Photo by WJF Developments

I think it’s fair to say that successful property people understand leverage. It’s also fair to say that debt is not inherently bad.

Used well, it allows you to control more assets, deploy capital more efficiently and improve returns. Used badly, or relied upon too heavily, it can make a perfectly good business fragile and sometimes break.

AI in your business is operational leverage.

Love it or still slightly unsure of it, I think we need to start looking at AI in much the same way. Used well, it allows fewer people to do more work, make sense of more information and operate larger, more complex businesses than would previously have been possible. That to a great many people is enormously exciting and attractive. It also deserves rather more thought than simply asking how many people we can replace.

For years, property investors broadly had two choices. Self-manage the portfolio, or place it with a managing agent.

Then from the midst of the pandemic, remote working created a third option. Experienced virtual portfolio managers / property VAs made it possible for landlords to retain control of their portfolios while delegating much of the operational workload to people working remotely. Beam has spent six years doing exactly that.

Now AI appears to offer a fourth option. Connect tools such as ChatGPT or Claude to your email, cloud storage, CRM, property systems and accounts, and suddenly large amounts of administration can be processed, analysed and organised in seconds.

Why wouldn’t a commercially-minded landlord want to use that? We certainly do, but we use it consciously.

You see, there is a difference between using AI to make your business more efficient and rebuilding your business so completely around AI that you surrender knowledge, customer care, resilience and negotiating power to a supplier you do not control. That distinction matters.

The wrong question

I recently heard about a portfolio landlord who had connected ChatGPT into large parts of her business and was delighted with the results. So delighted, in fact, that she had been able to fire her Filipino VA.

The saving was substantial, around 60% of her previous administration cost. On the surface, that is difficult to argue with. If £200 worth of software can genuinely replace £1,000 worth of human support, any sensible business owner is going to pay attention. But I think that frames the opportunity in entirely the wrong way.

A more interesting question is: What happens when you give an experienced property professional access to the same AI capability? 

Instead of replacing £1,000 of human support with £200 of software, perhaps that same £1,000 of human support, amplified by AI, can suddenly create £2,000 or £3,000 worth of the old operational impact. To me, that is a much more interesting proposition. Because the value of an experienced property person was never really their ability to send routine emails, update spreadsheets or move information between systems. Those things simply consumed their time. The real value sits further up the chain. The nuance – knowing what matters, what’s legal, recognising when something doesn’t look right. Understanding when something needs escalating. Making that phone call to speed things along. Knowing when to push a tenant and when to give them some breathing space.

Or deciding whether to spend another £200 repairing a boiler or £2,000 replacing it. Working out why one room isn’t letting when a similar one down the road is. Spotting whether something is just an administrative error, or the beginning of a compliance problem.

AI can increasingly inform all of those decisions. But there is a big difference between processing information and taking operational ownership. AI can increasingly do the work. That doesn’t necessarily mean it should own the outcome.

Push the human up the value chain

This, for me, is where AI’s potential impact on your business operations becomes genuinely exciting. If technology can remove two hours of repetitive administration from a VA’s day, I don’t necessarily want to remove the VA. I want to know what they can now do with those two hours. Can they spend more time solving problems, scrutinising costs, chasing contractors, improving arrears management or identifying issues before the landlord even knows they exist?

That is where the value starts to compound. The future property VA should not simply be someone performing fifty manual administrative tasks. They should increasingly be someone who understands property well enough to supervise technology doing those tasks, interrogate the output, deal with the exceptions and use the time released to move the portfolio forward.

AI pushes the human up the value chain. And in an HMO business, where margins are increasingly squeezed and regulation continues to tighten, that matters. The difference between a good portfolio and a struggling one is often the quality of hundreds of small operational decisions.

Where money gets spent. 

Where money gets saved.

What gets followed up.

What gets caught early.

Where the landlord’s attention goes.

A capable human with dramatically better tools can potentially make far more of those decisions well.

But leverage creates exposure

This is where the property analogy becomes useful. Nobody sensible argues that leverage is bad simply because debt introduces risk. We understand that the benefit and the exposure arrive together, and AI is no different. The more deeply AI is embedded within a business, the more work it can perform and the more valuable it becomes. However potentially, the more dependent the business becomes too. There is operational dependency, where AI performs functions previously carried out by people.

There is knowledge dependency, where processes, information retrieval and institutional memory become increasingly mediated through an AI platform. And eventually there may be economic dependency. That final one interests (read concerns) me most.

Let’s say a property business previously spent £5,000 a month on administration and operational staff.

Through AI it eventually reduces that cost to £1,500. Fantastic. 

Three years later, the business may have reorganised itself completely around that new cost base. Going back to the original structure may no longer be commercially realistic. And here is where I think business owners need to keep at least one eye open. Today’s AI pricing is astonishingly low compared with the economic value these systems can create. It would be optimistic to assume today’s subscription models represent the final destination.

Future pricing may become more usage-based, task-based, agent-based, outcome-based, or something we haven’t thought of yet. And as these platforms become more deeply integrated into businesses, they may also become increasingly capable of understanding the economic value they create for their different customers. And how much you can afford to pay… 

The technology itself is capable of understanding a remarkable amount about how a business operates once it is connected to email, files, financial systems and operational data. If a piece of software is saving a business several thousand pounds every month, I don’t think it is unreasonable to ask whether it will always cost £200. But the bigger issue isn’t simply whether the price goes up. It is how difficult it becomes to walk away once the business has rebuilt itself around the technology as the cost increases.

That is also leverage.

Use it. Don’t surrender to it.

None of this is an argument for keeping AI at arm’s length. Quite the opposite. At Beam, we are actively looking at how AI can enhance the work our VAs perform. I would much rather an experienced property VA spend their time solving problems so our clients don’t have to, than manually assembling information an AI could organise in seconds. I would prefer technology to highlight the five things that need human attention than have someone manually work through hundreds of records looking for them. That is progress.

But as property investors, we should apply the same thinking to operational leverage that we already apply to financial leverage.

Understand what you are gaining.

Understand what you are becoming dependent upon.

Retain access to your own information and processes.

Keep important operational knowledge portable.

Don’t allow one platform to become the only place that understands how your business works.

And keep capable people around the areas where judgement, relationships, negotiation and accountability matter. The opportunity isn’t to replace a £1,000-a-month property professional with £200 of AI. It is to take that £1,000-a-month property professional, give them £200 of AI capability, and see what they can now achieve. That, to me, feels like the much more interesting future of property management.

AI is operational leverage. And like all leverage, the smartest operators will use plenty of it. They will just understand what happens if they use too much.

If you would like to explore how an experienced property VA or virtual portfolio manager, supported by the right AI tools, could help you run your portfolio more efficiently and get more from the hours available, you can book a chat with us.

About the Author:

Jane Scroggs and Taran Hughes are the founders of Beam Virtual Property Support, in partnership with The HMO Roadmap. Their team of virtual assistants handles all aspects of lettings, compliance, credit control and property maintenance, always focused on streamlining your operations. Learn more about Taran and Jane here.