As an optimist, I typically get quite frustrated with the media whenever they start talking doom and gloom — especially with their predictions that “the bubble” will soon burst, or that we’re headed for another economic downturn. If it’s not going to happen on its own, then striking fear and apprehension into hearts and minds across the nation is a pretty effective way to make it happen.
But I’m also a realist. And if history (and gravity) is any indicator, what goes up must eventually come down. So while I refuse to jump on the pessimistic bandwagon in most situations, I also strongly believe that it’s a good idea to be prepared for whatever may come your way.
According to MPF Research, rent growth and occupancy levels reached historic highs in 2015, at 5.6% and 96.1%, respectively.
However, one of the reasons that we may be at the peak is because whenever opportunity exists everybody and their uncle attempts to capitalize on it. In the case of multifamily management, more units are rapidly being developed to accommodate the recent demand. This of course will lead to lower occupancy rates and more freedom for renters to refuse to give up such a large percentage of their pay check.
What can you do to protect your property management business against a potential downturn?
Keep occupancy high
Don’t wait until your occupancies start dropping to take action — that’s when it’s already too late. Now is the time to take the steps necessary to ensure that your occupancy rates remain high. The best way to do this is by providing superior service to your existing residents. This is just best practice in any economic climate, as it costs 6-7x more for a company to obtain a new customer vs. retaining an existing one. (Source: Bain & Company).
The number one factor influencing tenant retention is maintenance — so be sure to stay on top of it! Property management software that includes maintenance management can effectively streamline internal processes and enhance communication. The result is a significant reduction in the confusion and delays that sometimes occur when maintenance schedules are very busy. Having a maintenance management system in place also enables your staff to track and identify problem areas that should be proactively addressed to ensure an optimal experience for residents.
Bump up marketing efforts
Continually strive to attract prospects to your properties, to keep occupancy and demand high. Figure out ways to differentiate yourself from competitors. What value can you offer to prospective and existing residents that your competition can’t? Your first step should be to identify who your target audience is, what their needs and interests are and how you can best reach and speak to them. Delve a little deeper in to this process with The Property Manager’s Guide to Extraordinary Marketing.
Increase profit margins
Even if the bubble does burst, higher profit margins will help your property management business to weather the storm until fairer days return. Property management software can significantly increase your profit margins by automating time-consuming manual processes, providing instant access to accurate real-time information, streamlining internal workflows and providing the business intelligence needed to make informed business decisions. And if the bubble does stay intact for a while longer? Well no one ever complained about making more money.
Get your free copy of The Property Manager’s Guide to Proactive Management. And make the time necessary to plan for an extraordinary future.