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Starting a Rental Business

April 01, 2019

Rental Businesses Show Promise

When I attended my first wedding event many, many years ago, I had to rent a tux for the event. It was not normal to rent anything back then, yet groomsmen renting a tux for a formal event was typical.

Fast forward and people are renting almost everything now.  And it’s all done online. In the sharing economy, renting business models work nicely and there’s opportunity. From ebikes, to HVAC systems, and furnished apartments to boat slips, entrepreneurs are looking hard at all kinds of rental businesses. The smartest are focusing on property management.

Countries across the world are becoming rental nations — for real estate and much more. The improved cost and convenience of renting for customers and businesses are enjoying renting too. Renting can be a key part of a business value proposition especially if you are targeting Millennials.

Renting Just About Everything

Rented workspaces. Photo courtesy of Wework.com

Uber, Airbnb, Public Storage, Wework, and Common are just a few riding on this sharing and rental wave. And then there’s the Millennials who are even more likely to use these services, likely for the rest of their lives.

Real estate and automobiles for instance will only rise in price and many mobile, urban dwelling young people are disinterested buying and insuring a vehicle or a big house in the burbs. Buying won’t be an option for many.

Have you rented a car, ebike, vacation home, furniture, appliances, power tools, construction machine, storage locker, boat slip, or parking space lately? Then you know how much profit opportunity is present.

Storage units much more prevalent than anyone realizes. Screenshot courtesy of Simplystorage.com

Should You Start a Rental Business in an Opportunity Zone?

There’s big advantages in setting up in a designated opportunity zone. These are cities designated under the Tax Cut and Jobs Act (USA) where growth is becoming rapid and where tax savings can be enjoyed. There’s big interest in opportunity zones right now. Take a look at the newly listed locations at SMBintelligence.com.

Screen capture courtesy of SMBintelligence

3 Drivers of Rental Business Growth

3 Things support the growth of rental businesses: scarcity/cost of buying, lower income consumers, and convenience.

Boom or bust, buying is too expensive for most. Take a good look at Manhattan or the Bay Area of California and you’ll see why rental entrepreneurs are seeing dollar signs.

Income: When you consider that the average wealth and income of most people has dropped or stagnated, it means people must rent rather than buy. Many products deteriorate quickly or are costly to fix, own or maintain. Owning a boat slip is nice, but cost wise, renting a spot in your local marina makes more sense.

Space: Of course, you’ll need to rent a storage space for storing your boat in the off season. As more people buy boats, marina slips and storage become more precious. Rental rates can only go up.

The number of startups catering to these rental markets is growing. So you may want to start up a property management business, or boat storage business, or parking spaces. Making a profit in your business really comes down to efficient, high level management. You can adopt tech solutions like apps, devices and software to assist.

Convenience: With the new solutions you can connect to customers to deliver service much better and faster, almost on demand. And you can keep an eye on your properties in real time, monitor your costs and finances, ensure you get paid on time, and help contractors cut their costs when they service your assets.

Software is Central to Successful Rental Businesses

You can make money renting just about anything. And rental management software helps you keep it profitable. If you’re successful you may even want to franchise your new business model.  Within your software interface, you can manage leases or rental contracts, collaborate with renters, automate payments, and create up to date reports on your revenue and costs.

The software is important, because it helps you test and improve profitability. Profitability won’t happen fast. You’ll discover which customers, products and agreements produce the best ROI. Without software and in-depth analytics, you can’t narrow down which of your efforts are working.

You can write off your business expenses such as depreciation on assets that you rent or use for your business. Right now, in the US, new tax laws are allowing 100% writeoffs on depreciation of business purchases. A truck, lift, security system etc are much more affordable based on these tax writeoffs. Hence the big interest in opportunity zones.

One business opportunity ripe for development is property management. Take a look at ManageCasa property management software and you’ll learn why efficiency is central to any business model now.

 

 

See also: Property Management Expo Chicago | Denver Apartmentalize Location | Denver Real Estate ForecastTax Breaks for Property ManagersProperty Maintenance TipsHawaii Real Estate ForecastCalifornia Housing PredictionsHOA Management Software | Should I Buy or Rent? | Property Rental Management Software | Apartments for Rent | 2020 Rental Housing Outlook | Apartment Rental Prices | Best Cities for to Buy Property | Wework | Airbnb | Cloud Software | Student Housing Rental Market | Multifamily Housing ReportStart a Property Management Business | Cloud Based Property Software | Property Management Accounting

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