Trending in Property Management
As the rental management industry moves forward on a quicker timeline, it’s important for a property manager to develop a strategy to help them anticipate what’s ahead, and respond long before events play out.
Those trends we’ve discussed here in past years have deepened. And other changes, challenges and opportunities are slowly evolving but will be a fixture for your rental business in the next 5 years.
Macro and MicroTrends Make it Complicated
We’ve listed the major category items below for your review. There are micro and macro trends posing challenges for property managers looking to scale up or optimize their current business operations this year and into 2023.
Issues such as acquisitions, inflation, work from home, hacking threats, lack of affordability, and rent controls are upon us now. The fallout from these will increase the business challenge for property management companies.
Acquisitions will pick up as smaller landlords run into financing, churn, and eviction issues as interest rates rise. Any recessionary activity will only increase pressure on landlords cash flows and balance sheets. So far, employment and wages are net positive in 2022.
Yet, will poorly managed rental portfolios being acquired be the real trend in the second half of 2022 and into 2023?
Smart management through technology is another trend we take for granted. Next generation property management software is encouraging more digital adoption this year.
24 Current Trends and More Coming
The trends of inflation, rising financing costs, higher labor costs, and rent price trends are big news right now. Were you ready for them and are you handling these reasonably well? Adopting a great property management software platform is a trend, yet you’ll need new managerial skills and the ability to foresee these immense challenges so you can avoid profit destroying consequences.
Studying the Trending News and Technology
A lot of people take a light interest in trending market changes such as demand outlooks, price trends, new technology, and more, yet don’t act on that knowledge. 2022 should be a year of asking good questions, to deal with challenges of taxes, renter migration, economic swings, and more.
And in 2022, more lessons will be learned. You’ll be asking a lot of questions such as:
- should I buy or manage more rental properties?
- should we raise tenants rent price to recover pandemic losses and inflation this year?
- should we investigate additional digital amenities and services?
- is this the wrong time to upgrade/renovate apartments and houses?
- how can you capture more leads for your property management company?
- is a recession just ahead and how do we minimize risk and hedge our assets?
- is remote at-home workstyles going to persist and what do we need to capitalize on that trend?
- how can you automate more work?
- how much do proptech amenities/services affect the choices of younger rental prospects?
24 Property Management Trends
1. Management Efficiency: Reductions in staffing, cash flow, revenues, and rising overdue accounts receivable means having to run a property management business efficiently. Thankfully, your property software is designed to come to the rescue.
2. Business Growth: Whether by design or growth hacking, some landlords and property management firms will be intent on growing a little. Many expect some challenges, but as the economy picks up through 2022, opportunities will grow. There are many reasons why landlords decide to change their property management service provider. The trends discussed here might be why.
3. Focus on Tenants: Efficiency, growth and profit were the previous top goals pursued, according to surveys. Yet 2022 is a much different year, and 2023 could be a turn the other way. Smart property managers are working on better tenant advertising, screening, and creating an enjoyable tenant experience. Landlords expect better results from being careful about tenants they rent to.
4. Rising Taxes and Closed Loopholes: Governments having overspent and facing rising costs, higher borrowing costs and materials costs, along with rising wage costs will need to charge more income and property taxes. They’ll also make changes to prevent tax evasion and to capture more revenue from real estate. In high tax states, the coming rise in taxes could threaten many landlords.
5. Renter Migration: The migration to low tax states, along with work from home workstyles has changed the demands of renters. Renters want more room, lifestyle, amenities and high speed Internet so they can work and live in the same space without sacrificing their health too greatly. Landlords who cater to their needs, especially in states such as Texas, Florida, Tennessee, and Montana stand to enjoy strong demand and higher rent prices in 2022/2023.
6. Choice of Location: In past markets, renters scrambled to capture slim pickings near where they worked. Many renters who are financially enabled now have a choice of where they might rent. And work at home workers demand to live in whatever towns or neighborhoods work for them.
7. Technology and automation Trends: New cloud services, Internet-connected devices, and automated services have arrived and property managers and tenants really like them. In fact, the work from home trend goes hand in hand with Proptech tools. Everyone needs the cost-efficiencies of remote work and high speed bandwidth will be a part of it. More fiber optic service is being implemented in neighborhoods, which will work well for property managers and their distributed staff.
Virtual showings, web-based services, tenant apps, online rent payment will ease workloads for busy property managers. The era of virtual property management is well underway.
The demand in 2022 is for all in one cloud based platforms that are easy to learn and use. Full SaaS platforms aid in workflow automation, meet changing rental regulations, optimize financial management, and offer lease driven accounting and expense management which reduces administration.
8. Demographic Trends: Millennial and Gen Z tenants are comprising more of the tenant market and they want high tech digital solutions. Without the technology, they consider a landlord backward or irrelevant. Landlords as well, choose property management companies based on tech expertise.
Without technology, a property management firm won’t possess the efficiency, competence and capacity to scale up to allow owners to achieve profitability.
In some cities, apartment rental demand will increase (e.g., San Francisco, Boston, New York, Miami, etc.) occupancy rates will likely shrink further as the pandemic ends. Workers quitting jobs and migrating to southern, low tax cities such as Austin, Dallas, Houston, Orlando, Tampa, Jacksonville, Charlotte) will mean challenges for the cities they leave behind.
