Awareness of new trends in the continuously changing property management field is advantageous and essential to survival and expansion. As 2024 approaches, the property management industry is undergoing a significant shift propelled by rapid technical breakthroughs, changing tenant and visitor expectations, and a growing emphasis on sustainability. For anyone hoping to stay ahead in this ever-changing industry, effectively dealing with this fundamental change requires a deep understanding and proactive adaptability to all the current trends that may influence the shift of property management in 2024.
To make things easier for you and give an overview of what you can expect in the year ahead, we have curated the top trends you will see changing the tides of the property management industry for prosperous growth. So, without further ado, let’s start!
Top Trends That Will Surely Affect Property Management In 2024
1. Property Managers Are Exploring Growth Strategies in 2024
Several property management companies are actively seeking new and inventive approaches to expand their portfolios, outpacing the growth plans of many property owners.
A significant focus for property managers is recruiting new property owners, with 71% of respondents indicating plans to engage with new clients beyond this year. Furthermore, 92% of third-party property management companies have expressed their intentions to expand their portfolios during this period. This marks the third consecutive year more respondents plan to grow their portfolios in the upcoming years. Additionally, property management firms are encouraging their existing clients to contemplate investing in additional rental properties.
Beyond expanding clientele, many property management companies are acquiring portfolios from other companies to broaden the range of property types they can manage and extend their service areas. Here are some tips to help you grow your bottom line:
- Get in Touch With “Absentee owners”:
Initiate contact with absentee property owners. Before ramping up your marketing efforts, optimizing your business systems is crucial. Once you’ve implemented the initial tips, you can progress to expanding your marketing outreach.
A highly effective strategy for generating leads in property management is reaching out to absentee owners through methods such as cold calling or direct mail.
Indeed, you may not be aware of whether these absentee property owners are landlords, already engaged with a property manager, or have a residence occupied by a family member. However, one certainty prevails: this segment of homeowners, identifiable through public records data, is notably more likely to require property management services than other homeowner categories.
- Providing What Clients Are Asking:
Property managers are diversifying the services they extend to tenants, aiming to minimize vacancies and explore additional revenue streams.
Resident benefits packages have gained popularity as a means to enrich the tenant experience while simultaneously boosting revenue. Among the services offered by certain property managers are utility management, credit reporting, renters insurance, and identity protection.
In response to escalating rents and the increasing demand for remote work accommodations, renters are expressing preferences for specific amenities this year. These include HVAC systems, in-unit dryer/washer facilities, internet access, walk-in closets, and soundproofing.
- Target Long-Term Buyers
When expanding your outreach efforts, targeting potential “buy & hold” investors can significantly bolster your business’s financial trajectory. Leveraging a property information platform empowers you to identify prospective investors within your locality precisely. This strategic approach involves scrutinizing recent small multifamily purchases below a designated amount and recent home acquisitions with 100% equity and no accompanying loans.
Additionally, exploring recent home purchases funded through hard money loans provides another avenue for identifying the potential of these long-term investors. An alternative avenue involves scrutinizing recent home sales, particularly those where the property changed hands within a year of the initial purchase. While these investors may initially appear as flippers, they could also include a long-term strategy in their portfolio.
- Outsource Staffing Needs During High Demand:
Minimize unnecessary recruitment efforts. Before proceeding with a new hire, evaluating the genuine necessity of this addition to your team is crucial. Property managers commonly face the challenge of extreme seasonality, where demand for showings, move-ins, and move-outs fluctuates significantly. During the busy summer, property management company owners may feel compelled to hire to cope with the overwhelming workload. The fear of falling behind in meeting demand and frustrating clients drives this decision.
However, the issue arises in the winter when these new hires are underutilized, leading to a slowdown in work. Property management company owners are then faced with the dilemma of retaining the team through the slow season or letting go of the recent hires.
This cyclic pattern induces considerable stress for all parties involved. To address this challenge, consider outsourcing your fieldwork. This allows you to enlist support for showings and inspections from licensed professionals without committing to expensive hiring decisions.
2. Growing Expenses in Real Estate Management:
The persistent rise in real estate taxes, insurance, equipment, utilities, property acquisition, and labor, among other things, presents an ongoing challenge for property management companies and their clients.
