What do you think will happen in the property industry next year?
It used to be fun to make these predictions, but ever since the pandemic, the eviction moratoriums, crippling inflation, and then the complete explosion of the real estate market with higher-than-believable prices and low, low inventory…we’re wishing we had a crystal ball.
For real estate investors and rental property owners, market conditions are likely to calm down in 2023 (they have to).
We’re talking today about some of the property management industry trends we expect to see in 2023. Some of these will come as no surprise – technology will continue to make our lives easier, for example. Some trends may surprise you, however. For example – there’s talk about tenants beginning to negotiate rental amounts rather than simply agreeing to what you ask and signing a lease.
Let’s take a look at some of the anticipated trends that we find most interesting as Charlotte property managers.
Property Management Technology Trends
Emerging technology is hardly big news in the property management industry anymore. By now, everyone is using an online portal, self-showings, and digital inspection software.
What will be new and exciting in 2023? You may see even more artificial intelligence (A.I.) driving what property managers do – and what we don’t do.
Machine learning is also growing in popularity. Do you have a chat box that’s driven by artificial intelligence instead of a human being on your website? That’s the type of technology that’s going to grow in the coming year. Machine learning and A.I. will be used to manage more and more automated tasks. You might see data that’s analyzed for specific properties, tenants, and owners. Our property management clients will have access to even more information than they do now, but that information will be extremely nuanced and customized.
You should also expect to stay in the cloud for 2023 and beyond. If you aren’t already storing most of your data and information in the cloud, you should be by now. Cloud computing keeps property managers mobile. You don’t have to be at the office to keep up with inspection reports, accounting statements, and maintenance requests. Cloud management simplifies what we do and it also saves money.
Growing Portfolios for Institutional Investors
You may be looking at the real estate market in Charlotte or anywhere, really, and wondering who is buying up all of the single-family homes, condos, and townhomes. You may be wondering why the inventory remains so low and the prices continue to rise.
There are a lot of reasons for that, but there’s one in particular that is of some concern to smaller property management companies: institutional investors.
Large firms like American Homes 4 Rent, Invitation Homes, and Progress Residential are in multiple markets. They can afford to pay cash for any asking price, and they’re turning those homes into rentals. In some cases, they’re even buying up single-family homes that aren’t yet complete in new construction communities with the intention of renting those homes out.
They have a lot of buying power. They’re going to continue eating up as much of the market share as they can.
This is a trend that independent investors in Charlotte need to prepare for. The answer may be in our next section below.
Focus on Customer Experiences
Customer service is not a new trend. In the last few years, a lot of property managers have wanted to move beyond customer service in order to provide a great customer experience. This is an excellent way to grow a business and it’s a trend that will continue into 2023.
Landlords and property managers who are willing to invest in tenants will find those investments to be worth their resources. More strategic advertising, more objective tenant screening, and a commitment to creating an enjoyable tenant experience are some of the things we expect in the next year. Landlords expect better results from being careful about tenants they rent to. When you invest your resources in developing a great tenant relationship before they even move in – you’re setting yourself up for a more profitable investment experience.
This is also the competitive advantage that independent real estate investors have over those large institutional companies. You cannot provide the same level of customer service when you’re a large and lumbering company like the ones we mentioned earlier. When you can provide a hyper-local and detail-oriented rental experience, your tenants are going to appreciate what you’re doing and where they are.
Customer service may look a bit different next year. It will still focus on responsive maintenance, transparent communication, and convenience like online rental payments. However, it will also mean more security in the home, a more personalized property where tenants can really feel at home, and flexible lease terms such as longer or shorter leases.
Higher Rental Values – but Less Shocking
We don’t think rents will start falling in 2023. They’ll continue to increase, but in percentages that are more manageable for tenants. Instead of going up 15 percent, for example, a tenant’s rent next year may only go up 3 percent.
This is something landlords will need to budget for as well. Rental values shot up in dramatic ways over this last year, and that’s in part due to the low inventory and the high demand as well as inflation and the competitive, fast-moving sales market.
Next year, you will have some tenants who are financially comfortable and more than willing to pay the higher rental values. You’ll also have tenants who simply cannot afford the rent. Some experts have predicted that owners may have to negotiate with those tenants who simply cannot afford what’s being asked. Would you be willing to come down $100 or $200 a month for a well-qualified tenant who was desperate to stay on budget? Think about it.
It’s difficult to know exactly what will happen, but these are some of the trends we expect to see in 2023 as professional property managers in Charlotte. We still think owners and landlords like you are in a strong position with their rental properties.
Let’s talk more about what 2023 can mean for you, specifically. Contact us at AM Realty.