Summary
Artificial Intelligence (AI) can handle many of the administrative tasks of being a landlord such as drafting listing descriptions, responding to communication, setting reminders, providing marketplace guidance and reviewing financials. AI can’t show property, inspect the premises, serve legal notices, appear in court, or take legal responsibility for any of your actions.
AI’s impact on Property Management
Can AI replace your need for a property manager? Kind of. Today people are looking to leverage AI and one area many real estate investors are looking at is rental housing.
AI is capable of handling a lot of things a property manager typically does. It can handle recurring tasks, set reminders, manage general communications, keep you informed about legal requirements, and help you make more informed decisions.
What is left then?
Plenty. I’ll unpack where we see AI’s strengths and weaknesses when it comes to day to day operations.
But before doing so, I want to share 2 important observations, one from billionaire Mark Cuban (former member of the hit show Shark Tank and former owner of the Dallas Mavericks).
“AI is not smart. It just knows how to use statistics basically to predict the next word. It's predictive. It's not deterministic.” (The Diary of a CEO Podcast)
Essentially, AI can arrive at what it thinks is the right answer, but it still needs human input to confirm or to execute on the information it provides.
The second observation is that AI may be an “agent”, but it doesn’t have an “agency relationship” with you. That means it does not have a fiduciary obligation and cannot be held accountable for errors, omissions or anything else. You bear the sole liability of your actions and decisions.
Task | What AI can do | What AI can’t do |
Leasing | Create ads, pre-screen leads, coordinate tours, manage general communication | Show the property, perform individualized assessments, document the interior condition, deliver keys |
Rent Collection | Post charges in software, send payment reminders and receipts, flag past due balances | Deposit physical payments, sign, post and/or mail notices where required |
Site Visits | Review photos and report notes | Walk the property, spot violations, test smoke alarms, or identify odors |
Maintenance | Troubleshoot reported issues, contact vendors, process invoices | Judge the severity of an issue, respond on site, provide property access |
Accounting | Spot errors, provide insights, log transactions | Mail payments or deposit physical funds, identify issues when data is incomplete or missing |
Communication | Answer routine questions, cite policies and procedures, gauge sentiment | Calm tense situations or address issues when there is no clear policy and procedure |
Lease Renewal | Perform rent research, run a work flow, draft documents, handle communication | Interpret regulations without guidance, address complex questions where there is no policy and procedure |
Legal/Evictions | Identify potential issues, draft documents, support decision making | Make final judgment calls, take on risk, attend court proceedings, attend sheriff lock-outs |
How AI Can Help You Manage Your Rental and How It Cannot
Can AI Lease a Rental?
AI can help you create ads, set rent, pre-screen leads, schedule tours, and follow up.
AI can’t guarantee full compliance with fair housing laws (perform criminal background checks or perform individualized assessments), show the property, prepare the interior for rent, perform welfare checks while vacant, manage curb appeal, document the condition of the property prior to move-in, provide keys, or address move-in day emergencies.
Can AI Collect Rent?
AI can send rent collection reminders and let you know if a tenant hasn’t paid. If you have property management software, it can enter charges on a ledger and accept online payments if set up.
AI can’t deposit payments not made online and it can’t sign and mail out non-payment notices (unless you’ve got really sophisticated setup)
Can AI Report on the Property Condition?
AI can analyze reports and photos of a property, but it can’t be at the property before, during, or after a tenancy.
AI can’t walk through a property and identify lease violations, unauthorized pets, people, or other deferred maintenance. It can’t test life-safety systems such as smoke or carbon monoxide alarms. It needs a human to do initial legwork.
Can AI Handle Maintenance Coordination and Emergency Response?
AI can help you troubleshoot a maintenance issue with your tenant, recommend vendors, and even reach out to them. It can follow up and request proof of completed work and even potentially quality check the work if photos and a detailed invoice are provided.
AI is not perfect at assessing the severity of an issue, it has limited abilities to manage the emotional state of the resident, and it cannot rush over to the property to address an issue in person.
If your tenant calls about a broken water line, a fire, or an active roof leak, AI can’t help you resolve as quickly as you may need to.
AI also does not have meaningful vendor relationships that ensure the property is prioritized or that the vendor will comply with rules that protect the owner from a lawsuit if there is an issue.
AI cannot provide access to the property for routine repairs or even during emergencies. That said, digital locks can potentially address the access issue.
Can AI Handle Accounting for My Rental Property?
AI can excel at this if you provide it with the data. This data can be something you create or that you receive from software. It can spot potential errors, unreconciled items, and tear apart your profit and loss or trailing 12.
AI does have limitations on receiving money and paying expenses though. While it may be able to queue, potentially wire or transfer funds, it can’t print and mail a physical check when needed.
Can AI Manage Resident Communication & Lease Enforcement?
AI can manage general communication via email, make or answer calls and questions, and measure the sentiment of conversations. It can also spot some lease violations and recommend what sort of corrective action should be taken (after being trained).