Insurance costs for commercial real estate are experiencing a notable increase, surging by 33% YOY per apartment unit to $180. Insurance constitutes over 8% of an owner’s quarterly per-unit operating expenses, almost doubling the share from five years ago. Over the past year, combined property tax and payroll costs have risen by 9%, and the national average effective rent has seen a 4% increase.
As we have mentioned before, addressing this challenge requires strategically focusing on efficient business practices and exploring new revenue streams. Additionally, there is an ongoing need to showcase value to rental property owners who, confronted with mounting costs, might consider independent property management.
The current slowdown in the rental market has resulted in more accidental or DIY landlords. This presents a significant opportunity for property management companies to expand their clientele and enhance their service offerings.
Therefore, in 2024, the primary emphasis should be managing operating costs and improving business efficiency through new avenues. This challenge not only demands attention but also presents an opportunity for growth. There is a potential for increased profitability in the real estate market over the next year. Although cash flow may experience a decline, rental properties could emerge as more lucrative assets for investors, particularly with the expectation of stable interest rates.
3. Rising Demand for Automation in Property Management
Automation emerges as a pivotal force driving the pursuit of efficiency and effectiveness in property management. Property managers increasingly adopt new technologies that automate mundane tasks, streamline operations, and elevate guest experiences, and this year, they won’t hold on to the technology to make all the mundane tasks easier. This shift extends beyond cost-cutting; it aims to enhance service quality and liberate valuable time for focusing on strategic aspects of property management.
Traditionally, tasks like maintenance requests, leasing, tenant screening, and rent collection, among other things, were manually executed, consuming considerable time and carrying the risk of errors. Automation introduces an innovative approach to handling these responsibilities. Integrated software and smart devices are revolutionizing property managers’ operations.
Automation in property management is no longer a luxury but a necessity. The potential for automation in property management will continue to expand with advancing technology, necessitating property managers to adapt and innovate to stay ahead. Here are some ways how automation will help in property management in 2024:
- Efficient Rent Collection Procedures:
Setting up standing orders or monthly payment plans is common for long-term leases to ensure timely rent payments. However, sending regular reminders becomes crucial in facilitating prompt payments with short-term rentals.
You can simplify the rent collection process by incorporating automation for rent reminders, payment notifications, and online payment options. This not only benefits property managers but also enhances the experience for tenants. Many property managers recommend utilizing automated rent reminders through email, as approximately 80% of outstanding invoices can be successfully collected through email reminders alone. Another effective option is SMS notifications. Both methods provide tenants with convenient online payment portals, ensuring smooth and hassle-free transactions.
- Automated Expense Management:
Automation is crucial in tracking business and administrative operations. Implementing automated systems for budgeting, generating detailed reports, and expense tracking enhances financial management by providing property managers with the necessary insights and data for informed decision-making.
With the help of property management software that seamlessly integrates with your current system, you can easily ensure the automatic tracking of expenses and the generation of comprehensive financial reports, streamlining the financial management process.
- Efficient Management of Maintenance Requests:
If you’ve already established support systems and service providers, there’s no need to get bogged down handling routine maintenance requests. In any property management company, a significant portion of maintenance requests consists of repetitive tasks that don’t necessitate your direct involvement.
When you optimize your maintenance request process by automating the submission of requests, you cut down on valuable work hours. This automation can generate new work orders, allocate them to the appropriate service providers, and provide essential tracking. This not only saves valuable time but also ensures timely resolution. There are many applications and software that you can consider that enable tenants to submit maintenance requests effortlessly, through a user-friendly mobile app.
- Efficient Tenant Onboarding:
Prospective tenants often explore properties through digital tours, express interest, and submit applications online. By implementing an automated system, you can ensure a seamless and prompt onboarding experience.
This system digitally facilitates the swift creation and delivery of lease agreements, welcome packages, and move-in requirements across various devices. Additionally, such automated systems can efficiently collect tenant information and documentation, eliminating the need for cumbersome physical paperwork.
- Enhancing Tenant Communication:
Effective communication is pivotal in delivering an exceptional customer experience for your tenants. However, reliance on digital processes alone can sometimes leave tenants feeling uncertain.
