How Property Management May Change in the New Normal
You may have built your property management company to know that real estate businesses have a high return on investment. The housing market crisis in the previous decade was a cause of concern, yes, but as years passed and the industry recovered, things looked like they were improving. Then, COVID-19 struck, leaving things uncertain once again.
Prospects for property managers at the moment seem discouraging. The COVID-19 crisis does not look like it will wind down anytime soon, so the profitability of renting or leasing out homes seems grim. However, property managers should not despair; the industry can bounce back, and even be more lucrative, in the coming years.
To weather the uncertainties at present and to prepare for success in the “new normal,” property managers should answer the following questions.
Can the business absorb labor costs?
Businesses that rely on in-person transactions are suffering the most in this crisis. The labor costs for these businesses are higher than those of other industries. Normally, a high headcount is a sign of a healthy enterprise; in a struggling economy, though, it might be difficult to keep people employed when money is not coming in.
Reducing employee headcount can decrease labor costs, but it puts a strain on the remaining workforce. Morale will go down and quality of service might not be at the same level as before. Instead of retrenchment, employees might settle for a temporary pay cut. What matters is that you are able to balance the need for manpower and a healthy cash flow.
Where do we earn the most revenue?
Management fees are the primary source of income for this type of business. Depending on the location, this can be anywhere from eight to 12 percent of the monthly rental income. If your company owns the rental units, that is another source of revenue. These will have various implications depending on how well your community adapts to the current economic situation.
A property manager should be able to pinpoint aspects of the business that bring in more money. They should also know the competition and be aware of other property management companies, renters, lessors, and app-based listings brokers specific to the area.
Are we using technology to augment our efforts?
Technology can lead you to new prospects and renters. An online advertising campaign is a rich source of data and insights for future business decisions such as targeting of specific age groups, neighborhoods, and income brackets. Good leads will always bring more business.
Furthermore, look into hiring a dedicated customer service team. Remote virtual assistants or contact centers can help you manage your incoming phone calls, and would give potential customers a real person to interact with. It is still preferable for many consumers to have a live person to talk to over a phone line. The few hundred dollars you spend will go a long way in making your processes quicker and your relationships with customers smoother.
Should we charge for maintenance?
Rental property maintenance takes up a significant portion of a company’s time and resources. The payback, however, is that this can sometimes be more profitable than the eight to 12 percent management fees collected per month. You must review your company’s policies and monthly income statements to see if you should focus on maintenance and coordination instead of property management, at least for the time being.
Property management might look vastly different in the coming years. It is good to be aware of what these changes might bring and how these will affect you and your business.
For residential property management in Jacksonville, FL, contact our team at Quest Real Estate today. We’re happy to help!