How the job of property management is changing “came through loud and clear” in this year’s annual survey of property managers, said Chris Litster, CEO of Buildium, in a recent webinar.
Litster presented the 2020 State of the Property Management Industry Report along with National Association of Residential Property Managers (NARPM) CEO Gail Phillips.
The survey was actually three surveys in one, including 1,738 property managers, 217 community managers, 1,118 tenants and 603 owners and investors in more than 50 cities.
“What we heard loud and clear is that property management has changed,” Litster said. “Property management is complex, yes, but what has changed is the environment around it.”
He cited five substantial elements, macro trends, that show how property management is changing.
- Cost of housing
- Legislation and regulation
- Industry consolidation and owner mix
- Changing tenant demographics and generations
- How technology is changing everything
Property management is changing and offering more services
Across the board, property managers are offering more services than ever before.
This is a way for property managers to diversify their revenue streams and find new ways to demonstrate their value to clients in a shifting market. Of particular note are services like property sales and brokering, financial reporting, building renovation, and investment advice, which have experienced average gains of 14 points over the last three years.
These are the types of services that are taking on new importance as landlords sell rentals, investors acquire rentals, and owners of all types keep a close eye on their properties’ profitability.
Business growth opportunities for property managers
The survey shows that 48 percent of property managers named growth a top priority this year—an increase of 9 points since 2017.
“Growth is the top priority,” Phillips said, and “the importance of efficiency has rebounded this year.” Profitability expectation was lower.
Though fewer property managers reported portfolio growth in 2019 than in years past, 70 percent did add new properties to their portfolios in the last 2 years.
Portfolio loss has prevented many property managers from achieving significant growth recently, with a strong seller’s market motivating some rental owners to sell their properties. In response, property managers have found innovative ways to generate more revenue without adding new doors, from expanding their services to retooling their fee structures and more.
“However, another piece to the profitability question that has really exploded is legislation and regulation,” Phillips said. “There are a lot of changes that are going on here and I just want to note we are looking through the lens of how it impacts our industry. This is not about politics. This is how these policy changes impact our economy. “
Phillips read a response from a participant in the survey that said, “So as laws become more restrictive we are forced to take additional precautions in our leasing processes and resident-retention policies. This is not always perceived well by owners and residents.”
Phillips said in an effort to combat housing-related issues NARPM is seeing “a lot of new regulations pop up, and we are trying to work with our localities. This is just the beginning.”
Top priorities for property managers
Property managers are laser-focused on growth and efficiency above all else—as they have been for four years straight, according to the survey
In our recent seller’s market, growth hasn’t come naturally, the survey says.
Property managers have had to fight to maintain their profitability and client base—their third and fourth most-selected priorities for the coming year. In addition, many have renewed their focus on effective communication with their residents, owners, and employees, needed in this fast-moving era where technology both facilitates and hinders relationships.
The future of property management
“Property management increasingly resembles the hospitality industry,” Phillips said in the webinar. “The role is becoming more of a consultant, especially as regulations complicate things for the landlords. Relationships are still the most important thing despite all prop-tech hype,” she said during the webinar.
“Customers are drawn to high-touch, personalized experiences,” she said. “It should all be in service to a strategy that creates great tenant experience and customer experience,” she said.
In addition, a few takeaways:
“First and foremost, make sure you ground every decision you make in the experience and relationships you are seeking to create with your owners and managers.
“Remember, focus on your local expertise. Property management cannot be handled on a national level. Awareness of local market trends matter.
“Diversify your revenue stream, and most of all keep learning and stay connected and take advantage of the learning opportunities out there for you,” Phillips said.
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Download Buildium’s 2020 State of the Property Management Industry Report
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