Here Is Why You Should Venture Into Property Management
Here is why you should venture into property management. unfortunately, we cannot all afford to splurge funds to buy real estate and rent it out but the good news is, you don’t have to. There’s another way to take advantage of that massive supply-and-demand chasm: property management.
Most real estate investors who own more than a few properties will hire a management company to help them with the dirty work. And as more landlords and vacation rental owners (like Airbnb) crowd themselves into the market, opportunity for real estate-management companies will only increase. Here is a list of reasons why property management is the way to go:
1.Out With The Old, In With The New!
Vacation rentals are outpacing the hotel industry. Five years ago, vacation rentals would topple the hotel industry by 2020. By 2019 there were plenty of hotels in every city. Did you know? Airbnb is now the second-largest lodging company in the world, only 100,000 units behind Marriott International, according to Str. It’s also acquired 150 million users, with two million people staying in an Airbnb every single night. And more and more people who stay in an Airbnb don’t ever want to go back to hotels. Needless to say, business is booming.
It’s hard to say whether vacation rentals will completely obliterate the hotel industry (even most taxi companies have survived ride-sharing apps), but one thing’s for sure: Vacation rentals are a force to be reckoned with. And while hotels don’t need property managers to do their dirty work, vacation rental investors often do, opening up another page of opportunity for entrepreneurs brave enough to build a property management business of their own.
2.Life Is So Much Easier With Technology
Technology makes property management easier than ever before.
As property management businesses flood the market with lucrative success, savvy tech entrepreneurs have followed suit. Because the truth is, there’s a glaring problem with building a property management company. Namely, that it’s a highly demanding, boots-on-the-ground, 24-7 sort of business model. If the A/C stops running in the middle of summer, if there’s a sudden water leak in the kitchen, if the pipes freeze and burst, if anything sudden and unexpected happens, it almost always falls to the property management company to do something about it (that’s why the real estate investor hired you in the first place, isn’t it?). This means the property management company needs to have dependable people near each managed location, a quick way to communicate with tenants, employees and local handy-men, and a system for organizing everything behind the scenes.
3.Rent Just Keeps Going Up
Even during trying Covid-19 times, rental asking prices continued to increase steadily. Otherwise for-sale prices, on the other hand, fluctuate dramatically depending upon the health of local- and nation-wide housing markets. For real estate investors, rentals are far less risky than fixed-and-flipped properties, and they provide the passive income that many real estate investors crave. As new and old real estate investors scramble to leverage the statistical safety of a buy-and-hold strategy, property management companies will benefit.
4. A Majority Of Occupied Properties Are Actually rental Properties
In this day and age, a large percent of occupied houses are rentals. And while owner-occupied houses account for part of the figures, that gap is getting smaller and smaller. In fact, experts have argued that rental vacancy rates have been decreasing steadily since 2009. So what does this mean for real estate investors and property management companies? Well, as people continue to opt for rentals over homeownership, the demand for rental properties will increase and, as investors fill that gap, so too will the demand for property management companies.
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