10. Rent Negotiation: The market could be divided into 2 sectors: those who can afford rent and those who can’t. More high income renters will appear and they’ll be willing to pay much more. Yet they’ll want better services and amenities whether in a house or low-density townhouse/condo or apartment situation. There will be more rent negotiation, especially as renters threaten to move out in 2023.
Landlords and property managers will have room to negotiate higher rents in exchange for improved amenities. House rents are rising everywhere. You’ll want to improve your negotiation skills and understand the playing field.
11. Returning Economy and Trade Tariffs: The pandemic was a tough time with massive unemployment in Australia, US, UK, Germany and Spain. The tourism, restaurant, and entertainment sectors will recover and tenants will be more reliable with paying, and rents will rise. Demand in tourism zones will increase as the BA2 variant subsides throughout the summer 0f 2022.
12 . Government Restrictions: given how high housing prices are and how high rental prices have become in cities such as San Diego, New York, San Francisco and Los Angeles, the cries for rent controls will get louder in 2021. Restrictions on rent payment increases and eviction moratoriums will continue as rent prices race beyond what the market can afford.
13. New Construction Trends: besides big growth in new construction, and government programs can impact your future rents and income potential.
Large multifamily buildings will come back once Covid 19 is diminished, however developers will be offering huge concessions. Big developments near key transit locations will receive priority from government.
14. Interest Rates and Inflation: financing, wages, utilities, and operating costs will rise in 2022/2023 thus cutting into your net income. Smart financing will play a bigger role for larger landlord portfolios and property management service firms may see budgets shrink against rising business costs. Smart property management service fee designed and negotiated will help ease inflation losses.
15. SaaS Software Technology: Automation is the big ask in property management this year. Managers need to get tech to do more to easy their rising workloads and to scale up their business. New cloud based SaaS software technology is delivering the desired capabilities. Managers will see further improvements in property accounting, time management, tenant screening, virtual leasing, online payment, property maintenance and repair services. Some offer complete solutions while some with little more than simple apps are found inadequate.
16. Demographic Shifts: Baby boomers are finally retiring and the Millennial generation is out of their parents homes and into renting their own apartments. Some renters will continue migrating out of the cities to rent more roomier houses. Your rental products and management style will gradually be reshaped to suit them in 2022.
17. Startup Property Management Companies: We’ve all heard about the growth in accidental landlords. Estimates are that 100,000 new startups will enter the rental business. Buying rental income properties is popular and many are realizing there is big money in property management. They will be cautious and knowing that property management automation and growing their portfolio are keys to operating a successful property management company.
These newcomers to property management won’t want anything to do with old PM practices involving spreadsheets, receipts, and paper check payments at month’s end. No, they’re not trained pros and they’ll want to simplify right away using property management software.
18. Industry Consolidation: Big property management conglomerates are entering the independent property rental market. What are they looking for in properties or in property management companies they’d like to acquire? What services will they offer (e.g., maintenance). Will investors be a threat to the rental market sector?
19. Property Management Specialization: Given growing complexity in PM licensing requirements, government legislation, lender regulations, insurance requirements, environmental constraints, and accounting and taxation property management professionals have begun to specialize. Will expertise in any area give you a business advantage? What training and licensing must you obtain?
20. Rental Property Insurance: Changes in legal liability mean more renters should have their own renters insurance, and they will. Yet, fraud is prevalent and premiums are rising fast in some regions. Similarly, landlords will also need to be sure of their own landlord insurance. Is insurance coverage for them a value add for your property management company?
21. Digital Amenities including Keyless Entry, 5G and Free Wifi: Here are some more benefits tenants love. It’s for large multifamily buildings or large portfolio managers to either provide free wifi or create it as an affordable option for tenants. 5G Wifi may be the coin-operated washing machine of the next 5 years.
22. Smartlocker Storage: We’re in the era of Amazon shopping. Amazon’s growing share of retail shopping is shocking. Tenants will need some way of accepting packages at their apartments, many of which don’t have suitable storage. Smart lockers allow them to pick up parcels when they can. The tenant receives a digital message and unlock code on their smartphone. Yes, another app.
23. Property Management Marketing: Given the complexity of property management today and how new client opportunities are happening as landlords scale up portfolios, property management companies realize they have to market their services better. Otherwise, competitors will gain marketshare.
Managers will look to integrated social media, PPC ad campaigns, SEO, and website content to build presence.
24. Greater Demands from Owners: Owners see what’s available via other property management services companies. They’re looking for better financial reporting, help with rent collection and evictions, and advice on financial management.
Some are turning to lead generation and brand building strategies. Using social media advertising and content marketing on their website, the best companies will be making noises this year. Building a brand and communicating services will drive new business in growing markets.
Ever improving technology is the asset that gives property management firms a competitive advantage. Continuously applied, it pushes the modern property management company ahead one day at a time, until competitors simply can’t keep up. Be sure to stay updated on property management technology and strategy via our blog.
Please share the news and trends with your real estate associates and friends.
These are just a few trends in property management software to be aware of in 2021. More are coming and we’ll let you know right here. See the Reviews of the Top Property Management Software. Subscribe to our blog for continuing insight on technology and housing trends.
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