To address this, you can automate reminders, responses, important announcements, notifications, maintenance schedules, and community updates. This automation can eliminate uncertainties, promoting improved interactions and a sense of security for tenants. Moreover, this automated approach provides a valuable avenue for feedback, recognizing that there is always room for improvement. A centralized communication platform may serve as a practical solution in this context.
4. Heavy Competition in the Property Management Industry
The surge in rental demand and price appreciation during the pandemic has positioned property management as an attractive venture, particularly for existing real estate brokerages. National firms and institutional investors have strategically expanded into high-demand markets, notably in the Sun Belt, often acquiring local property management companies to bolster their portfolios.
The US has an estimated 326,000 property management businesses, with California representing 54,173 firms. And property management companies are facing increased competition from not only their counterparts but also real estate brokerages. This heightened competition is a direct consequence of the sluggish sales market.
In response to these challenges, some smaller management companies opt to provide their clients with a more personalized and comprehensive customer service experience. This strategic approach positions them effectively in the competitive landscape against their larger counterparts. As the real estate market changes over time, many real estate agents and brokers are seeking to diversify into property management. While this may threaten property managers’ opportunities, it can also present opportunities in the opposite direction.
The transition of real estate professionals into property management roles often comes with a general need for more experience and expertise. This situation allows smaller, well-established property management companies to distinguish themselves and seize their moment in the spotlight.
5. The Growing Importance of Bleisure Travel
Bleisure travel stands out as a prominent trend reshaping the property management landscape. This fusion of business and leisure travel has witnessed a notable increase in popularity. The essence of pleasure involves prolonging a business trip by a few days to explore the destination, inviting family members to join, or simply incorporating tourist activities and relaxation into a work-related journey. It allows individuals to relish the destinations they visit for work, blurring the lines between professional commitments and personal enjoyment.
Property managers who address “leisure needs” by offering extended stays, versatile spaces, and amenities catering to the business and the leisure side requirements position themselves to capture a broader market. Unsurprisingly, most leisure travelers prefer short-term rentals over traditional hotel accommodations.
Platforms like Airbnb underscore the increasing appeal of apartment and home stays among younger travelers. The relative affordability of this accommodation type becomes a significant factor, especially when employees wish to extend a business trip without incurring additional per-person expenses, making it easier to bring along a partner, spouse, or friend.
The choice of location holds significant importance too for individuals who seek a balance between proximity to local business districts and accessibility to tourist and nightlife attractions. Rental apartments often outshine hotels catering to traditional corporate clients when accommodating this blend of business and leisure.
Among the top US cities favored by leisure travelers are:
- Austin, Texas
- Carlsbad, California
- Des Moines, Iowa
- Huntsville, Alabama
- Stamford, Connecticut
These destinations offer a favorable mix of business amenities and leisure opportunities, making them ideal choices for seamlessly integrating work and leisure during their travels.
6. Certain Restrictions by the Government
Government restrictions remain a significant factor in the real estate market. Recent data indicates that real estate investors continue to make up a substantial portion of single-family home purchases, representing 26% of all homes sold in June 2023, according to a recent report. These figures have shown minimal change over the past two years, prompting some policymakers to advocate prohibiting large investors from acquiring homes that could otherwise serve as primary residences for homeowners.
Given the persistently elevated housing prices and soaring rental costs in cities like New York, San Diego, Los Angeles, and San Francisco, calls from politicians for measures against landlords, particularly those associated with Wall Street, are likely to endure. Adherence to regulations is poised to become a focal point leading to the 2024 election.
7. Tech Will be the Centre of Property Management in 2023
Technology has assumed a pivotal role in property management companies’ operations in the current market, significantly impacting employee workflows and customer experiences. Innovations and breakthroughs are set to revolutionize efficiency, enhance guest experiences, and streamline operations. Some intriguing additions include the emergence of AI-driven virtual assistants, such as ChatGPT, artificial intelligence, machine learning, and process automation.
