Your New Profit Center: Maintenance
Is the possibility of a recession about to alter how you’ll be doing business? Will you need to adjust your property management service packages?
Hopefully, you have reports that identify profitability changes and where you can achieve better results for owners. If a recession is on the way, you’ll be better able to navigate any turbulent waters.
Yes, a Recession Can Hurt
A post on Forbes by Aaron Marshall published just before the Covid recession suggested rental owners not worry about a recession. Well, we know many landlords lost their properties and others faced horrendous losses of rental income, property damage, had squatters, legal challenges, and other troubles.
Yes, rental demand is high, supply is low, new construction is dropping fast, and renters have good jobs and savings.
It’s easy to get complacent and not respond to the threat of recession. If you’re proactive, it might simply mean a shifting of budgets to new tasks.
What Will Happen During a Recession?
- increased termination of leases, churn rate grows, turnover losses increase
- rent late payment and default increases
- Covid fears decreasing, thus tenants willing to share units again
- density will increase putting more stress on utilities and amenities
- tenants are stressed and dissatisfied with their situation
- rising vacancy and churn
- rising costs vs rents that aren’t increasing as fast
- rents may fall in 2023 putting pressure on you to do the same
- extra incentives needed to get renters to sign high priced leases
- financing costs rise
- repairs and maintenance vs new equipment purchases
Refocus on Asset Maintenance
A new strategy might include promoting your property maintenance services. Since landlords will not be buying new equipment, HVACs, roofs, flooring, appliances, etc., 2023/2024 could a be a renaissance period for maintenance and repair. Leasing, tenant retention and tenant service will also be on the priority list.
Uncertainty May be More Harmful
Renter’s confidence is being eroded. Rising costs, expenses, rent, transportation and rising jobless claims means their commitment to their lease is questionable.
This uncertainty makes them feel out of control and unable to plan. It may increase lease renewals for some, however others may adjust to prepare for lower net income and job loss by leaving.
Stats show a strong recent trend of renters looking out of state for rentals. That’s because of low supply, but property managers will have to focus on tenant retention strategy for the next few years.
We have no real way of knowing how central banks and governments will respond to higher interest rates, falling demand, and persistent inflation. It may be a political thing. Your financing costs will rise along with costs for maintenance work, equipment and appliances, repairs, taxes, and wages. That will hit your budget.
Given all the uncertainty and downside potential, it’s wise to build a contingency plan.
ManageCasa’s features for property maintenance:
Receive tickets with images via mobile phones, schedule repairs, collaborate, keep parties informed get paid online all with ManageCasa.
Lease renewals, cost reductions, cutting service calls, and preventative property maintenance will be the focus going forward.
Absolutely review the most profitable property maintenance services so your marketing and promotions are centered on what house and apartment landlords will have on their minds. Set appropriate goals and benchmarks for property maintenance programs and use ManageCasa™ to help you track maintenance success.
Review how landlords choose property maintenance companies and what to look for in the best property maintenance contractors.
Discover more on the ManageCasa blog:
Property Management Software| Property Maintenance | Maintenance Services | Property Maintenance Companies | US Property Management Companies Near Me | Preventative Maintenance | Property Management Accounting Software | Inspection and Maintenance | Tracking Maintenance Calls | Property Management in a Recession | Property Maintenance Startup | Common Rental Repairs | Property Maintenance Guide