Just 1 in 3 small rental properties are profitable. How can property managers help? [The Lookout]

Robin Young
Robin Young | 2 min. read

Published on April 18, 2023

In the previous post from our content series, The Lookout, we shared what’s behind rising demand for property management services. In this post, we’ll cover how property managers can prove their value by helping small rental investors achieve a goal that gets more difficult with every passing year: running a profitable rental property.

Most small rental owners don’t want to deal with every issue that pops up, nor do they have the expertise to navigate the growing number of regulations on the rental market. But as you know, that doesn’t mean that property managers’ work is done if they have those areas covered.

How Many Rental Properties Are Profitable?

Our research shows that only a third of small-portfolio rental owners consistently earn a profit from their properties, though more than half depend on their rental income to pay their own bills or fund their retirement.

Chart: How many rental owners' properties are profitable

Chart: Rental owners' reliance on rental income to make ends meet

To keep rental owners’ business, property managers have to prove the tangible effect of their services on owners’ financial health—and their stress levels. That might sound like a second job on top of the one you already have, but our research is here to help.

How Property Managers Can Improve Rental Properties’ Profitability

Rental owners told us that there are four main areas where they look to property managers to improve their properties’ financial health:

Chart: 4 ways for property management companies to positively impact owners' finances

Property managers can optimize rental properties’ operations so investors can spend more time on revenue-driving activities, like flipping properties or acquiring new ones.

They can change up leasing practices to avoid and shorten vacancies—for example, by sending out lease renewal requests earlier in the year.

They can update properties to raise their value and improve their appeal.

And they can look for ways to lower property costs—for example, by referring them to more cost-effective suppliers and vendors.

In our next post, we talk about the impact that hiring a property manager has on rental owners’ stress levels—it’s an effect that’s so significant, you can actually measure it. 

You can learn about this topic and so many more in our 2023 Property Management Industry Report. And be sure to follow The Lookout on YouTube for weekly updates on our latest research on the rental market and property management industry.

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Robin Young

As Buildium’s Senior Researcher, Robin leverages her background in social science research and interest in real estate economics to identify trends in the rental market. She combines intensive market research with insights gleaned from surveys of property managers, renters, and rental owners to examine topics like shifting renter demographics, the housing affordability crisis, and the transformation of property management during the pandemic. She's best known as the author of the annual State of the Property Management Industry Report.

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