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TAKEAWAYS FROM REPORT ON STATE OF THE RENTAL PROPERTY INDUSTRY

Feb 01, 2020

Substantial industry report validates our very purpose

As heavy consumers of news germane to our industry, we were interested to come across the 5th Annual State of the Property Management Industry Report published by Buildium and the National Association of Residential Property Managers. Its purpose was to identify the evolving preferences of owners and tenants and how property managers can best position themselves as our fraternity enters a new chapter.

Although the report was national in scope, it was with little surprise that the Bay Area was referenced liberally with its unenviable status as one of the costliest places to live anywhere. Equally unsurprising, the Bay Area also was put on the map as having one of the highest concentrations of renters, weighing in at number 7 nationwide.
Technology is a double-edged sword

Undoubtedly, technology has transformed the rental housing business as we once knew it, as renters express a strong preference for tools to pay rent online and submit maintenance requests with a few taps. They also want access to a resident portal, easy communication via text and email. This affinity for pro-tech solutions begins even before the inception of the tenancy - 49% of survey respondents placed tremendous value in the capability to apply for rentals online.

We would expect that Gen Z and Millennial renters would continue their brisk use of technology, but one eye-opening finding is a re-surging interest in rental technologies among Gen Xers and Baby Boomers. This is notable because, as the report documented, one of the largest gains in renterships is in households headed by someone age 55 or older. 

These golden renters join households with annual incomes of $75,000 or more who were traditionally more likely to own their homes in the past, before times have changed.

We won’t delve too much into the socioeconomic forces at play, but suffice it to say that renting is a financial necessity for a great number of Bay Area residents of every genre. The picture of a ‘typical renter’ continues to evolve, whether by choice or by home ownership being more than an arm’s reach away.
Despite all of its marvels, Bay Property Group has said time and time again that technology cannot be used as a crutch and that relationship-centered customer service and industry expertise can never be replaced, a point that reverberated throughout the report. 

Quick response times to resolve any smoldering issues, accessibility, good communication skills, and real-time updates for owners require a human element of our job that can never be automated.

We also like saying that although your investment is your property, it is also the tenant’s home

This sentiment is being echoed by today’s hyper-connected, often stressed residents who are seeking amenities that provide convenience, comfort and connection.

When asked how residents want their rental to make them feel, a common thread emerges - words like “home,” “secure,” “comfortable,” “welcomed,” “valued,” and “at ease” were recited. These anecdotes reinforce our goal to be empathetic with residents and provide the comforts of modern life.

The plight of the accidental landlord

Although there are dedicated, intentional investors and even more well funded institutional investors who gobble up a large stock of multifamily properties, there is a throng of accidental and unintentional landlords who find themselves cast into this role without much forethought.

We spoke to this group in an earlier post.

Among these unlikely landlords, the report reveals that maintaining their investment property is top of mind, with over half reporting maintenance being their most vexing challenge. For owners who fall into that category, we would welcome a conversation to tailor solutions that reduce your stress and put your rental business on autopilot.
Murky building codes, laws and regulations also concerning

A number of owners polled were out of sorts with a shifting regulatory regime, unable to keep pace with the many rules to comply with. Bay Property Group has more than a working knowledge of the legal landscape, but when things get complicated, we can always turn to our broker of record, attorney Daniel Bornstein, who in his “day job” focuses his law practice on landlord-tenant issues. This air support makes all the difference when there is any ambiguity with local ordinances or state laws.

Where does the report wrap up?

One of its takeaways was that property managers are wedged into a difficult position of ensuring the profitability of clients with rent prices that keep rental units occupied with qualified residents against the backdrop of rising rents. To be sure, this is a delicate balancing act, and setting the "just right" rent amount is a subject we took on here.

Enter rent caps at the local and state levels and the carefully choreographed rules and steps that come along with raising rents. Bay Property Group can play a vital advisory role to stay on top of measures aimed at easing affordability issues, such as upzoning and rent stabilization.

The report offers a premonition that we have already seen come to pass - up-and-coming cities outpace primary markets as investors discover higher yields and faster growth in outlying areas residents migrate to. 

It’s been said that cypress trees do not grow in each other’s shadow, and we would observe that Oakland has become a formidable force in its own right, though along with other outskirts of San Francisco, there are unique challenges best approached with property management professionals who know the lay of the land. Finally, the report drives home the fact that while technology can enhance the human element in property management, it cannot replace our personal approach - personal service cannot be replaced with an app.

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