It’s a new year, and you’re ready to take your business in new directions. But what kind of growth is right for your property management company?
The demand for rentals has caused a boom in the property management industry; and if you’re ready to grow, be sure to grow smart. There’s a lot of information out there, and we know that you don’t have the time to wade through every Google search result, sorting the great advice from the not-so-great.
That’s where the Buildium Blog comes in. Here are the three worst pieces of advice we’ve heard lately on how to diversify your property management portfolio—and what you should do instead if you’re looking to grow.
Bad Advice #1: Small Companies Can’t Compete with Big Developers
In today’s competitive real estate market, many property managers are finding themselves going toe-to-toe with big developers as high-rise apartment buildings pop up left and right. Not only that, but growing markets create competition for qualified employees, leaving many smaller property management companies feeling frustrated and defeated. But if you’ve been told that you can’t compete with big developers, you’ve been given bad advice.
Find your edge against the competition by leveraging your local market knowledge. Most big developers have a national or international presence, leaving them scrambling to make sense of the local market as their new buildings go up. Invest in a local approach by leveraging your knowledge of the community’s economy, trends, and demographics.
You can also focus on providing an incredible customer experience. That means getting to know your residents and clients, measuring their satisfaction, and doing all that you can to exceed expectations. Your best bet is to find the right property management software to help you to take your business—and customer experience—to new heights.
Fast fact: A 2009 survey conducted by Software Advice found that companies who used property management software managed an average of 102 units per employee. Those using generic software or spreadsheets only managed an average of 61 units per employee. This suggests both that property management software can help you to grow your business, and that companies investing in their growth often turn to software to help them scale.Looking to grow your property management portfolio in 2018? 3 smart tips on the #BuildiumBlog. Click To Tweet
Bad Advice #2: The Best Opportunities Are in Primary Markets
The world of real estate seems to revolve around primary markets—so it’s easy for property managers to feel like the only viable avenue for growth is to expand their presence into powerhouse cities like New York, Boston, and San Francisco. Sure, those markets offer high occupancy rates and competitive rents, but secondary markets (generally defined as mid-sized cities experiencing growth) offer plenty of opportunity for property managers to diversify into promising new markets that offer many of the same benefits.
For property managers, turning to secondary markets to diversify your portfolio puts you at the center of fast population and price growth without the cutthroat competition of a primary market. Keep an eye on the growth of key secondary markets with our guide to 24 under-the-radar cities investors are eyeing in 2018.
Fast fact: On average, according to a 2017 report released by PwC and the Urban Land Institute, the cost of doing business in secondary markets is 16% lower than in primary markets. Real estate costs are 38% lower in secondary markets, energy costs are 22% lower, and labor costs are 14% lower than in primary markets.
Bad Advice #3: No Two Properties Are Created Equal
As smaller property management companies bootstrap their way to growth, they may take an individual approach to assessing the needs of each property they manage. As you scale, that’s not always a sustainable strategy. From a management perspective, consistency in how you operate properties and serve residents is key to success. While in execution, each community and property will have different needs, property managers can leverage technology to create consistent systems for how you predict needs, identify trends, and service your clients.
So while no two properties are created equal, your services always should be. Whether you’re managing a mobile home park or a multifamily property, clearly define your property operations and services. This will not only result in happy clients—it also gives you a great way to market yourself to new owners. Whether it’s offering tenants an easy platform for signing leases, paying rent, and submitting requests, or your process for recruiting and vetting employees, leverage technology to improve your internal systems and create efficient processes for all of your properties.
Fast fact: Across the U.S., there has been unprecedented growth in rental demand. 9 million more households have become renters over the last 10 years—the largest gain in housing history. Today, roughly 45 million families and households are renting.On the #BuildiumBlog: Bad advice we've heard on diversifying your portfolio—and how to grow instead. Click To Tweet
What moves are you making to diversify your portfolio in 2018? Let us know in the comments below!Read more on Scaling