Gas prices are at a historic high and the prediction is that they are not expected to go down any time soon. The costs associated with managing a rental property can be extremely high. In order for a landlord to turn a profit and go from a supplemental income stream to a living wage takes a lot of hard work, grit, and savvy. Rising gas prices is a new obstacle cutting into those profits and making it even harder for landlords to meet their financial obligations.
How rising gas prices are affecting landlords
What do these rising gas prices mean for landlords? Overall, it means you can expect prices to rise for supplies and services you use to run your rental business.
But the first obvious ramification of higher gas prices is the higher cost to fill up your gas tank. Landlords and real estate professionals have historically spent many hours and many miles in their vehicles. It’s noted that real estate agents average driving over 3,000 miles but can easily drive over 20,000 miles annually. Landlords conduct similar business as realtors such as showing rentals — and from personal experience as a landlord, I can say my car was like a second office.
But your wallet isn’t the only thing affected by those prices, for example:
Supplies and appliances will cost more because it will cost suppliers and distributors more and they will pass on those cost differences to the consumer.
Travel, airline tickets & rental cars specifically, will be more expensive.
Maintenance – from purchasing gas for the lawnmower to the costs of hiring a contractor, landlords can expect maintenance to be more expensive.
As every service provider and supplier deals with rising gas prices, they will likely need to raise their price points to compensate. That means landlords and property managers will see prices rise for most supplies, products, and services they need for their business. But there is some good news in all this – as things become more costly, innovation and creativity often flourish. In that, there are some ways landlords can navigate with tools and technology.
What are some ways landlords can mitigate rising gas prices
- Accept online rent payments and electronic cash alternatives
- Conduct virtual showing and inspections
- Price comparison and order supplies for delivery
- In-house key management
- Online market research
- Attend conferences, expos, and networking events online.
Accept online rent payments and electronic cash alternatives
No need to hand-write those deposit slips and drive to the bank every time a tenant makes a payment. Switch over to online payment processing so tenants can pay their rent by electronic transfer (ACH) or credit card and those funds will deposit automatically into your bank account.
What about tenants who pay by cash or money order? There’s an electronic payment option for them as well using a Cash Payment Network. A tenant goes to a convenient store location with a custom payment code they receive from you or their tenant portal and are able to pay rent in cash (or debit) near their home. Just like the electronic payment options, those funds are also deposited into your bank account and show up automatically in your landlord software.
In either scenario, you can eliminate manually processing rent payments and those drives to your bank. The tenant benefits by seeing their rent recorded in their tenant portal without waiting for someone to manually enter that data into the software. And that means you’ve saved time by not needing to do that data entry.
Tenants can schedule electronic payments online through their tenant portal and avoid paying for a stamp to mail and can rest easy knowing that their rent is paid on time.
Not only are there time savings, tenants can save some money over purchasing money orders as a Cash Payment Network fee is usually a less expensive option.
In either alternative rent payment option, the payment transaction shows in the tenant ledger (and throughout your rental software) very quickly compared to you and the tenant waiting days for the mail delivery, manual processing time, and a physical drive to the bank for deposits.
Conduct virtual showings and inspections
Unless you manage a multi-unit property where onsite staff is within walking distance of a vacancy, you’re likely driving multiple times to a vacant rental to show it to prospective tenants. Add to that the many times a year you drive to conduct rental inspections and you’ve just spent your hard-earned profit on these rising gas prices.
Consider hanging up those keys in exchange for virtual showings and inspections. The benefits are many including:
Flexibility
With virtual showings and inspections, you can be more flexible with coordinating those times with your prospective and current renters since traffic and distance are no longer a concern.
Time savings
Commute time getting to and from rental showings and inspections is time that can’t be recovered. Time is money as they say, so you can put those saved hours into building your portfolio, catching up on tasks, or giving yourself a much-needed break.
Costs savings
As gas prices increase, anytime you can hang the keys up and use technology to your advantage is money in your pocket. But it’s not just the cost of gas you’ll be saving but the total in maintenance costs, wear & tear, and maybe even insurance. Talk to your car insurance carrier if you notice your travel has significantly decrease as there may be better insurance rates depending on your average mileage.
Integrated with software
Many property management software options have partnered with virtual inspection heroes like zInspector. You’ll find tools for tenants to do self-inspections, report and maintenance information that integrates with your software, and other great features. Check with your property management software company to ask about their inspection integrations.
Price shop and order supplies for delivery
From office supplies to materials and appliances, everything can be found online which gives the savvy landlord information at their fingertips for comparison price shopping. Look for the best prices with options for low to no delivery fees. But, even if there is a delivery fee, you can quickly decide if the fee is less than your total transportation and time costs. Also check if there are exclusive online discount codes, membership discounts, or other perks that justify shopping online vs running to supply stores. It’s true that big box stores roll out big loss leader discounts to get your attention – but just as landlords are the heart of a community, so are local merchants and suppliers so be sure to ask them for their discounts and delivery. Even if a local merchant is a little more expensive, building a relationship with them might be worth it in terms of networking and community building.
In-house key management
From rental turnover to renters losing keys, driving to the hardware store to get copies of keys made seems never-ending. Instead, consider bringing your key management in-house and save yourself the time and gas money. And I don’t know about you, but as a previous property manager, waiting for keys to be made felt like an eternity when I had so many other things to accomplish in a day. A good key management system will save you in time, money, and frustration.
Online market research
I used to drive the entire city to conduct market research to view apartment complexes and manufactured home communities a few times a year to get a feel for what our competition was doing in terms of amenities, landscaping, parking, visual marketing, and more. These days, you can find that information online with a little search savvy. Tip: don’t forget to check review sites and image searches to see information and pictures from tenants instead of relying solely on website marketing pictures.
Attend conferences, expos, and networking events online
There’s nothing better than a good real estate and rental conference to see what’s new in the rental industry and meet with other rental professionals. But as prices on gas continue to rise, we are already seeing prices of airline tickets and rental cars rising as well. Many conferences and expos now have a live streaming component – so if you’re looking to save some money, consider attending virtually.
If you must drive as prices continue to rise, try to consolidate your driving choosing the most efficient routes and check for best prices and discounts at the pump as well as other fuel-saving tips. Don’t forget, travel expenses are often tax deductible so check with your accountant on how best to document your trips and costs to get the maximum benefits.