Tips on How to Start a Rental Property Business

Sep 16 17:18 2021 Trayvon Taylor Print This Article

Most people deal with rental property at least once in their lives. 

Just imagine, these days in the U.S. 42 million people rent their properties. In Europe, the rental statistics are also impressive – 44-68% of people prefer to rent a property.

At the same time, the pandemic changed the way people work. The home became the place where people spend most of their time.

The rental real estate market is increasing rapidly along with the entrepreneurs actively investing in real estate.

The new situation created two leading rent trends in 2021: a house in the suburbs,Guest Posting where you can breathe fresh air and take a break from the hustle and bustle; and rentals of commercial property for health organizations. As a result, the rental property business is in great demand.

It has become clear that the rental market won’t be able to keep up with demand.

The rental market is projected to grow at a CAGR of 8% from 2021 to reach $2.216 trillion in 2023.

 

Rental Business Model

 

To effectively build your business in the rental market, you need a platform for individuals or companies to rent the types of property that suit them. The most famous rental property platforms around the world are Airbnb, Virbo, Respite, and Booking.

However, before you start your rental property business, you need to consider business models that will help you successfully monetize your product.

In general, the three most popular monetization models are fees, advertising, and premium features.

 

Fees

Rental platforms may charge a fee for conducting a transaction. Airbnb uses this method of monetization by charging commission fees from both guests and property owners. The amount of the commission directly depends on the rental price: the higher the price, the higher the fees.

 

Ads

Advertising as an engine of trade is an attractive monetization model for rental property platforms. Real estate rental platforms can collaborate with airlines, travel and car rental agencies, or cargo carriers.

However, don't forget that an excessive amount of ads negatively affects your loyal audience. We recommend using ads only when your target audience begins to grow.

Zillow and Trulia use advertising on their sites, but make their ads as customized and native as possible for users. For instance, their ads are connected with interior designers, retailers of home organizations, general contractors, automotive products and services, insurance, and other related services.

 

Premium Services

If none of the above models suits you, you may consider providing premium features to your customers for an additional fee. For example, you can use a premium subscription to give access to exclusive lists of the latest housing, discounts on rent, and tourist events.

Premium services have a positive impact on users' attitudes. Such platforms as Redfin and Housing.com have successfully implemented this system and are receiving a positive response. Moreover, due to paying for some rare exclusive access, users feel more privileged, as compared to free access visitors.

However, you can focus on two or more types of monetization models of your rental platform at once. This will work effectively for the different needs of your target audience.

 

How to Start a Rental Property Business: 5 Key Steps

 

In any business, the first steps are the most crucial since they build the path for the business going forward. Their thorough review is what will pave the way to success. 

I have outlined 5 main steps that will help you better navigate the sequence of project implementation on the market.

 

Conducting Market and Competitors Research

Even if you have an exciting idea for the rental business, you need to conduct market research and study your competitors. I advise you to start this stage BEFORE development. It’s better to have enough time to assess the risks and find solutions that are beneficial for you.

At the research stage of your future rental platform, you need to analyze the following. As usual, it starts with the discovery phase, which seems like a simple and easy step at first, but if business owners underestimate it, the following steps will be in the wrong direction. For many business projects, this phase is associated with significant financial savings.

The discovery stage is all about money-wise product development, which involves various aspects of future product development, such as:

 

  • Deep analysis of the project idea
  • The technology stack that is the best to use
  • Platform architecture and its interaction
  • The appropriate amount of functionality that needs to be implemented
  • Pain points of customers that are better to avoid or upgrade
  • Problems or limitations in the industry
  • User journey and wireframes

 

It sometimes happens that entrepreneurs infuse their soul into an idea and forget vital details. Without the discovery phase, it's easy to get into trouble. The project implementation gets nervous and rambling. In simple words, this stage is all about avoiding failure in future development.

  

Creating a Unique Value Proposition

The main goal for every new business is to win the competition in the market. This means creating some unique proposition that brings value to customers that competitors do not have.

If you are making real estate auction software, a unique feature will be bridge loans as a type of short-term credit. As for other platforms, a rental business can provide some kind of bonus system if users visit the website often.

Currently, many people worry about their health and safety. It would be a good idea to cooperate with unusual hotels, such as Ottilia in Copenhagen. This hotel is unique because all their rooms don't need to be cleaned by outsiders. They already have an automatic built-in disinfection system, which is the best solution for the current pandemic situation.

 

Deciding on the Type of Development

When you already have a great idea about creating your real estate rental platform, decide which type of development is better. Many business owners hesitate about which way to choose in-house or outsourcing teams. This happens because entrepreneurs don't know the exact difference between each type.

 

Let's look at the main business practices worldwide:

 

In-house development

Having an in-house team means that your company will have to manage and control all the processes. As a rule, this requires more time and human resources to find and manage a team. Mistakes at each stage will cost not only money but also time.

 

Outsourcing

If you choose to outsource development, you will have less personal control over the development process.

However, if you find a reliable vendor, you will save significant time and money. There is a larger pool of talents and the opportunity to hire top developers for a reasonable price.

Usually, there is a project manager between you and your outsourcing partner. The project manager will report on the work done when you need it.

When choosing a business practice for your rental property platform launch, you should focus on the following:

 

  • Do you have enough time for recruitment?
  • Do you have any experience in selecting specialists?

 

If entrepreneurs want to reduce the delivery time and provide them with top programmers in a short time, it’s vital to look for an experienced outsourcing company.

  

How to start a rental business with maximum benefits

It’s vital to ensure that you face an experienced partner with proven expertise and good ratings. Here you need to turn to proven platforms, such as Clutch and GoodFirms, read the reviews of previous customers, and research what solutions the company provides.