These technologies position themselves as robust growth trends in the property management sector. All signs indicate that they will persist in enhancing rental companies’ efficiency and profitability, fundamentally transforming how we engage and interact. Here are some ways in which technology is reshaping property management:
- Utilizing big data for planning and decision-making:
Going beyond conventional approaches, integrating AI to forecast potential investment opportunities through in-depth analysis of market trends and consumer behavior is a noteworthy advancement.
Property management software employs data to assess property performance, financial aspects, and tenant interactions, identifying key performance indicators and areas requiring attention. This data-driven approach enhances decision-making, leading to increased efficiency and profitability.
- Harnessing machine learning and AI:
The influence of machine learning and AI extends across various industries, including property management. Leveraging AI more effectively involves predicting maintenance needs, assessing asset lifespans and life cycles, anticipating tenant behaviors, navigating market fluctuations, and optimizing rental rates and seasonal pricing.
Integrating these elements into schedules enhances competence and enables proactive problem resolution. Predictive maintenance also contributes to sustainability and energy planning, addressing a crucial trend in the industry.
- Leveraging Data Analytics:
In the pursuit of enhancing guest experiences and optimizing property performance, property managers are increasingly relying on data-driven insights to guide decision-making.
Through the use of analytics tools, property managers can refine pricing strategies, comprehend shifts in traveler preferences, identify lucrative market segments, and discern booking patterns. This encompasses monitoring occupancy rates, pinpointing areas of inefficiency before they escalate into problems, and much more.
- Integration of VA and AR
An emerging trend gaining traction is the heightened utilization of virtual and augmented reality. Augmented reality proves instrumental in providing guests with an immersive experience. Property managers can create captivating virtual tours of their properties, captivating potential clients with innovative presentations.
Furthermore, this technology serves as a tool to furnish guests with essential information and support. Hosts can effortlessly develop virtual guides for each listing, enabling guests to access crucial information upon arrival, such as welcome guides, maintenance procedures, or emergency protocols. Additionally, there’s the option to offer enhanced insights into the local area, facilitate language translation, or tailor experiences based on guests’ interests.
- Embracing Sustainability and Lifestyle:
As the focus shifts towards sustainability and eco-friendly opportunities, property managers can enhance energy efficiency, implement effective waste management, incorporate renewable resources, and offer tenants improved health and wellness, elevating their overall lifestyle quality and living experiences.
- Adoption of Smart/Intelligent Buildings:
What was once considered high-end luxuries and marketing tactics have become practical necessities for every rental. However, it’s crucial to recognize the significance of their integration.
Features like virtual tours, automated lighting and heating sensors and systems, smart locks, and digital check-ins and checkouts simplify life for everyone involved and generate valuable real-time data for informed, data-driven decision-making.
- Integration of Blockchain for Security and Transparency:
With smart contracts and digital documents taking center stage in new transactions, the potential to eliminate paper trails and minimize reliance on third-party elements emerges. Blockchain technology ensures transparent and secure historical interactions. In investment scenarios, the prospect of streamlining processes and transactions promises increased efficiency and security.
8. Rental Industry Supply and Demand
In 2023, the US experienced a notable surge in apartment supply, reaching the highest levels since 1987, with the completion of around 440,000 units in construction. This influx has provided renters with abundant choices and significantly slowed rent growth, leading to outright declines in apartment rents across many markets.
The YOY growth has been in negative territory for the past six months, marking the first time this metric has dipped below zero since the early stages of the pandemic. Although this recent decline hasn’t fully offset the gains of previous years – the national median rent remains 22% higher than its pre-pandemic levels – it does indicate a temporary pause in the market’s upward momentum.
Several factors contributed to the slowdown; however, weak rent growth is equally rooted in the market’s supply side. The ongoing multifamily construction boom, combined with softening demand, has led to an imbalance in the market.
Looking ahead to 2024, it’s anticipated that the supply will continue to outpace demand, presenting an additional challenge for apartment investors grappling with rising expenses and elevated debt costs. The rental market in 2023 is projected to witness the second slowest rent growth in the history of estimates dating back to 2017, surpassed only by 2020. While demand is expected to rebound slightly in 2024, it will likely remain subdued. Despite a relatively strong labor market, concerns about affordability persist, and sentiment data indicates a continued lack of confidence in the economy among Americans.
