The last few years have been quite challenging for property managers. The increased rental prices, rising inflation, and a significant fall in property demand have made it difficult for businesses in the property market to thrive. Many of these challenges have continued in the post-COVID era. In addition to the increased property cost, expensive maintenance, debt, delays and defaults on rental payments, and untrained staff are a few things that have affected even the most professional and highly experienced landlords.
Today, property management trends like automation have significantly improved the industry and have enabled renters and landlords to communicate seamlessly. Keep reading to learn more about the different property management trends to watch for in 2023.
What is Property Management?
Property management refers to taking care of the property and handling all day-to-day requirements of managing rental properties. They oversee all property-related operations to ensure everything is going smoothly and the renters do not face any difficulty.
The level of management and upkeep a property requires may vary depending on the type and size of the property, but a few basic things all involve repairs and regular maintenance. The industry is going through many challenges, including delayed rental payment, debt, higher maintenance, a rise in remote work, high wage costs, and untrained staff. Keeping up-to-date with the latest property management trends will help you overcome these challenges effortlessly. Below, we have listed a few property management trends you should know if you are entering the property market or are already part of it.
Top Property Management Trends
The property management industry is currently thriving. Despite the challenges it faced amidst the pandemic, its growth doesn’t seem to be slowing anytime soon. The industry is believed to be one of the most thriving and profitable sectors in the coming years. One of the most significant factors that drive growth in this industry is technology. Managers are focusing more on experimenting with different software solutions to figure out the one that can deliver maximum value. Managers need the right tools, software, and automation technology. That’s all it takes to ensure profitability in the property management business.
Many landlords and property managers show interest in price trends, demand and supply, and new technological advancements but do not do much to incorporate these changes into their property management business. In the year 2023, your focus should be on adapting to the trends. Here are a few questions you must ask yourselves:
- Is there room for buying more rental properties?
- Should I raise the rental prices of my property to recover from inflation and pandemic-related losses?
- Should you add more amenities and advanced facilities to make your rental property more appealing?
- What’s the best way to generate quality leads for your property management business?
- Is this the best time to renovate the rental apartment? Or should you wait a little longer?
- How will remote work trends affect the property demand in your location? And what can you do to thrive in all economic situations?
- Is it possible to automate more work?
These were just a few basic questions. You should learn more about the property market trends and take your time to incorporate the required changes into your property management business. Let’s get straight to the top property market trends you will see in 2023.
Retaining Team Members
Property management has always been a tedious job. From being available for customers 24 hours to handling maintenance and emergencies, there’s a lot on your plate. One of the biggest challenges that property managers have been experiencing for years is a lack of staffing. It’s become difficult to retain employees and find new candidates who can manage your property business seamlessly.
It gets even more challenging when you have to handle your untrained staff with outdated management tools. You must take steps to make work more organized, better, and efficient for your team. They should feel like they are accurately paid for the service they offer. For instance, updating your management software or using automated technology to streamline your routine business operations are key to ensuring smooth workflow. Do not burden your employees with repetitive tasks, which can easily be accomplished using automated tools.
Moreover, you can offer flexible working hours to your employees. This will offer them the convenience of working at their own pace while also making them feel valued.
High Property Cost
Gen-Z is all set to buy homes in 2023, but that doesn’t mean they are capable of doing that. The rising inflation and ridiculously high home prices keep people from investing in their dream homes. The median sale price of properties in September 2023 was $412,502. The average income of an individual in the United States is around $69,717.
To finance a home, an average person must have an income of at least $65,000 a year, zero debt, and a good credit score to secure a home loan at 5-6 percent interest for 20-30 years. They must also be able to provide a down payment of at least $30,000. If the individual meets these requirements, they will be able to finance a home worth $200,000.
Portfolio Development
With inflation slowly decreasing and things getting back to normal, investors and property dealers are highly likely to consider expanding their investment portfolio. The mortgage rate has been reduced, and it’s a perfect opportunity for investors to take more rentals in 2023. Property managers do not only aim to buy more properties, but one of their biggest goals is to provide a positive customer experience to their tenants.
As mentioned earlier, staff training and satisfaction have also become important for managers. It has been challenging for investors to take on more rentals amidst the pandemic and post that. But now that labor shortage, inflation, high property prices, and other similar issues seem to be resolved, property dealing has become more effective and easier than before.
Property Management Service
Adding more rental properties to your portfolio will require a third-party management service provider to take care of the rental services, property maintenance, tax obligations, and other routine tasks. You may have handled your tenants alone, but now it’s best to leave it to a professional. Delegating these responsibilities to someone who specializes in property maintenance is the best decision.