AI can oftentimes be identified by residents, and when tensions are high, that can damage the relationship rather than repair it.
AI also cannot identify all lease violations e.g. items not photographed or described in a report or issues such as odors.
While AI can help recommend what legal notices to prepare or use, the specific notice to use is highly subjective. This can lead to legal missteps you are liable for.
If you happen to live in a state like Washington (RCW 59.12.040), where mailed notices have to be mailed from within the state, or like Oregon (ORS 90.155(1)), where mailed notices must be sent by first class mail, issuing notices can be difficult to do with AI. Some states also require “posting the notice” which requires being physically present at the property.
Can AI Manage Lease Renewals?
AI can excel in this process if you provide clear instructions, the lease documents, and access to software you use to collect rent.
AI may struggle if there are layered regulations that introduce uncertainty or if the residents require more communication and/or have complex questions. While AI may be able to address a lot of these issues, it cannot tackle everything.
When drafting your renewal offer, make sure you are familiar with Oregon’s rent control rules.
Can AI Provide Legal Advice?
AI is great for flagging potential legal issues, helping you understand the pros and cons of an action, but the final judgment comes down to you. The problem with that is, you will be working with incomplete information.
AI doesn’t know what cases get settled or how judges rule on most cases. This means it may not have full context for how things work or are applied in real life. A legal miscalculation can cost you 10 years of management fees.
We highly recommend talking to an attorney who specializes in landlord-tenant law in your area.
How does having a property manager help? There is a good chance that the legal issue you’re facing with your tenant is a legal issue they’ve seen before so they may already have a process and procedure to handle it. That saves time, money, and provides more certainty.
Can AI Handle Rental Property Evictions?
AI can help you understand your rights, draft paperwork, and advise you on possible decisions you need to make.
AI can’t attend court for you. AI doesn’t take on the risk of loss so if you’re wrong because the AI tool you used had incomplete or inaccurate information, you pay the consequences.
Learn about Sleep Sound’s Eviction Protection Program.
Is the Juice Worth the Squeeze?
If you are an experienced landlord or want to become a professional landlord, AI is an opportunity to leverage your skills into a more efficient and more impactful operation.
If you are new to being a landlord, or have multiple units you need to manage, you have to ask yourself how much your time is worth, how you want to spend that time, and if you want to absorb all of the risk of working with an AI.
Only you can determine if those tradeoffs are worth it, and there is no “right” answer.
Just make sure that if you want to trust an AI tool to manage your 6 or 7 figure asset, that you are comfortable with the risk and rewards it offers.
If you want the advantages of AI, but don’t want to take on all the risk, talk with our team about managing your Portland area or Vancouver rental property.
How Sleep Sound is Using AI
Sleep Sound is using AI to improve a variety of experiences for our owners, residents, and vendors. Some of these uses include:
Responding to general messages
Routing emails to the correct team member
Reviewing leases for compliance
Rental analysis
Workflow management
Troubleshooting and managing maintenance communication
Coordinating showings
Identifying lease violations
Tracking important matters and more.
While AI helps the Sleep Sound team, our team reviews all drafts and flags, and makes the final decision on what should be done e.g. what the rent should be, which lease violation is appropriate, if a maintenance request should result in a repair or replacement and more.
FAQs
Question: Can AI replace my property manager?
Answer: Not entirely. AI can take over a lot of the routine and recurring functions and even reduce the time you spend managing a rental, but there are plenty of things AI cannot do. AI cannot show the property, prepare the property for rent, check on the interior condition, or guarantee proper application of the law.
Question: Is AI less expensive than hiring a property manager?
Answer: If you primarily need administrative support then yes, but if you need full service property management, or lack the expertise to properly use the AI tool, then it will potentially cost you more in the long run if you only use AI.
Question: Can AI Screen a Tenant?
Answer: It depends. If it has access to screening criteria (which it can help you write) and access to a database to check the credit and criminal background checks of the applicants along with other important information, AI can help you make a decision. AI can make mistakes which could expose you to fair housing lawsuits.
Learn how we screen tenants at Sleep Sound.
Question: Can AI help me negotiate a lease renewal?
Answer: Yes, if you provide parameters and the forms it should use, it can handle a lot of this process.
Question: Can AI help me manage maintenance for my property?
Answer: Definitely. It can help you set a preventative maintenance schedule, identify vendors you may want to work with, provide support with troubleshooting and more. AI cannot visit the property nor can it always accurately assess the severity of an issue or guarantee a vendor will be at the property.
Who We Are
Sleep Sound Property Management, Inc. is a professional property management company licensed in Oregon and Washington State. The company was founded in 2007 and has built a strong reputation in the marketplace. Sleep Sound is headquartered in Portland, Oregon and manages homes, plexes, and apartments in the Portland metro and Vancouver, Washington area.
4415 NE Sandy Blvd #201, Portland, Oregon 97213.