Even in an optimistic scenario, it is improbable that demand will be strong enough to offset all the incoming supply, potentially slightly causing the vacancy index to increase in 2024. Rent growth is anticipated to emerge from negative territory in the early months of the following year but is not expected to surpass low single digits in 2024.
9. Focusing on “Google” is a Must for Property Managers in 2024
For property managers, one of the most effective strategies in 2024 is to optimize your website. Search engine optimization (SEO) might be a long-term approach, but its enduring benefits make it one of the most cost-efficient tools in your marketing toolkit. In the digital age, property managers can leverage many opportunities to connect with potential tenants, showcase properties, and enhance brand awareness. Notably, the top three results on Google account for 54.4% of all clicks.
Being a property management company, you have the advantage of local SEO, which is more manageable than aiming for keywords on a national or global scale. Here are some areas to keep your focus on:
- Defining Your Target Audience
Pinpointing the target audience enables property managers to customize their marketing efforts for specific demographics, preferences, and needs.
- Social Media Marketing
Social media platforms offer an excellent platform for property managers to interact with their audience, share property listings, and cultivate a robust online community.
- Email Marketing
Email marketing empowers property managers to establish personalized connections with prospects and maintain ongoing communication throughout the tenant lifecycle.
- Content Marketing
Crafting informative and valuable content, including infographics, videos, and blogs, enhances credibility and draws in potential tenants.
- Online PPC Campaigns
PPC advertising enables property managers to target specific keywords and demographics, amplifying website traffic and strengthening lead generation.
10. Rising Home Prices
Entering 2024, significant shifts are evident in the real estate landscape, with key trends shaping the industry’s trajectory. Notably, surging home prices and persistent inventory constraints emerge as central themes. The housing market is poised for a substantial upswing, with home prices projected to surge by 2.6%. This upward trajectory intensifies buyer competition, often leading to multiple property offers.
Naturally, the ripple effect extends to the rental market and the occupancy of retail spaces. Despite a prevailing housing crisis and local investors grappling with strategic challenges, the housing supply remains a determining factor. Data indicates increased housing costs and demand, underscoring the ongoing housing dynamics. The constrained housing inventory is a tough challenge for buyers and property managers in 2024. This challenge is underscored by a historic low in housing supply, down by 13.6% compared to the previous year.
As we approach 2024, the property management landscape is witnessing significant shifts driven by technological advancements, changing tenant preferences, and a heightened focus on sustainability. Property managers are strategically expanding their portfolios, exploring diverse growth strategies, and adapting to the rising demand for automation. Diversifying services and targeting long-term investors are key tactics to stay competitive. However, challenges such as growing expenses and increased competition necessitate a keen focus on efficient business practices.
Integrating technology, including AI, machine learning, and data analytics, transforms property management operations, enhances efficiency, and elevates customer experiences. The industry’s responsiveness to leisure travel trends and the ongoing impact of government restrictions are crucial considerations. Additionally, sustainability, the adoption of smart buildings, and blockchain integration are emerging as pivotal aspects.
Property managers are advised to prioritize SEO strategies and leverage digital marketing tools to connect with their target audience effectively. As the industry grapples with various trends, property managers who embrace innovation, remain customer-centric, and stay agile in response to emerging challenges are well-positioned for success in 2024.
Frequently Asked Questions
Q: How many property management companies operate in the US?
Approximately 326,000 registered property management companies are currently active across the United States.
Q: Is real estate in the US considered overvalued?
In the second quarter of this year, national home prices were reported to be 9.4% “expensive,” indicating a misalignment between the property’s price and actual value.
Q: What are the qualifications to become a property manager in the USA?
To become a property manager, specific essential qualifications need to be met, including:
- The minimum age requirement is 18 or 21 years (varies by state).
- Possession of a high school diploma or equivalent GED.
- Legal status as a US citizen or permanent resident.
- Completion of Real Estate License Coursework and passing score on the Real Estate Licensing Examination if required by state law.
Q: Which US city boasts the most expensive rental market?
New York, NY, continues to hold the title of the most expensive rental market in the United States, with an average monthly rent for a one-bedroom reaching around $3,260.