Three must-know property management trends for 2023 include portfolio expansion as a top item, according to Buildium’s 2023 Property Management Industry Report .
Here are three of the property management industry trends that the report says will exert major influence over the way in which small and mid-sized companies do business in 2023 and beyond.
No. 1 – Property management portfolio growth
The report says, “Looking specifically at small property management companies who manage rental properties owned by third parties, 92 percent plan to add new doors to their portfolios in 2023 and 2024.
A majority of respondents “said their companies plan to grow by a significant amount—a term that most respondents defined as an increase in the size of their portfolios by between 26 percent and 50 percent.
These portfolio expansion growth plans represent a more normal return to business which was seen pre-pandemic.
While portfolio expansion took the top spot in Buildium’s report, “efficiency and profitability took second and third place—two priorities that had fallen down the list during the pandemic as issues related to rental owners and renters took priority.”
No. 2 – Demand for property management services
The industry report says rental owners’ demand for property managers’ expertise remains elevated above the pre-pandemic period.
The number of rental owners who reported that they currently had a property manager jumped from 55 percent in 2019 to 64 percent in 2020, and held steady at 63 percent throughout 2021 and 2022.
“The good news is that our surveys have found that for small real estate investors, enlisting an expert’s help in these areas dramatically reduces their stress levels. So, in spite of the temptation to keep costs low by managing their properties themselves, Small-Portfolio Investors and Accidental Landlords alike continue to see the value in professional property management services,” Buildium says in the report.
“Our survey found that this is particularly true when it comes to collections, maintenance, leasing, regulatory compliance, financial reporting, and local market expertise.”
No. 3 – Competition in the property management industry
One of the keys to staying competitive is technology which is helping small property management companies stay competitive and profitable during the labor shortage.
National firms and institutional investors have expanded into popular markets—particularly in the Sun Belt—to seize the opportunity that those appealing cities present, often acquiring local property management companies for their portfolios, the report says.
“This has been particularly stressful for small property management companies, who have less room to compete on price than larger firms do,” Buildium says in the report.
So, one of the key elements of competition can be embracing more technology, such as:
- Take on more properties than they otherwise would have been able to.
- Focus more of their energy on relationships, helping them to attract higher-quality, longer-term clients and tenants.
- Get rid of their offices, allowing them to reduce their costs significantly while increasing their organization, efficiency, and consistency.
- Improve team members’ enjoyment of their jobs, allowing them to spend less time on repetitive tasks so they can focus on more impactful and fulfilling work.