It will free up your time, allowing you to focus more on expanding your portfolio instead of handling your tenant’s complaints or maintenance requirements. Property management service ensures that the best value is provided to tenants. They might also handle your staff. A property management service provider handles everything from running background checks on tenants to collecting rent and from handling government compliance to maintenance.
Marketing Strategies
Another property management trend we’ve seen in 2023 is the increased awareness of digital marketing. Property managers are considering content marketing, mobile-friendly websites, social media, PPC, email marketing, and other marketing channels to reach out to a broader audience. Usually, marketing starts with website development.
A high-quality, well-designed website that offers informative content to your target audience can attract their attention and boost your revenues. Local SEO has helped people target tenants based within a specific geographical location. Property dealers and managers focus on developing attractive, mobile-friendly websites that can provide their visitors with accurate information about different properties, rent, maintenance, etc.
Nowadays, most tenants and homebuyers look for a suitable property on the internet. They use the filter option to search for a property within a specific location and with the right amenities. With the right marketing strategies, your property business will flourish.
High Cost of Business
While everything seems to be expected after the series of global events in the last few years, inflation doesn’t seem to be getting under control anytime soon. High wages and high maintenance costs due to the increased awareness of sustainable living have made it challenging for property managers to plan a budget for the increased expenses. Usually, they handle it by raising the rental prices, but that can result in a poor customer experience.
Increased Demand for Single-family Homes
The increased prices of properties and the rising inflation have raised the demand for single-family apartments. Individuals are reluctant to rent houses because of the high prices. That’s one of the biggest property management trends in 2023. As a result, people are considering single-family units. The focus is more on small apartments that offer quality living standards, are well-designed, offer privacy, and are not associated with long-term financial commitments. Fortunately, renters do not have to worry about the available options in single-family apartments. As the property management business is growing exponentially, you will never lack options in single-family and multi-family units.
More Focus on Tenants
As important as finding a tenant is for a property manager, achieving their satisfaction can be super challenging. The focus of managers has shifted to tenants. It’s more important for them to provide tenants with the best service, whether it’s resolving their issues or accepting the payment terms. The ultimate goal is to provide an enjoyable and high-quality tenant experience so that they can live peacefully. Achieving tenant retention is crucial, as finding new tenants requires a lot of hard work.
More Use of Technology
Many hectic manual operations, which were super time-consuming and required a lot of effort in the past, can now be automated. With cloud-based operations and the innovation of automation tools, financial tasks have become a breeze. For instance, data entry and accounting operations can be performed using automated tools. Likewise, automated technology can easily conduct manual and repetitive jobs like rent collection, requesting maintenance, rent payment, and other maintenance or financial operations.
The virtual tour is one of the latest solutions that has been gaining immense popularity in the property management business. Now, you no longer need to show your property in person to your prospects. Just upload a live virtual tour of each room and every corner of your place on the property website and wait for your customer to respond. The 360-degree view of the entire house will help them get a clear picture of everything within your property.
Increased Competition
Finding a new tenant or retaining the existing one is not a cakewalk. As the industry is getting more and more competitive, you need to come up with exciting offers, lower rental prices, flexible payments, and smooth maintenance to keep your tenants. The increased competition might make it tough for small property managers to compete with those who are popular and have many rental properties. One way to achieve that is by offering authentic and personalized services to your tenants. As a result, many property managers are relying on automation and upgraded technology to set themselves apart from their competitors. It also helps automate routine management tasks so that they can focus more on other crucial responsibilities.
Energy Efficiency
With the growing concern regarding the environment and your individual contribution to the environmental effect, people are looking for energy-efficient homes. So, what exactly does it mean for property managers? As the name implies, the goal has been shifted to living in a sustainable space where they incur minimal energy costs and can contribute to the environment through a green living approach.
Many property managers have already embraced the trend by installing solar panels, which allow tenants to run as many electrical devices as they want without bearing a high energy bill. These are not only energy-efficient options, but they can help you save significantly in the long run. That attracts the tenant’s attention and will likely get you the best individuals for your rental place. Advertising your property as energy-efficient is the best marketing strategy for property managers.
Location Choice
Gone are the days when a majority of renters would choose a home near their work location. They would also consider factors like the distance of school, grocery stores, restaurants, public transport, and theaters from their home.
