Whether residential real estate is really viable as an investment is not only decided when buying or exiting, but during ongoing operations. More precisely: in lease management. It is the point where strategy and reality meet. Anyone who wants to secure income, raise value or sell portfolios needs more than portfolio management – they need structure, management and a deep understanding of the dynamics between tenants, property and capital.
Three parties, one balance
Investment apartments are more than physical assets. They are relationship systems. An area of tension arises between tenants, owners and service providers that will only remain sustainable if all sides are taken into account. If a party is neglected – for example through non-transparent communication, inadequate service management or unrealistic tenant expectations – this has a direct impact on profitability. Lease management is therefore not an administrative process, but a relationship architecture.
Market rent as a navigation point
Dealing with existing leases requires a sense of proportion. If the rent is significantly below the market, the earnings potential is wasted – especially when revitalizing or selling. If it is significantly higher, there is a risk of vacancies. The idea that above the market is automatically better does not go far enough. In segments outside the top locations, an overshooting of rental prices quickly leads to migration and the devaluation of the investment. Rent adjustments – for example through modernization or graduated rental models – are legitimate and necessary. But only if they are embedded in market knowledge, compliance with the law and a tenant structure that is sustainable in the long term.
Tenant retention is not a feel-good measure
Operational details also have an economic effect – for example, whether the lawn has been mowed, the stairwell is in good condition or the property management remains accessible. A well-groomed environment not only reduces complaints, but also lowers fluctuation and vacancy costs in real terms. Lease management therefore does not end with the signing of the contract, but reaches deep into everyday life. Credit checks, documents, contract drafting, indexation or graduated rent – that is the obligation. Communication, transparency, efficiency – that’s the freestyle.
Digitisation? Only where it carries
Not every process benefits from technical automation. A successful example is provided by the micro-living brand elevon, which is part of the joint project of Domicil Real Estate AG and talyo. Property Services. Around 1,400 fully furnished micro-apartments in ten cities are marketed primarily to students and young professionals in a targeted manner and for the most part digitally – from the first contact to the admission of interested parties to the signing of the contract, even across national borders. This largely digital process is a perfect fit for the young, mobile-oriented target group. In other cases, however, such an automatism would sometimes generate resistance – especially where traditional communication is considered a sign of trust. The use of digital tools should therefore be strictly based on the object, target group and region, not just on what is technically feasible.
A practical example that sets standards
A particularly vivid example is the temporary relocation as part of a string renovation that the Domicil Real Estate Group is currently carrying out in a residential complex in Brühl: Tenants move into fully furnished replacement apartments for a few weeks while construction work is underway in their old apartments. The decisive factor here was not logistics, but communication: If you explain at an early stage what is happening, what is expected, what alternatives exist, you create acceptance. Remarkably, the rent will remain unchanged even after completion of the renovation measure. There are no individual surcharges, no special terminations and no disputes. Instead, the modernization costs are covered by the purchase price share of the investors as a deliberately planned component of a long-term value preservation strategy. That, too, is contract management: forward-looking, binding, stabilizing.
Efficiency can be measured – retention must be understood
The hard metrics include vacancy, arrears, fluctuation and cash flow. Those who evaluate in a structured way recognize patterns – for example, in the case of creditworthiness problems, rental difficulties or service quality. In certain cases, tenant surveys or consultation hours also help to make the soft factors visible.
But key figures alone do not explain everything. Lease management is not an Excel topic. It is an operational expression of strategic clarity. If you don’t know exactly what kind of tenant you want, you won’t get it. And those who see the tenant exclusively as a risk factor instead of as part of the economic logic are squandering potential.
Impact is created in the details
Professional lease management is the underestimated core of any successful residential real estate strategy. Stability in the portfolio, calculable cash flows and saleability depend largely on this. It is not the level of administration that is decisive, but the strategic claim. And perhaps this is precisely the decisive insight: It is not the lease that creates the value, but the way it is handled.
