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This post was updated Apr. 4, 2024.
Whether buying a home to live in or as part of an investment strategy, the ability to sell it for a profit is critical. When market conditions make such a sale impossible or unwise, property owners often hold on to units and rent their spaces out.
Welcome to the world of “accidental landlords” — people who never intended to rent out their properties and often have no experience running this kind of business.
Professional property investors have the expertise to navigate an unexpected business model. Still, it can be a major burden for people renting out their homes or apartments because they must deal with everything from maintenance to property tours to collecting rent.
The good news is that these accidental landlords can leverage robust, user-friendly software platforms to succeed (and even excel) in an industry they never wanted to join.
In any market, owners want to buy low and sell high. When housing prices are up, people who own homes want to sell, and with housing prices in a slump, homeowners are hanging on to their properties for fear of losing money on their investments.
As mortgage rates rise, existing property owners are reluctant to give up 3 percent mortgages in a 7 percent market. And because young people increasingly prefer renting to buying, it is often easier to find a renter than a buyer.
Challenges for accidental landlords
Keeping a home in saleable condition creates overhead, and a home that one cannot sell provides no revenue, forcing property owners to rent these spaces out to generate a profit. As renting causes a property’s value to depreciate, this is rarely ideal for owners whose ultimate goal is selling.
Many cities and counties have strict renter protections, which can prevent owners from selling occupied properties when the market is strong. And while residents deserve fair treatment, these regulations can trap landlords in unwanted long-term business relationships.
Ultimately, the biggest challenge for accidental landlords is the unexpected nature of their business. Most of these property owners never meant to rent their properties. Rather than net a profit from their original investment, they must treat their property as a going concern and learn how to succeed in a new industry.
Renting out a property takes much more than handing someone a set of keys and letting the money roll in every month; owners must provide upkeep, prevent churn, bring in new residents quickly, and ensure the rent comes in on time and in full while maintaining positive relationships with residents.
New solutions
The good news for accidental landlords is technology remains the great equalizer. Professional software platforms are growing increasingly easy and intuitive to use, requiring no more expertise or industry experience than the average mobile phone user. With just a few taps of a smartphone screen, even the most accidental of landlords can turn their unexpected business into a successful enterprise.
Many rental platforms have easy systems for inspecting properties, tracking issues, and scheduling and paying for repairs. These portals also allow for easy communication with residents. Residents can log any maintenance issues and upload film or video of the problem, keeping landlords informed without a messy chain of emails or calls.
Rental software also features intuitive payment systems that include recurring payments, trackable recordkeeping, banking integration, and more. The right system can streamline and smooth any interactions, keeping track of leases, rental agreements, and payment histories.
For many property owners or managers, arranging tours for potential residents is a major challenge. Finding a convenient time to show the property that suits both owners and renters is difficult, and many visitors feel pressure if an owner or manager is present. Thankfully, residential software also includes apps and platforms that make touring much easier.
Although online resources provide extensive information, most real estate consumers seek the tangible experience of viewing properties in person before making a decision. Self-guided tours allow visitors to arrive at any time, see any number of properties, and follow their own path through a space without wasting valuable time from a manager or leasing team. These systems often allow prospects to apply for a lease on the app once tours are concluded.
Very few people want to end up in an industry by accident. Owning and renting out homes is a fulfilling and lucrative career for many professionals who are often proud to provide a public good. But doing so successfully requires training, expertise, and passion.
With new and evolving software solutions, any landlord can thrive in the rental market by letting automation, big data and smart spaces do much of the heavy lifting.
These tools can help families make the most of a home they cannot sell or turn a choice to delay selling into a gateway to a whole new industry. With the right digital tools, renting out a property can become a happy accident.
Andy Larson has 25 years of experience in the commercial real estate industry which includes 20 cutting-edge technology solutions for the multifamily sector. In addition to leading Tour24’s revenue team and strategic partnerships, Larson is also responsible for scaling the company’s reach and helping Tour24 meet demand. Connect with Larson on Linkedin.
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