We’ve been working for years helping dozens of companies implement the latest innovations in real estate. We've witnessed the growing importance of digital adoption during this time, particularly exacerbated by the COVID-19 crisis.
The fundamental reason for technological implementation is to reduce operational costs. It does so via streamlining processes. Outsourcing follows the same approach.
It allows companies to save money on training, equipment, and software while enjoying the same benefits. Our client portfolio includes many outsourcing requests for vital tasks, like back-office processes and software support. Therefore, we’ve seen the increasing need for these solutions over time.
But, what does all of that mean for real estate? That’s our topic today.
Moving real estate to the cloud: What does it mean?
Real estate has been going through significant changes, especially with the advent of the internet. Countless real estate agents and firms have adopted or moved entirely to cloud technology.
The main advantage of this change is how it streamlines collaboration. Anyone can access the resources they need at all times. Sharing these files with those needing them is equally simple.
Most common options
The internet is filled with cloud solutions for virtually every task within real estate. Excellent introductions include Google Drive and Office 365. These enable companies to take care of all documentation and many back-office accounting functions.
We also have specialized software, like MRI, Yardi, Procore, and Zoho. These apps combine more features to solve issues, like property management, lease administration, CRM, and even monitoring construction projects.
Cloud computing and the Software as a Service trend in real estate
The SaaS industry is majorly responsible for real estate’s move toward cloud technology. Many experts, like PropertyBase, have tackled the subject with much depth. In essence, the tools we mentioned earlier are part of SaaS.
To summarize, the SaaS industry focuses on providing apps and digital tools to tackle different areas. Every software you're implementing for a monthly plan is a software service. Cloud computing has been vital in enabling this industry to flourish.
Most common options
Cloud computing allows companies to store sizable data in external servers, not their in-house files or even hard drives. This advantage enables these solutions to grow with your company and portfolio.
It also makes it easier to update your platform and plans according to your requirements. If you need more space or features, a few clicks or a quick talk with customer support is enough to tailor these solutions as your business grows.
Excellent security
Cloud computing allows updates to install seamlessly without risking data loss. All the information you need remains outside of the software itself, so you don't need to worry about changes messing with essential documents.
Major software providers, like the ones mentioned, employ state-of-the-art security protocols and measures to guarantee safety. That includes excellent uptime to avoid platform shutdowns and other practices to keep your data away from third-parties.
Easy updates
The standard for cloud computing is to install updates automatically. That means you don't have to do anything other than approving the installation. There's no need to buy new versions or disks and do everything by yourself.
Additionally, all integrations within your cloud software follow the same rule. These updates provide vital improvements, like fixing errors and boosting responsiveness. It's not necessary to research the latest software all the time.
Outsourcing: How it can streamline your company
Outsourcing is surprisingly similar to cloud computing. It has grown from a curious practice to an industry standard for saving costs and streamlining operations. Outsourcing allows you to hire expert resources without providing them with the necessary equipment and tools.
That's why outsourcing has turned into an everyday reality for many companies. Primarily, it allows real estate firms to save on high costs. Accessing specialized teams without investing in training and onboarding also allows for instant implementation.
What can you outsource?
Back office accounting is the most common outsourcing subject for real estate, and it’s among our most requested services. Outsourcing can cover multiple areas, such as administration, tax preparation, accounts payables, and more.
However, outsourcing has expanded to cover new ground every day. Today, it’s easy to find companies hiring offshore help desks, brokers, training, and software implementation. The outsourcing industry has adapted to include countless services.
Why is outsourcing a worthy consideration?
The most prominent reason for outsourcing is saving expenses. We already mentioned all the investments you can skip, but that’s not the end. Many outsourcing companies offer guarantees in case something goes wrong, reducing costly errors.
It also boosts your profitability, letting you optimize the offshore tasks. Outsourced resources adapt to your needs and can start working almost immediately. It simplifies management for these departments as well, as most services take care of their personnel.
Is outsourcing transforming real estate?
Being a cost-efficient strategy isn’t everything outsourcing has to offer. The benefits related to efficiency have been fundamental for outsourcing’s growth within the real estate industry. Several experts agree that outsourcing has been changing real estate management.
Outsourcing allows you to relocate in-house resources to more critical tasks. You can focus veteran staff on projects with better returns. One excellent example is marketing. Outsourcing these functions lets you focus your resources on growing your company.
Seamless content generation
Generating content is vital for any business today. That goes beyond creating blogs or news articles as well. Creating valuable content, like key insights on markets, photography, and design, makes prospective customers more engaged.
Outsourcing your content marketing strategy is an excellent start. It's becoming the standard for countless companies. Property managers get to focus solely on maintaining their assets than attracting buyers.
Social media isn't a problem
Social media often faces neglect from a surprising number of real estate companies. It's somewhat understandable, too. You need to invest a lot of time engaging with online followers and providing helpful updates.
However, it’s also fundamental for maintaining everyone up-to-date on what you’re doing. That includes software updates, implementing new commodities (like tenant portals), and upcoming renovations on your properties. Outsourcing can take care of all that.
Considerable savings in multiple departments
That covers virtually everything related to your company’s “front” or image. Those are the most common outsourcing examples for all industries. Outsourcing offers more than that, as we suggested when talking about accounting.
Thanks to cloud solutions and remote collaboration, you can outsource many departments. For instance, offshore help desks let you troubleshoot any problem with your software. Outsourcing your software implementation minimizes onboarding errors, and so on.
A vital turn in real estate
McKinsey & Company released an article about how real estate investment is undergoing a significant evolution. Two key points spring from that article: it was released in 2019, and it touches on many issues solvable with the strategies we’re discussing.
Essentially, real estate investors have flocked toward assets under management. The main reason has been the pursuit for equity and cash yields. However, attracting these investors might call for a significant shift in traditional companies.
How is investment evolving?
The main change is that investors look for minimal risk in their investments while increasing their yield. Additionally, they're also prioritizing long-term deployments for their capital. There seems to be a preference for open-ended funds.
Direct investment has also become increasingly popular. It allows investors to reduce costs while enjoying more control over a company’s decisions. Finally, net returns have become significantly more popular than gross.
How can managers respond?
As you can infer from the summary, investors are willing to get more involved as long as they can measure risk and maximize their profits. That means that companies should look to minimize their expenses. Generating analytics and statistics also becomes vital.
As we've mentioned repeatedly, cloud software and outsourcing are excellent ways to decrease operational costs. They offer a quick and cost-efficient method to boost any firm's profitability. Gathering data and compiling comprehensive reports also become much more straightforward.
Reducing IT spending: 10 quick tips
If you’re interested in investing in technology, IT expenses require consideration. Minimizing costs should extend to how you’re using the software. Luckily, Gartner has excellent rules for reducing these expenses quickly.
Prioritize immediate impact, which includes problems coming in months at most. Avoid targeting annual impacts before.
Look for costs that you can eliminate or reduce directly. You can avoid some costs for a limited time, which is what you should avoid.
Focus primarily on items that can impact your real cash instead of depreciation and similar assets.
Take enough time to cut your costs definitely on your first try. It’s better not to need revisiting.
Pay close attention to cost-related accounts, like expenses, balances, and more.
Assess uncommitted and unspent expenses for terminations and renegotiations.
Don’t forget about your capital expenditure.
Don't worry too much about sunk costs, but consider whether the benefits are worth your time.
Both discretionary and non-discretionary spending play vital roles in your company’s spending, so don’t neglect them.
Finally, give the same importance to both fixed and variable costs. Elimination is better for fixed costs, and you can also consider a reduction for the variables.