As the nation’s demand for rental housing continues to grow, the property management industry is growing with it. This booming branch of the real estate investment sector can expect a spate of new technologies and opportunities that they’ll need to keep up with in 2020 to stay ahead of the game.
Demand for rental housing in the second quarter of 2019 spiked 11 percent from 2018, despite rental price increases averaging 3 percent nationally to $1,390 per month according to RealPage, a real estate software, and analytics company. Demand is expected to remain high in 2020 as loss of existing renters to home purchases remains modest relative to historical standards.
According to a recent survey from Freddie Mac, despite rental price increases, a record 82 percent of tenants say renting is more affordable than owning—up from 67 percent a year ago. Even though demand for rentals remains high, rent prices have been increasing year over year. Apartment construction has been booming since 2014 to meet demand. All of this information is important to property management companies, as rent prices play a significant role in their revenue streams.
In addition to the booming rental market continuing into 2020, here are some more top property management trends to expect this year:
Digital technology has already transformed the real estate industry, and property management is no exception. Investors, agents, and property managers are capitalizing on new technology as it hits the market. From the smart technology home automation tools that make life safer, more convenient, and more energy-efficient for tenants, to a new generation of first-time, tech-savvy tenants entering the rental community, there’s an abundance of new trends converging on the property management industry in 2020.
Possibly the biggest market trend to impact property management this year will be automation. AI is streamlining everything from online rent payments to receiving and handling inquiry calls from potential tenants, and even managing the tenant application process including instant credit and background checks. The ability to electronically streamline these processes actually enhances the tenant experience since all calls are answered and information provided immediately 24/7. If your property management company hasn’t already adopted automation, it’s going to become a necessity to remain competitive in 2020 and beyond.
While millennials still make up the largest percentage of today’s renter market, but GenZ, born between1996 and 2010, is growing up and getting their first apartments. Property managers need to be prepared as Gen Z will make up 24 percent of the global workforce in 2020 and is expected to grow from 8 million to more than 55 million in the next 10 years. Gen Z is the first generation to have known and used technology and the internet their entire lives.
As they stream into the workforce, property managers will need to be equipped to meet their unique expectations and needs. That includes:
- Online payments
- Free Wi-Fi
- In-unit charging and docking stations
- Keyless door entry
- High tech fitness centers
- Outdoor heaters and fireplaces
- Smart home technology
Although millennials are tech-savvy and often consider online rent payment and maintenance requests a deal-breaker when choosing an apartment, the urgency for technology Gen Z brings to rental housing makes it necessary for properties that haven’t yet upgraded their amenities to get moving.
As real estate investing gains new momentum with newbies buying up rental properties to establish rental income streams and they’re intending to manage their investment properties themselves. Established property management companies should pay close attention to these new investors as many of them will quickly realize the complexity and hard work involved in managing a rental property. Those investors who systematically add new investment properties to their portfolios won’t be able to manage them all and will turn to property management companies for help, or they’ll Segway into residential property management themselves.
Property managers should keep an eye out for this potential source of new competition in 2020, especially since they may start snapping up tech-savvy Gen Zers as consultants and employees.
You may already have noticed new marketing strategies in the property management industry. Property managers are always trying fresh marketing methods and tools to expand their business and attract new tenants. The current focus is on digital marketing, which offers property managers a myriad of opportunities to use the internet to get their brand out there.
Social Media is at the top of their online marketing schemes, as it can target the largest audiences and costs little to nothing. Producing informative blog content based on answers to often asked questions from your own tenants will generate traffic to your website and help initiate a dialogue with potential tenants. A grasp of search engine optimization (SEO) is important for maximizing your search engine ranking and expand the reach of your online content.
Lead generation has been the Holy Grail of the property management industry’s marketing strategy since forever. Lead generating software developed specifically for PMs has opened the industry up to new opportunities for connecting with potential clients, and powerful new software offers additional paths of generating property management leads. Look for next-generation software tools that help facilitate the search and due diligence efforts you need to identify the right investment opportunities for your clients and get more properties under your management.