The year 2016 has been exciting to property managers, to say the least, particularly on technological advancements. Going by recent developments in the real estate sector, it’s pretty obvious by now that every year marks a milestone for the industry, with new trends affecting not only property managers, but also owners, renters and buyers.
It may be difficult to conceptualize now, particularly for the new breed of property managers, but about 15 years ago, the real estate industry was a different game altogether. Records were arranged in heaps of handwritten files, consequently making storage and retrieval very cumbersome and difficult for all parties involved. Marketing vacant units greatly depended on word of mouth, while management, even if you had an extensive portfolio, was entirely onsite based.
Compare that to 2016, a year that has seen the number of prospective renters and buyers who search for properties online rise to 80%. 91% of property managers and realtors are now leveraging social media one way or another, but unfortunately, only 9% of them use it to market their listings. Additionally, contrary to previous years when renting was cheaper, it’s now 35% cheaper to buy than rent in the US. But, millennials still widely prefer renting over buying, largely because of the convenience attached to rentals.
Even when a bulk of prospective renters and buyers are relying on online forums, property managers and agents are still heavily dependent on referrals, which generate 49% of new leads. Unfortunately, after successfully acquiring leads, property managers now have to wear different hats, by becoming agents, negotiators, price setters and community resource- unlike back in the day, when all these roles were taken up by different professionals within the same pipeline.
Evidently, each year presents a new set of challenges and opportunities for property managers. Your ability to analyze the market and related trends ultimately determines the overall efficacy of your adaptive strategies. That’s why we’ve analyzed the trends in 2016 and predicted future developments, to draft a year-end checklist, just to help you prepare for what’s coming up in 2017:
Conduct Property Valuation
Think of property valuation as a fishing expedition. To attract the best fish in the sea, you need to learn their diet, and subsequently use it to find the best baits. The juicier the bait, the more the fish you’ll ultimately attract. That’s the precise approach applied by not only property managers, but also other types of businesses when it comes to pricing.
Getting the rental price right is undeniably very critical in attracting tenants and maintaining low turnover rates. And it begins with a comprehensive property valuation. Considering the average property price variations over the last decade alone, you cannot afford to proceed to 2017 without this step. Unfortunately, a bulk of property managers only conduct appraisals and consequently set rental prices that are pegged on indicative property values. Analyzing your property according to neighborhood rates may give you a rough estimate of the rate range, but certainly not the actual property value.
Although an undervaluation would probably attract many prospective tenants, you’d be losing possible additional income on a regular basis. An overvaluation, on the other hand- considering the ever-competitive rental market with over 231,000 registered property management firms– would, of course, repel a majority of prospective renters.
Employ All Variables in Setting Rental Price
Although we wish that pricing was only dependent on property valuation, the market is not that simple, particularly considering predicted consumer behavior in 2017. After conducting a comprehensive valuation, fishing starts to develop into a game of chess. Success depends on your ability to comprehend your opponent’s psychology and subsequent responses.
Now, human beings are a peculiar lot. Various recent studies have proven that many thought-provoking variables come into play when prospective buyers analyze and compare different product prices. That’s exactly what makes pricing a rather interesting engagement for property managers, especially if you need to get just the right rental price that will keep your units fully occupied over the next one year, while maintaining acceptable profit margins.
According to a Stanford marketing study for instance, asking prospective renters to compare your ‘low rates’ to other ‘unreasonably high’ prices could have negative effects. Additionally, going by an experiment conducted by MIT and the University of Chicago, there’s an inherent power in number 9. Consider three apartment units priced $234, $244 and $239. Although the former is cheapest, it has been proven that a majority of consumers, or would-be renters for that matter, would go for $239. Although number 9 is possibly a cliché by now, it would definitely work on your market- and that’s just a single variable in the strange, complex game of modern pricing.
Leverage Property Management-Specific Tech Tools
Technology is progressively revolutionizing the entire businesses world through automation of processes. Unfortunately, this is not good news for everyone, since it’s also considered a threat to the workforce in a majority of the industries….but fortunately, not real estate. According to Wacksman, even when technology is largely leveraged in marketing and correspondence, the whole idea of eliminating human element still scares many prospective renters and property buyers. A study conducted by NAR shows that 87% of them still engage real estate agents and brokers, a share that has gradually grown from 69% 15 years ago.
So, in case you’re worried, technology will not be a threat in 2017, but rather an element that should make property management a whole lot easier for you. And that’s why you should have property management software as the principle item in your tech checklist.
A good and comprehensive software should contain all the elements you’d need to successfully run a property management business. This will save you the trouble of switching between and integrating separate accounting, correspondence, maintenance, and marketing software. Property Matrix, for instance, is built with all the features along the tenancy pipeline, from marketing, tenant-screening, maintenance and repair, to payment handling and turnover management. By virtue of being compatible with a host of mobile devices, the software additionally allows you to walk around with an office that tracks and coordinates all the management operations in real time.
As you’ve already noted, this is a checklist of the core elements that are new and relevant to the current rental market scene. To effectually prep yourself for 2017, you should further break them down into smaller, more comprehensive checklists outlining your specific management strategies and the overall business model. A thoughtful approach to this would be contrasting your weaknesses against your strengths, to subsequently draft a corrective framework that will be substantially more effective in 2017.