and visualizations help them have a better idea of the property they are interested in and schedule visits only if they actually love the visualizations. The lack of ideal and authentic visuals of properties is what’s making property hunting time consuming and this can break that barrier.

CRM Implementation

All the hurdles associated with processes standardisation can be fixed with an effective CRM implementation. From facilitating an ideal space for the search and display of properties to taking care of processes that follow, tons of tasks can be automated, simplified and optimized for performance, speed and efficiency.

To give you an idea of the aspects a CRM application touches, here’s a breakdown below:

• Property Search Engine, which is similar to Google but for real estate properties. A good property search engine is intuitive, case-independent and smart, making users instantly find what they are looking for.
• Invoices and billing – to automate the entire process of creating and sending invoices to sellers and buyers. The specifications and details vary for different stakeholders and a CRM ensures these tasks are taken care of.
• Deal and Commission tracking – that simplifies the compilation of payouts for different agents and automatically initiates the transactions. Such features can also be used to assess the overall team morale, best performing agents, identify loopholes in operations and offer training wherever required.
• Automated Document Generation – this includes personalized brochures, banking procedure requirements and more that vary dynamically.
• Seamless integration to the website or portal is crucial in deploying an efficient CRM as this establishes the foundations for all automations, streamlining and other processes to get started.

Automatic Data Updates

Portfolio management (both localized and global) will never be a constraint with the integration of an enterprise system. With this, all stakeholders involved such as agencies, tenants and owners will have an app or a software solution that will allow them to make and view changes to property listings in real time.

For instance, if an owner simply updates property status as under renovation on the enterprise software, the change reflects on the portal in real time. This means people who are about to schedule property visits can either wait or skip, saving time and efforts of everyone involved.

Smartphone Apps

Extending the feature of the previous point further, a mobile app development brings everyone on the same page. Seekers can look for properties of their choice and preferences, owners can modify details about their properties and connect with only those they find credible and agencies can help maintain the entire ecosystem. Smartphone apps pave way for instantaneous processes and updates.

Besides, advanced technologies like artificial intelligence, augmented or virtual reality and more can be deployed to help tenants get better property recommendations, schedule virtual property visits, view and upload documents, have a checklist for different property leasing contracts, chat with owners and tenants, get questions answered from experts and more.

List and Search Services

Property listing and searching services are inevitable in the current scenarios as the world is moving towards a more agile environment. Instant gratification is the norm today and property list and search services offer just that. Moving away from advertisements and classified listings, people want to have digital solutions where they can find images of properties, have maps to calculate their distances from work and home and do more. And such listing and searching services serve these purposes.

Peer-to-Peer Leasing

This type of leasing platform keeps intermediaries and agents at bay and connects potential tenants and owners directly. Imagine eBay for properties. People could list their properties on one side and they could also hunt for properties on the other side. Directly establishing connections with owners/tenants, image transactions, contract initiations and more are done by tenants and owners with zero involvement from third-party associates.

Inspection Management Software

Exiting a property is as stressful as moving in. A property which has been exited after years of occupancy is prone to damages in terms of visible scratches, paint jobs, wear and tear and more. And if a property is furnished, there are additional damages or usage as well. When exiting, it has to be ensured that the property is handed over at an adequate quality for next tenants.

Legally, there are several aspects in terms of contract termination and checklists before exiting as well. These are manual in most cases but with digitization, they can be done online, monitored online and updated online with ease. Property owners need not come down to the property for final inspection but simply get a completed checklist with proofs from tenants. Inspection software can also streamline return of deposits, considering factors such as damages to properties and more as well. It’s a win-win for everyone involved.

Transaction Management Software

A transaction management software can streamline the hurdles associated with rental payments. When incorporated with an enterprise software, these can facilitate online payments, automation of payments on or before due dates every month and more. These software applications can also be used to track and retrieve reports on payments and all transactions that have happened to make exiting the property easier.

Internet of Things

Or IOT as we fondly call it, it is connecting multiple smart devices with each other to get more things done. These are not futuristic anymore as commercial availability has increased over the last few years. Home automation solutions are some of the simplest examples of the Internet of Things.

As far as their deployment is concerned, they can be installed at commercial spaces, industries and residents for the automation of equipment, managing energy consumption, control illumination, optimizing safety in terms of smart locks and safes and more. Because they come with an app, everything can be tracked and monitored in real time with access to advanced charts, visualizations and predictions.

Tenant Screening Technology

Like we said, leasing is a long-term affair and the consequences of bad tenants are often retrospective in nature. To avoid these, solid tenant screening technologies could be implemented. This will allow tenants to submit an airtight profile and supporting documents such as bank statements, credit scores, CIBIL scores, social profiles, verification documents from work, recommendations and their supporting documents for a seamless screening process. With tight algorithms and scoring mechanisms, the screening process can ensure credibility of applicants and peace of mind for owners.

