We’ve got good news for property managers: despite the challenges that made 2022 a difficult year to navigate, the industry is doing very well. The demand for results-driven condo and HOA managers is up as communities look to the professionals to help them improve day-to-day operations and minimize inefficiencies.
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- 2023 goals
To succeed in 2023 (and beyond), managers will need a clear business model, strategies that prioritize growth without sacrificing quality of service, and the right tools to ensure optimal profitability and performance.
Property management technology will play a critical role for communities and property management companies, but there are other trends to keep in mind as you start putting your 2023 plans in motion.
Though these goals are not at the top of every property manager’s list, they have been identified as high priorities by many in the industry.
Growth through new client acquisition
No surprises here. Growth is the top priority for managers and companies yet again. While growth for many companies was not stunted in 2021 or 2022, it was not as remarkable as some would have hoped it would be.
Business-related matters were a secondary focus because there was a greater need to help clients navigate the pandemic. Greater emphasis was placed on customer service, communication, and implementing processes to facilitate community operations. Now that owners and board members are used to using these tools and things have returned to normal, companies have more time to work on portfolio growth.
In addition to growth, companies are working towards improving efficiencies and increasing profits.
The majority of companies say that they will strive to attract new clients as opposed to enter into new property types or acquire other companies.
Like any other business, property management companies want to earn more as they become more successful. While companies will increase their service fees, they can only raise prices by so much. Another practical strategy some will employ involves the option of add-on services that appeal to communities with wiggle room in their budgets.
Property managers report these services to be among the most profitable to them, and desirable to clients:
- Fee collection
- Marketing vacancies
- Maintenance/repair management
Retain a strong team of staff
This last goal applies to company presidents and individuals responsible for hiring staff. The labor market has presented challenges for virtually every industry, and companies are finding it difficult to attract (or retain) skilled property management staff.
The shortage of good workers will persist. One of the largest issues that needs to be addressed is employee burnout. Even with software, managers are feeling like there is always too much to do. They don’t feel like they can do their jobs properly. C-suite executives shouldn’t take on more clients than their staff can handle. Finding a balance is key.
Salaries play another large factor in why an employee chooses to stay in a job. If compensation does not line up with industry standards, create a plan to get employees there within a reasonable amount of time.
These factors will impact how easily property management companies are able to achieve their goals.
Despite cooling markets, more HOAs are expected
Finding a home has not been easy, and experts don’t believe the North American market will be much kinder in 2023. Supply of single-family homes remains limited for several reasons.
Mortgage rates aren’t nearly as low as they were a couple of years ago, so people can’t afford to borrow as much money for a down payment.
Development has slowed, meaning supply is very limited. Single-family construction starts and applications for building permits in October 2022 were down 6.1% and 2.4%, respectively, from the previous month, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
And due to the lack of real estate, sale prices are outrageously high, even though sales have slowed.
Prices are expected to drop slightly, but it’s probably not enough to help the majority of prospective buyers.
There is a bit of good news for property management companies though. HOA communities are on the rise, and a modest increase is expected in 2023. The Foundation for Community Association Research has confirmed consistent growth over the past few years. The prediction for HOA growth in 2018 was 2,500 new associations, 4,000 new associations in 2019, and 5,000 developments in 2022.
HOAs are profitable for developers, which is part of the reason why we are seeing more of them. However, homeowners also benefit from living in community associations because property resale values tend to be higher.
Another factor contributing to the rise in governed communities is the fact that local municipalities facing fiscal challenges can pass trash or snow removal costs and responsibilities onto HOAs.
With more HOAs comes a need for more property managers. These communities will be very attractive to companies who like to take a hands-on approach and are comfortable working with boards that may be new to governing communities.
Property management software is nothing short of essential for growth during tough financial times
The numerous impacts of inflation will likely stick around for at least another year. Wages will go up as the cost of living increases, material costs will remain high, maintenance and repairs become more expensive, and projects may be completed more slowly due to a lack of qualified workers. Containing property management costs will be a priority for clients and staff, which is why property management software is now a must-have tool.
Property management software like Condo Control makes it possible for managers to complete more work with the same resources. The platform aids in workflow automation and tackles roadblocks like poor communication, inconsistent rule enforcement, late vendor payments, and inefficient service request processing.
According to a property management report, the most popular property management tools/solutions in 2022 were:
- Resident/owner portals
- Electronic payments
- Online maintenance ticketing
- Online document sharing
In 2023, property managers will be looking for:
While the software can’t do a property manager’s job, it can make their role significantly easier to manage. Moreover, the software helps to cut costs. Communities pay less for print and mailing expenses thanks to digital communication and document solutions, time spent on administrative work is minimized, and with options like virtual meetings, condos and HOAs, don’t need to pay for a big meeting space.
Some communities actually generate more revenue with Condo Control using the amenity booking solution. Since payments can be made online and booking can be done through a mobile app, the simple booking process encourages owners to use amenities that have fees.
Successful management companies already know how valuable software is to them and to their clients. Without it, managers will struggle to keep up, and may find that they end up losing clients who need to cut costs.
Growth is attainable
Despite cost-conscious communities, there will be property management companies that experience modest to moderate growth in 2023. Residential communities need strong leadership, especially during hard times.
More companies have reported higher portfolio growth over the past two years, and was more significant than it has been since 2017. The scale of growth has also been larger than in the past. A majority of companies report that their growth has been “significant,” meaning the company’s portfolio has expanded by more than 25%.
Companies anticipate that this trend will continue in the new year. Very few are expecting that their company will stay the same size or shrink.
Clients have more financial concerns regarding projects
Thanks to all of the post-pandemic and inflation challenges, condos and HOAs will be looking for more financial help from property managers when it comes to completing projects on budget.
Property management companies should not be surprised if it is harder to find vendors. Furthermore, service providers are probably going to charge more, and projects might take longer to complete due to supply chain issues and labor shortages.
Managers are encouraged to leverage any bargaining power they have with trusted vendors and be very transparent with boards when it comes to costs and completion times. Plan ahead as much as possible, and if it makes sense, encourage clients to sign long-term contracts so they do not have to pay more each year for the same services.
The new year will bring a few challenges for property management companies, but this industry is in a good position. The demand for property managers is up as more HOAs are developed. Communities are willing to pay for good leadership if managers can help them reduce costs and operate more efficiently. Property management software will play a big role in helping managers and communities thrive during a time when expenses are high and workloads are heavy.