A new survey by the National Apartment Association (NAA) shows the top seven challenges facing rental housing property managers today, with the No. 1 challenge – not unlike many other businesses – being recruitment, staffing, and human resources issues.
Property management professionals were asked to select the topics that are most challenging right now, and 74 percent answered with issues surrounding hiring and staff.
That’s not surprising, said Paula Munger, assistant vice president of industry research and analysis for the NAA.
“If you were on another planet and dropped in right now and missed the pandemic, you would look at this report and say, ‘Wow, something weird must have happened last year,’ because you can really see the effects of the pandemic in a lot of the responses and in a lot of their issues. Every industry right now, every single one, is having issues with the labor market. So, you know about the great resignation. There’s near-record amount of jobs available. People are quitting, they’re feeling empowered to do other things,” she said.
Munger said the data shows that in big companies with more than 20,000 units, more than 80 percent cited human resources as their top challenge. She said it’s a mind-boggling number “that really blew me away.”
Operational efficiencies came in second, with 63 percent listing it as a top challenge.
“The past year and a half have brought unprecedented change to the real estate industry,” the report says. “From transitioning to remote work, to the adoption of technology, property managers have had to pivot to stay successful, make the most of demand, and continue to serve residents, owners, investors and teams,” the report says.
Most pressing issues facing property owners and executives
The biggest concerns weighing on the minds of property owners and executives, including hiring and training new employees but also government regulations, eviction moratoriums, rent collections and COVID-19-related issues.
Most pressing issues facing property managers
The greatest challenges facing property managers also was hiring and retaining employees, but included finding qualified maintenance talent, delinquency rates, and eviction moratoriums. Maintenance positions are notorious for having high turnover rates and property management companies are struggling to fill essential maintenance positions.
No. 1: The most urgent challenge in the property-management business
Human resources issues, staffing and recruitment were the top challenge, and while those issues have always played a large role in property management, the pandemic exacerbated them. The inability to backfill positions plus the influx of inexperienced new hires created a training backlog, a “doing more with less” situation creating inefficient property management operations. Staffing issues are forcing an increase in wage and benefit packages to attract and retain talent. These increases are not being offset by increased revenue.
“The report talks about what they’re doing, and what they need to do right now, which is offering signing bonuses and higher pay, using recruiters and I think one of the quotes that was really telling was, ‘We need to focus on retention as well as recruitment’,” Munger said.
“There’s so many jobs available. There’s so much demand right now in multifamily. The labor market is so competitive. So, if you don’t offer your employees (a) good benefit package, training, professional development and really have them involved in the operation, I think you’re going to lose out to a competitor,” Munger said.
No. 2: Operational efficiencies
Rental housing challenges in finding high-quality vendors, reducing labor-intensive processes and reducing costs were cited in the report as the most challenging tasks for rental property owners and property managers. Getting out of the “constant fire drill” mentality was also cited as a big issue in operational efficiency.
No. 3: Maximizing revenue and profits
Increasing net operating income (NOI) to maximize revenue was a top-rated challenge and major pain point by many in the survey. On top of that, mitigating bad debt loss and trying to return performance to pre-pandemic levels were extra stressful and big issues.
“The specific analysis looked at the entire pool of under 1,500 units, where maximizing revenue and profits was their second greatest challenge,” Munger said. “We know a lot of those owners and operators lost revenue during the pandemic, and as an aside, we just released our income and expenses survey that we do every year and it covers 2020 financials … for the first time, since a great recession, we saw revenue, losses and expense increases.”
No. 4: Risk, compliance and regulation
Keeping up with constant new regulations, a particularly difficult issue in the Pacific Northwest, along with staying compliant was cited in the report as major rental housing challenges for rental housing property managers. Fraudulent applications and cyber threats also fell in this category.
No. 5: Implementing new technology and innovation
Training teams on new technology and working that it into the daily routine are both ongoing rental housing challenges for many. Vetting new technology also is an issue. Too, there is resistance by some to learning new technology.
No. 6: Investment and development decisions
The need to grow rental housing portfolios in a sellers’ market was cited as a top concern. Also, forecasting the impact of renovations on a rental unit and its value.
No. 7: Stakeholder experience
Improving customer and resident satisfaction was tops in this area of concern, along with keeping staff and residents safe during the pandemic.
Labor market challenges will remain
Munger added, “I think there’s still some difficulties to get through. Especially with the labor market.”
However, she said the report also showed some optimism.
“We did get a good mix of respondents here, and when you look at those rental numbers, they’re typically larger buildings, professionally managed and maintained buildings, and they tell a different story than with some of our smaller, mom-and-pop owners,” Munger said.
“The survey was done in late July, early August and rents were definitely starting to head up then, but certainly not as much as we’ve seen over the last quarter or so.”
Munger said her advice to property owners and managers out there is: “Hang on, as we want to get back to pre-pandemic levels.” She said with what they are seeing in revenue increases and enhanced demand this year that, that will happen.