Today, as people have adapted to the work-from-home and hybrid work trend, they are more concerned about the serenity, overall ambiance of the place, and the house itself than its location. They are considering all neighborhoods, towns, and residential areas. Others who commute regularly to work might want to stay in a location close to their office so they save money and time in their daily commute.
Amenities
A house and neighborhood that offers a safe and comfortable space is not a trend but a new living standard. With people migrating to low-tax states and adapting to remote work opportunities, their housing demand has changed significantly.
They want a place with sufficient room to accommodate their families without compromising comfort and privacy. They look for a space with a stable and fast internet speed. They are also likely to run a background check on other tenants before moving in. For families, safety, privacy, and a comfortable lifestyle in a house that’s equipped with all basic and advanced amenities is the priority.
A few crucial things that renters seem to be demanding in single and multi-family units are:
- HVAC systems
- Washer
- High-speed and stable internet connection
- Huge closets, preferably walk-in
- Soundproofing
Some high-income group renters might also demand a pool, gym, and exterior space where they can hang out with their families.
Supply and Demand
The rental apartment demand will increase in certain cities, especially the low-tax states where more and more people will migrate to enjoy a peaceful and low-cost lifestyle. While that means an increased demand for apartment rental in these areas, it might be challenging for the cities they leave. The occupancy rates in these areas will drop significantly. A few low-tax cities where employees will most likely migrate to, include Dallas, Orlando, Tampa, Austin, and Charlotte.
Rent Negotiation
Another major trend in the property market in 2023 is rent negotiation. There will be two categories of renters—those who can easily afford rent and those who struggle to pay a high rent. The high-income group will demand better facilities and advanced amenities no matter their chosen housing facility. Whether it’s an apartment, condo, or a mobile home, they will threaten the landlord to leave the house if they don’t get the right amenities.
Due to the increased competition in the property market, this group of people will have more options in terms of apartment rentals. Landlords can raise the rent, but they must add the advanced amenities to make their rental apartment worth the extra price. With property rent increasing in nearly every state, property managers need to learn negotiation skills to get their dream home at their desired price.
More Startup Businesses
As the property management industry is flourishing, we are expecting to see many newcomers building and expanding their portfolio in this area. They will be interested in rental properties and won’t rely on old-school practices for property management.
According to the estimates, around 100,000 new startups will be expected to enter the rental property market. They will be trained to handle property management using automation, SaaS software, and other advanced tools. These professionals won’t have anything to do with spreadsheets, receipts, and other paper-based methods. They will set up automation software to automate most of their tasks, including maintenance requests, recording payments, and so on.
Demographic Shifts
As baby boomers have retired and the gen-z population has already left their parents’ homes and are in search of new rental apartments, the demand for cheap rental homes will be on the rise. Embracing this demographic shift and adjusting your property management business to suit your audience’s needs and preferences are key to thriving in the competitive market sector.
Rental Property Insurance
Tenants are more concerned about their privacy, safety, and their requirements. They want to be assured that they get the services they were promised. To prevent rent-related complications, renters will have insurance protecting their interests. In the same way, landlords might also want to consider getting property insurance to ensure no damage to their building or violation of the agreement.
How Property Management Businesses Can Benefit from Adopting Consumer Payment Trends
From buying groceries to booking movie tickets, consumers love the flexibility of making payments with a single tap of a button. While most industries have embraced the new payment methods, property management businesses still rely on cash, bank deposits, and credit card payments for rent. Experts believe that the more options your renters have in terms of paying rent, the higher the chances they will clear it fast.
It will provide them with a frictionless experience and ensure the landlords get paid on time. Moreover, tenants who are offered payment flexibility tend to have a higher level of satisfaction with their landlords as compared to those who are supposed to pay through checks and cash. Limiting your payment methods won’t just result in customer dissatisfaction, but it’s associated with an increased risk of late payments.
Automation also plays a big part in streamlining payments. Automated software enables renters to register a complaint if they experience any issue with maintenance or the living standard. A notification is sent to the landlord showing these complaints, and they can take action accordingly. This results in happy customers. Their payment is sent to the landlord automatically when it’s due, and their complaints are heard. Automation and the latest payment trends have made things effortless for renters and landlords.
Conclusion
The advancement in technology and the innovation of AI and automation software solutions have given many advantages to property management businesses. Keeping up to date with these tools and the new trends in the industry will help you stay ahead of your competitors. These were only a few property management trends that most startups and experienced managers are expected to adapt to in the coming years. You should research many technology and property trends before entering this market.
Last modified: October 25, 2023
