Property management is, under ordinary conditions, a stable industry. Sure, over the last several years, we’ve seen widespread adoption of new technology, as well as growth in the short-term rental sector, but in general, property managers fulfill the same roles, year in and year out. Then, COVID-19 struck and the industry was forced to contend with dramatic disruption and transformation. Nine months after the first novel coronavirus cases were reported in the United States and a year since the first reports abroad, how has the industry reimagined itself?
Service Goes No-Touch
One of the most important benefits of hiring a property management company is their ability to physically staff your rentals, particularly when it comes to larger, multi-family properties. Tenants generally like to be able to drop into the office to ask questions, get help, or just drop off their rent, and they like knowing that a knowledgeable person is on duty during regular hours. Staffing is also critical for attracting prospective tenants because they can come to the office to inquire about units and arrange for tours. Since the start of the COVID-19 pandemic, however, many of these services have gone “no-touch.”
What does it mean for property managers to provide no-touch services? In addition to standard modern offerings like online rent collection, new no-touch management also includes virtual showings, new communication apps, and additional screening tools that can be used from anywhere. With property managers less likely to be managing business onsite, they need cloud-based tools and other digital resources to help bridge the gap.
New Short-Term Strategies
Another major challenge facing property managers today is the decline in short-term rental use. Peak travel seasons, including major holidays and summer break, failed to bring in the sort of revenues that property owners generally rely on to pay mortgages on these properties, leaving their finances in the red. And if investors can’t pay the mortgage on their short-term rentals, which are typically promoted via platforms like AirBnb, then they also can’t afford to pay their property management company. That being said, those investors who managed to survive this long may have brighter days ahead, and not just because of the vaccines on the horizon.
No, what may help shift the burden facing property management companies that specialize in short-term rentals isn’t vaccines, but the prospect of another stretch of cold weather spent cooped up indoors. This won’t, of course, benefit all areas equally, but many of the regions that typically rely on short-term winter rentals, including Florida and Texas, are expected to see spikes as people flee cold conditions that present a barrier to safe outdoor socializing.
It’s well understood by now that, if you want to compete in today’s real estate marketplace, you’re going to need to hire a property management company. However, it’s one thing to employ property management professionals to perform tenant screenings and collect rent and another to realize that, ultimately, your business’s survival depends on them. This stands in stark contrast to the recent past, when property managers primarily served to make rentals more profitable. They were beneficial, but not critical.
What changed? Since the start of the COVID-19 pandemic, several factors have contributed to the importance of having a property management company, first among them the importance of better resident retention. Showing properties and screening tenants is so much less convenient now, and the marketplace in general so fraught by job loss and other extenuating circumstances, that owners can’t afford to lose a tenant. Property managers enhance retention rates, though, further cementing their importance.
Another shift the rental industry has seen over the last several months is the crisis of unpaid rent coupled with a hold on evictions. Though some areas are again permitting evictions, across the board, tenants are having a harder time paying their bills, organizing rent strikes, and transferring the financial burden to landlords. Property managers can’t resolve this problem, but since they generally take responsibility for the legal and operational elements of eviction, they have played a unique role in carrying the burden.
It’s hard to say what’s next for property investors and the management companies that they employ, but it’s undeniable that the COVID-19 pandemic will leave a lasting mark. At the very least, we can expect that many of the technical advances brought about by the pandemic will remain in place, particularly things like remote showing, which will significantly benefit those moving across long-distances.
That being said, housing should be a strong sector with high demand, so there’s no reason to avoid investing because of the pandemic. If anything, this is a good time for existing investors to consider automation upgrades and other appropriate advancements that could make their properties more appealing or enhance remote operations. These may be strange and fraught times, but with plenty of potential for growth, investors need to stay open to those possibilities – and property management professionals can help.