Lease Revenue Management Software 

A lease revenue management software allows landlords or agents to conveniently come up with lease pricing for a property based on a number of prevailing conditions and criteria. These systems eliminate assumptions and opinions out of the decision-making process and deliver results or prices that are based on facts, data and logic-based calculations.

Broker Back-office Solutions

Broker back office solutions operate to make the lives of property managers and agents easier. These solutions take care of a myriad of tasks associated with managing a property. Some of them include:

Development of marketing collaterals such as brochures, presentations and more

Marketing aid and analytics

Maintenance and support such as responding to calls and queries, generate and process work orders, organize follow up and feedback calls of customers and more

Document management

Exit interviews and checks

Staffing and tasks allocation

Payroll processing and more

In simple words, these solutions allow agents to do a better job at what they are good at, leaving redundant tasks to the back-office executives.

Marketing Automation

Today, marketing automation is one of the swiftest growing industries with over 51% of the companies around the world implementing it. Marketing automation takes care of redundant tasks associated with marketing and sales such as market segmentation, competition analysis, demographics analysis, trends analysis in consumer trends, pricing and bidding strategies, reputation management, email marketing, social media marketing and more. With a solid marketing automation tool, agents can simply focus on converting a qualified lead to sales without having to worry about anything else.

Predictive Tools

Predictive tools can be incorporated across a range of aspects we have mentioned so far and in some of them predictive tools are default features. IOT, for instance, has predictive mechanisms in place that offers consumers adequate information on how much energy their property would be consuming in the future, water availability, probably equipment malfunction and similar.

Predictive tools can also dictate how likely a tenant could default payments or breach contract terms. Even in marketing automation, predictive tools offer insights on success rates of campaigns, email open rates, bidding prices and more.

Reporting Tools

Any transaction and every action taken on these enterprise software and applications can be tracked, monitored, accessed and retrieved as reports for analyses and observation. The beauty of reporting tools is that they are layman-friendly, which means elderly owners or millennials could find inferences easily from such reports. Reporting includes transaction insights, commission payouts, campaign spends, campaign reach and conversions, number of properties in portfolio with specific patterns and details and more.

Trend Analysis Tools

Trend analysis tools moderate pricing of properties by giving owners and agents an extensive idea on the market value of properties listed and current trends in rental pricing. These systems consider tons of factors such geographical value, economic volatility, happiness index and more to come up with pricing standards. This ensures tenants don’t end up paying more than what the property is worth for and owners don’t underquote their properties.

Case Study

One of the most successful and busy online marketplaces for real estate, Loopnet is a market leader that provides optimum information for its users on for-lease and for-sale properties in the US and Canada. From commercial properties to residential apartments, Loopnet offers information on all categories of real estate spaces.

When the pandemic hit the world, the real estate spectrum experienced a downfall with no personal property visits due to lockdown restrictions and protocols. However, Loopnet understood that solid tech intervention and implementation could ensure business as usual for the company even when bombarded with testing conditions.

It integrated audiovisual technology into its operations and rolled out CoTour that allows stakeholders and potential tenants and owners to check out properties virtually. To facilitate this, it deployed 3D virtual tours, HD video tours, aerial tours powered by drone videography, architectural photography and more. CoTour accommodated up to 20 users at once for virtual visits, giving everyone enough space for discussions and conversations on scheduled properties.

Besides, tech implementation also brings in blockchain to work in tandem with companies like Loopnet. Blockchain’s decentralized and authority-free mechanism allows for transparency and efficiency. This also means that it can be incorporated into the development of smart contracts for a variety of purposes.

One such implementation is the real-time price identification of properties. Currently, most properties are valued based on the details mentioned on the previous years’ balance sheets. This is not updated information in any sense. However, with blockchain, companies like Loopnet can intervene in offering the most updated prices and make changes to smart contracts in real-time. This paves the way for more liquidity in workflows and processes.

Future of Leasing

The leasing space with its obsolete mechanisms has an exciting future ahead of it with tons of tech deployments and integrations. We are looking at features like blockchain to make the entire process associated with leasing contracts more decentralized and fool-proof.

We are also looking at advanced artificial intelligence algorithms for added automation and better recommendation engines. Voice search will be predominant in terms of property search and listing as well.

Besides, wallet-based payment systems can also be deployed. Or even further, transactions could be based on cryptocurrencies as well.

Wrapping Up

It’s a world of possibilities out there considering the fact that leasing remains untouched for an overhaul for decades. This is the space for revolutions and game-changing ideas. This is the time for pioneers to emerge and that could be you reading this.

If you’ve always been into real estate and leasing, here’s your chance to get an enterprise app developed for your business. Or, you could also bring in automation or advanced digitization into your business for incremental profits and efficiencies.

What we suggest is getting in touch with us for a personal conversation on what solution would work best for your real estate business. Our tailor-made services would ensure you have the best returns on your investments.

Get in touch with us today.