Property Management, The Way Dad Did It
Mom and pop real estate investors turned landlords and property managers are handing their property portfolio to their kids. It’s a generational shift, yet their kids or grandkids or new recruits may not be ready, willing or able to assume the role.
The older generation built some handy skills through experience. They knew how to patch up problems, keep the peace, and maintain solid cash flow. But transferring those skills and experience to the new generation is a big issue facing the industry.
How Will the Next Generation be Onboarded?
And so far, the younger generation hasn’t shown much of an interest in property management. In order to attract them, the business of property management will have to modernize fast. And given the low salaries typical in the industry, compensation will have to be raised.
“Sixty percent of everyone in commercial real estate services will be at retirement age in the next five years,” said Rob Bridges, Transwestern’s national director of property management. “A huge population is nearing the end of their career life. There’s a huge gap in between generations.” — From Forbes report.
The Problem of Aging
Babyboomer property managers, those born between 1946 and 1964, are becoming too old to manage properties as they have. Some have lost interest and others want to retire. Times have changed and the joy they took in managing properties might not be present in the way they were used to.
And time and energy is less supply, building and landlord regulations are more strict, multifamily portfolios are growing, and tenants are placing new demands on owners and landlords. If the industry is to attract younger managers, adoption of modern systems will have to be accelerated. It’s well known that property management is lagging behind the technology adoption curve.
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In order to attract younger managers, the older generation may have to launch this foray into Proptech and business efficiency first, provide training, and raise wages.
Which property management skills are in most demand? It appears budget management is what firms will pay highest for.
A Rapid Transition to the Next Generation
One of the top property management trends in 2019 then, is how younger property managers are taking over. And they will change how property management is done. From connected devices such as smartphone-based communications and smart door locks, to online payment automation, to improved accounting solutions for property managers, they’re ready to go modern.
This new generation likes using property management apps and services for everything. It’s what they’re used to using during most of their lives. They may feel they don’t have their parent’s maintenance skills and instead would rather outsource maintenance and other management tasks to a property management company.
The new generation is more informed about investing and rental housing markets outside of the city they grew up in. The cap rates in many cities are down to 3% in some cities. In fact, this generation is more likely to actively keep up on the best cities to buy rental property.
They want to improve performance and they know they need to specialize their own role to get better results. New property managers are more likely to be up on housing market forecasts, building property management leads, and reading expert level blogs to hone their improving skills. If they’re going to run a property management function or a company, they know they need CEO level skills to keep pace with today’s property management sector. They’re also aware that managers today need what some call full stack knowledge — local, technical, and financial.
Proptech or property management software will have a big impact on how managers manage and on investors ROI.
How are you transitioning your way out of property management and onboarding the new generation? What skills do you look for in new recruits and how will they find your company?
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