After the pandemic, the world has experienced a disruption in the supply chain and economy. Inflation and economic downfall are two major outcomes. But, surprisingly in the US, the property market trends are positive. It is a unique situation where economists fear a recession but at the same time, the property market is booming.
Renter Occupied – Different Age Groups – Source: NMHC
So in this unique situation, what should you do as an investor or a property owner? To answer that question let us understand the property management trends for 2023. If you understand the management trends you will get a clear picture of what lies next.
What is Property Management?
In simple terms, property management is all about managing the property by the property managers. The property manager takes responsibility for the daily oversight of the rental properties.
Property management depends on the type of property. But overall it is all about maintenance of the property, daily repairs, and regular upkeep of the rental property.
As per the present property management trends, the industry is struggling with some of the ground realities. And to overcome these challenges the property managers have to alter and modify their policies. These new strategies are based on the facts of the property management industry trends of 2023. With these strategies, they ensure profitability and sustainability
Some common issues as per the latest property management trends are higher wage costs, a rise in interest rates, delays in rental payments, remote work options, unemployment, debt, and higher maintenance for property owners present.
Types of Property Management:
The four main property types are as follows:
Residential Property Management
The property manager has to manage single-family homes, rental apartments, townhouses, etc.
Commercial Property Management
Commercial property managers look after commercial properties like hotels, offices, commercial complexes, and other working spaces.
Industrial Property Management
Industrial property managers look after the warehouses, manufacturing facilities, and distribution facilities.
Special Purpose Property Management
Theatres, sports arenas, schools, universities, resorts, etc. fall under this category.
Property Management Trends in 2023
Let’s take a look at some of the latest emerging trends in real estate for property management in 2023:
- The rise in interest rates and inflation:
When the banks increase the interest rates, the net income of people is reduced. They have to pay more on their mortgages.
When the net income is reduced, it reduces their purchasing capabilities. Furthermore, we are witnessing one of the highest inflation rates in the last few decades. Inflation also reduces the purchasing capacity of the people as they pay more for the same products and services.
Data source: Statista – Inflation and wage growth
All these factors that lead to lower purchasing and spending capacities ultimately lead to low demand for property and property management services.
- High rates of the property market:
The income of people has not grown as compared to the inflation. The cost of buying a house or a property has also risen. And this has led people to rent a property rather than buy a new property. This ultimately has become the major factor in deciding the property management trends in 2023.
Renter migration has also increased the demand for rental stays. Due to the migration of renters to lower-tax states and work-from-home opportunities, people tend to demand good property maintenance and a higher standard of living at affordable rent prices.
- Labor and Staff Challenge:
The role of a property manager is demanding. This includes managing labor staff, high pressure to work during the weekends, completing work within given time limits, and managing a team that is facing disturbances in their work-life balance due to many economic factors.
Data source: Statista – Labor costs in the United States
To improve the quality of work and workers, the company needs to provide flexibility in employees’ working hours, support, and maintenance, which gives satisfaction to the employees and results in good outcomes.
- Increasing demand for single-family rentals
To maintain a high-quality lifestyle and due to the higher rates of property, single-family rentals are in great demand in 2023. Due to high interest rates people are reluctant to buy a property. This is one of the major rental property trends we are witnessing this year.
Therefore, the demand for single-family rental has sky-rocketed. Especially, the rentals that provide good apartment living standards, improved privacy, and without any long-term financial commitment is growing.
The construction market hasn’t subsided due to high-interest rates. And therefore, whether it is a single-family rental or a multi-family rental, people have more choices now than ever before.
- Increasing demand for property management services
So now we know that the demand for rental is growing substantially. The impact of this on the property management trends in 2023is a direct increase in the responsibilities of landlords too. The competition is high, the renters have choices and the interest rates are not lowering soon.
Those landlords who are investing and pushing the limits of their property management services are high in demand. They are making good profits. They need to have a smooth and timely process for background checks, government compliance, maintenance advice, rent collection, etc. These are the key elements of property management that they cannot ignore.
- Tenant requirements for better facilities:
As more people have the option to work from home, the demand for rentals that can provide a good environment for the same has grown. People prefer properties that they can use to complete their office work efficiently and at the same time use it as their home. Here is an important property management industry statistics chart for rentals that will help the property managers to decide which part of their rental property requires more focus and improvement.
The basic requirements have changed and this has impacted the property management trends in 2023 dramatically. A property manager now has to work on two fronts – Facilitating the environment for work-from-home and at the same time the basic necessities of a family home.
Surveys show that the demand for washers and dryers, sound-proof walls, high-speed internet, walk-in closets, etc. has grown drastically. Providing good amenities and meeting the requirements of these new demands by the tenants can bring great experiences as well as challenges for any property manager.
- Increase in taxes:
When the government has to pay more to borrow and spend, the taxes on property might increase too. So property managers and landlords in high-tax states might face a new challenge in 2023 and beyond.
- Good Marketing Strategies:
In this modern era, good marketing strategies are necessary to attract attention. The property managers are required to create mobile-friendly websites for easy accessibility for the renters to use your services. Social media has become a huge platform to promote management services, and good ratings and reviews may attract a number of quality tenants. This develops a good relationship between the tenant and the property owners.