Don't neglect personal communication with companies that used to cooperate with your vendor. They can share their valuable experience.

 Here are the ways to start working with an outsourcing partner:

  • Study the best companies providing services for your niche and that have proven expertise.
  • Search the reviews of past customers, and contact them to discuss the details.
  • Choose 3–5 best hiring
  • Call them or talk to them in real
  • Make sure that you have similar values.
  • Choose the best price and quality option for your needs.

 

MVP Development and Product Launch 

Having decided to start your own rental business, I advise you to launch your project with a minimum viable product (MVP). It is the first version of a product with a minimum set of core features enough to create value for early customers and gather feedback for further development and improvement.

 

What benefits do you get from an MVP?

1) You get a version of your product with the main functions. It won't be very expensive, but you will already be able to see and analyze the product in action. 

2) If you want to attract investors to your rental product, then an MVP is the best option for presenting and attracting future investors.

3) With an MVP, you save a lot of time and money, because the development process isn’t expensive, and core features implementation is faster.

 

Having an MVP product, there is a great chance to launch your project first among other competitors.

 

Getting Customer Feedback

You have just launched your product, but the development process is not yet fully completed. It’s necessary to analyze your real estate property platform by getting feedback from your customers. It is worth spending time and studying the feedback from users, as there will be many helpful tips on how to improve your product.

The entrepreneur will have information for features that work well or what needs to be fixed.

 

5 Core Rental Property Platform Features

 

In the rental market, you can see hundreds of platforms with different functions that are attractive to particular customers. However, each of them has basic features that are customized for certain types of users.

What are the main functions you need to implement when launching your product?

Below, I have collected the most common functions of the rental property platform.

 

Buyer Registration

As usual, the registration and log-in processes should be performed by requesting marketplace users' email addresses, names, phone numbers (optional), and passwords.

However, many users may find it complex and time-consuming to fill out a form, and they will want an easier (but, according to some experts, less safe) way to register on your platform.

Many platforms allow logging in via social networks, such as Google, Facebook, or Twitter, to save time for their users.

 

Property Listing 

If you are starting a rental property business, you’ll always have three user roles – property owners, tenants, and admins. When launching a website, it is necessary to diversify and separate some of the functionality for each type of user.

The property listing feature allows real estate owners to add their properties and information after creating their accounts. For example, the property owners can describe their property in detail, add a photo and specify all the necessary data.

 

The information should be as detailed as possible:

 

  • The number of bedrooms, bathrooms, amenities
  • Square footage
  • The story about the suburbs, etc.

 

Photos should be clear and high quality to attract the attention of tenants. It is important to set certain requirements for the resolution and format of the photos that will be uploaded.

As for tenants, they can search for rent using an advanced search with specific parameters that they set themselves.

Another good idea is to allow saving the visited pages and finding similar options in terms of parameters. 

These relevant recommendations feature will help your users find what they were already looking for faster. The additional value of this feature is in creating a positive user experience that will help keep your customers on the platform until they find the most suitable option. I suggest making sure that the recommendations won't be hidden somewhere far away on the platform.

  Search and Navigation

This feature will help your users easily find a property that satisfies all of their requirements. It is only necessary to specify the desired parameters. Here, business owners should be careful not to overload users with useless functions that will later create an outflow of visitors.

I advise you not to add unnecessary parameters, as these can make users feel uncomfortable. It is crucial to add filters such as the built year of the property and its size in square feet. It’s necessary for “internal customers’ comfort” to know the number of beds, bathrooms, the availability of appliances, and other amenities.

Location plays a significant role in renting. Your users should see on the map where their rental object is located to make a final decision. The map should also show places near the desired object – supermarkets, places of public recreation, museums, and so on.

 

Property Page

This must-have feature will determine the attractiveness of your business to the audience. The real estate page is one of the most vital pages to create.

On this page, you need to place all the detailed info about properties, including photos.

It would be helpful to introduce specific parameters for uploading photos. You can set a limit on photos – for example, from 5 to 15 images. A customer-engaging function can be a 3D virtual tour of real estate inside and outside the house. You can also add the function to upload videos.

When users choose an object for rent, they need to visualize their future premises. Make sure your users have access to all the necessary information to make their final decision.

 

Messaging

Your rental property platform is an agent/mediator between the property owner and the tenants to provide information to both sides. Both owners and tenants may want to ask some questions and discuss rental details.

The quick and well-built communication will help to attract a bigger number of loyal users and push them to make decisions faster.

It is also a good idea to make an internal chat with the property owner, where admins can ask a question privately.

Whichever option you choose, you need to focus on your target audience and their needs.

 

Conclusion

 

Despite the economic crisis associated with COVID-19, the rental market hasn't lost its force and continues to move forward confidently.

Nevertheless, business owners should pay attention to the changing trends in the rental market. There are two extremely popular rental trends in 2021: country houses and premises for medical centers and hospitals.

However, the rental property industry remains profitable and successful for those who make it digitalized and functionally attractive to their customers.

 

To sum up the above, creating your rental platform is a challenging task. But your rental business can prosper if you:

  • Explore and analyze your niche and competitors.
  • Come up with a value for the audience.
  • Choose the best business practice for your rental property project.
  • If you choose the in-house team, be ready to hire, control, and manage them.
  • If you choose outsourcing practice, find an experienced vendor who can provide you with high-quality services.
  • Build a rental platform with core functionality.
  • Launch your platform and collect customers’ feedback that helps to improve the business.

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About Article Author

Trayvon Taylor
Trayvon Taylor

Trayvon Taylor is a Full Stack Developer in Sloboda Studio, Top Software and Application Development Company in Eastern Europe specialized in Custom Real Estate software and Marketplace creation. We turn Application ideas into reality by providing unique design and various Web Development Services.

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