- Proper Use of Technology:
Another major factor that will affect the property management trends in 2023 is technology. With the growth in demand, quality of services, and high competition, property managers will have to use technology to automate important aspects like monthly rental collection, renewal of rental contracts, maintenance request platforms, and more.
This will help them save a lot of time and resources so that they can focus on their marketing strategies and beat the competition. This will also ensure liquidity and high customer compliance.
Any property manager who uses technology efficiently will have an edge over those who do not invest in technology upgradation.
- Energy Efficiency:
Everybody wants to be eco-friendly nowadays and wants an energy-efficient home to reduce their carbon footprint. The demand for energy-efficient homes and offices is on the rise. Due to inflation, the spending capacity of people has decreased. The energy price might also increase due to inflation.
This has forced people to move to energy-efficient homes. This saves them money. This will be another unique feature of the modern property management trends.
Landlords will have to invest more in making their properties energy-efficient. A solar-based heating system and an electricity generation system is such an example. But this will add additional load and challenges to property managers. This will help them stay ahead of the competition in the long run.
How Property Management Companies Can Benefit Adopting Payment Trends?
As mentioned earlier, one of the major factors that will define the property management trends of 2023 is the adoption of better payment trends. But, how will the property management companies benefit by adopting the payment trends? Let us understand.
Ahead of Competitors: As a property manager one has to handle many things. Two important things are rent collection and addressing the grievance of the renter. If both these systems are automated it can bring in a big change. The renter will not have to worry anymore about paying the rent on a date. The renter will not have to worry more about calling the property manager for complaints and follow-ups.
Rather property management software software or a mobile app can help make things easy for all. A renter can register a complaint and the property manager gets the notification in the to-do list. Based on the complaint the property manager can assign the work to a vendor with just one click. And once the vendor completes the work the renter and the property manager are notified at the same time. In short, this automated system is fast, efficient, and automated. Such automation will set new property management trends in 2023 and beyond.
Payments without barrier: Property managers have to face many more new challenges than ever before due to the new property management trends in 2023. One of the major challenges is to collect the payment.
But, if the company upgrades to an automated payment system with the best payment processor, things can be totally different. It will lead to a barrier-free payment collection. For example, the company can use new technology for automated rent collection, upcoming rent reminders, a renter complaint management system, etc. This will not only help in the free flow and timely collection of revenue but also help the property managers save a lot of time for other important things.
Happy And Loyal Renters: When technology makes things easy for the renters, they are happy. With the new technology, their payment automatically gets transferred to the landlord without delay. Their complaints are easily registered and taken care of without multiple phone calls. They can see the history of their payments and complaints. And all these facilities make a renter satisfied and stay loyal.
Again, this gives you a better lead in the competition.
Data And Reports: With technology, you make life easy for the renters as well as the property managers. But the other thing that you get is a proper record or the data of all the transactions made by the renters. You also get a clear report of all the complaints raised, what solutions were done, how much time it took for a property manager or a vendor to provide the solution, what was the feedback of the renter, etc. A company can use this data to improve the efficiency of their team.
This data can also help the property managers to focus better on relevant areas.
How To Overcome Property Management Trends in 2023?
Let’s check out some steps needed to overcome these trends:
- To stay ahead a landlord should fulfill the renters’ expectations and give them a satisfactory living experience. It will improve the owner’s reputation and boost their ratings and reviews.
- Companies should clearly define the policies, guidelines, and principles related to rent collection, rental maintenance, rental screening and inspection, and communication. This will help all the parties involved. Well-defined documentation not only helps in improving transparency but also helps in resolving disputes easily.
- Trained and updated staff are a must. Without a trained staff a company cannot stay ahead of its competitors. A trained staff also improves the renter’s experience leading to overall improvement of the company’s reputation. Therefore, it is important to train and review your staff regularly.
- Technology and automation are the key factors in today’s era for getting quick and easy access to almost everything. Renters prefer to fill out their contracts online rather than bothering to do it offline. An automated payment and a robust complaint management system can be achieved with technology.
- To manage the labor challenge, offer more competitive wages, benefits, flexibility in working hours, and a supportive work culture.
- Single-family rentals are in high demand and the demand will stay there for long. So companies can focus on this segment for better returns.
- Work-from-home amenities are in great demand. After the pandemic, more companies are opting to give their employees the option to work from home. Therefore, the demand for homes that provide various amenities and a positive environment to work from home is in great demand.
- Automated payment is the key element in defining the property management trends in 2023. An automated rent collection system can be beneficial for the company and the renters. It facilitates barrier-free payment collection and customer satisfaction.
- Another factor that may affect property management trends is the growth towards community-focused property management. Facilities such as community spaces, events, and various community activities can bring a warm, welcoming atmosphere to the tenants, which brings a sense of satisfaction and retention to them.
After analyzing the latest property management trends, it is clear that the demand for rental properties, especially single-family rentals, is at an all-time high. The work-from-home trends have pushed landlords to add more facilities to their properties. All this has further added challenges to the property managers.
Using technology to automate payment and complaint redressals can help companies achieve an efficient property management system. A company that understands property management trends and adapts accordingly will certainly stay ahead of the competition and make profits.