Last modified on June 6th, 2022
By Megan Eales Monroe
Staff recruitment and turnover have historically challenged the property management industry. Data from CEL & Associates, Inc. reports pre-pandemic turnover nearing 33%, topping the average rate across all industries. Several new factors, including the recent pandemic-induced rethinking of work, the traditional workplace, and even the workforce, have only contributed to the issue.
A recent National Apartment Association (NAA) report, sponsored by AppFolio, surveyed property managers about the most significant challenges they face. The report provided new insights into the extent to which staffing and turnover concerns have affected the rental housing industry. Of all survey respondents, 74% said human resources, staffing and recruitment were among their top-three challenges, with 50% of those respondents identifying those issues as their primary challenges.
Today on The Top Floor, we’re diving into what appears to be the most pressing issue facing property managers: HR, Staffing, and Recruitment. Focusing on the NAA research, we dive into the rental housing industry’s pain points and how the industry is tackling these challenges on the ground.
Meet Our Guests:
Paula Munger is the AVP of Industry Research and Analysis for the National Apartment Association and is responsible for leading research efforts on topics of importance to the industry. She gathers, analyzes and synthesizes data and information to arrive at the most meaningful and relevant insights. Paula’s research aids NAA members in their business initiatives, as well as NAA advocacy and public relations efforts. Her background includes positions at the Federal Reserve System, Cushman & Wakefield, and the University of New Orleans Real Estate Research Center. Paula is a member of the National Association for Business Economics and The Counselors of Real Estate®.
Leah Cuffy is the Research Analyst at National Apartment Association (NAA). In her position, Leah provides members with data-intensive research, including a monthly report highlighting labor force trends in the apartment industry, quarterly updates on the state of the national apartment and an annual rental housing income and expenses survey.
Before joining NAA, Leah was the Senior Research Assistant at the Diana Davis Spencer Foundation, a family foundation that supported entrepreneurship, self-reliance, global understanding, and free enterprise. She also has previous experience in commercial real estate research and analytics with Costar Group. Leah began her career in the multifamily sector through various roles in property management at both Equity Residential and UDR.
She has been able to leverage her experience and fulfill her passion for providing valuable market research for members allowing them to make informed and sound business decisions. Leah holds a Bachelor of Science in Business Administration with a concentration in Marketing from Washington Adventist University.
Stacy Holden has over 20 years of experience in multifamily property management and currently serves as an Industry Principal and Director at AppFolio. A former controller of one of the largest property management firms in the Northwest, Stacy has firsthand experience in property management and is an expert on how organizations can leverage technology to solve urgent business challenges. Prior to AppFolio, Stacy spent several years in the real estate technology group at Intuit.
Dr. Jacinta M. Jiménez, PsyD, BCC (also known as “Dr. J”) is an awardwinning author, psychologist, and board certified leadership coach with a 15+ year career dedicated to the betterment of individuals, leaders, and organizations. An in-demand international keynote speaker and consultant, she has worked with individuals in top companies in Silicon Valley and throughout the world. A graduate of Stanford University and the PGSP- Stanford PsyD Consortium, Dr. J is a sought-after expert in bridging the fields of psychology and leadership and regularly contributes to national news and TV outlets, including CNN/HLN, Business Insider, Forbes, and Fast Company. Her bestselling book, The Burnout Fix (McGraw Hill, 2021) debuted as #1 New Release on Amazon, has been recognized by Business Insider as a top book to read about burnout, and was the winner (out of more than 10,000 non-fiction books) in getAbstract’s prestigious 2021 International Book of the Year Reader’s Choice Award.
Megan: Today on The Top Floor, we’re diving into what appears to be the most-pressing issue facing property managers: human resources, staffing, recruitment and employee retention. A staggering 74% of folks in the industry identified HR, Staffing, & Recruitment as one of their top three challenges, with 50% noting it as their primary challenge, according to a new report from the National Apartment Association sponsored by AppFolio. And that’s not entirely new, considering staffing and high volume employee turnover has long been an ongoing pain point for property managers across the country, experts say. In fact, there was a 32.7% turnover rate even before the COVID-19 pandemic, according to data from CEL & Associates, Inc., that’s much higher than the average rate across any other industry. And the pandemic has only made matters worse with continued labor shortages and an exodus of workers creating hiring challenges for companies with millions of jobs unfilled in what’s now being called “The Great Resignation.”
For property managers specifically, attracting and retaining talented employees has become a major challenge. These staffing issues inevitably impact bottom lines. For this and many other reasons, such as growing costs and supply chain issues, nearly half of property managers identified maximizing revenue and profits as one of their other top challenges industry-wide, regardless of the type or location of rental properties.
Today’s conversation discusses pain points the rental housing market is up against, and how the industry as a whole is tackling these challenges from the ground up as we collectively rethink the future of work. We’ll also uncover strategies property managers can adopt to overcome them, through solutions like cross-training, leveraging tech for virtual tours and leasing, and sharing work-life balance techniques with employees to help them combat burnout along with offering competitive benefits and training programs. Here to start off the conversation is Paula Munger.
Paula: All right, thanks Megan. I’m happy to be here. I am the Assistant Vice President for Research for the National Apartment Association and we research topics that are important to the industry. So, that could be anything that’s happening currently. It could be policy issues. And then we also do some reports on the Labor Market for the Apartment Industry and just regular quarterly reports looking at market trends.
Megan: Effects of the pandemic slowed down the hiring process and made it more challenging to retain workers in property management. Here, Paula references data and insights from an AppFolio-sponsored report by the National Apartment Association (NAA), which surveyed property managers about their biggest challenges.
Paula: So the challenges that we saw in the survey existed before the pandemic. HR, staffing, recruiting, trying to maximize your revenue, trying to be more operationally efficient, that was all in place, but like everything with COVID, we hear about this all the time, the trends were just totally amped up. So we saw, while they existed before, the sheer magnitude and depth of the challenges did surprise me. If you’re a company that has more than 20,000 units, that was the largest company we surveyed, 83% of the respondents said they were having challenges with HR recruiting and staffing. That’s just a phenomenal number that totally blew me out of the water.
Leah: HR, staffing and recruitment have always played a large role in property management. However, the pandemic created new roadblocks in this area.
Megan: Leah Cuffy is a research analyst at the National Apartment Association.
Leah: And this was evident in the survey results. When the respondents were asked to select the three topics that were most challenging for them in terms of importance, 50% selected HR, staffing and recruitment as their number one challenge and 74% selected it as one of their top three challenges. And these staffing issues have been rated the other top challenges, including operational efficiencies and maximizing revenue, which were the second and third most common challenges with nearly 63% and 48% respectively.
Leah: So challenge number one, HR and recruiting. So after selecting the top three challenges, respondents were asked to rate the set of activities within each of these topics. Each activity was rated on a scale of one to five, with five being the most challenging. So within the topic of HR staffing and recruitment attracting new team members, training new hires quickly, and reducing turnover were rated as the most challenging tasks. Turnover has always been a challenge, but COVID has only made that worse by placing headwinds on both sides of the equation. More associates are resigning and the hiring pool of replacements are smaller than usual.
Paula: Yeah. So what’s interesting, what happened in the beginning, way back when, in 2020, when the pandemic first hit and everything closed. Restaurants closed, hotels closed. We had something interesting happen in the apartment market, which is, those jobs, the service industry jobs. There’s a lot of overlap in the skills. So you need really good customer skills if you work in the hotel industry. So we remember saying, ‘well, we have all this access to this pool of labor,’ and apartments were deemed an essential service. So all those folks stayed employed and our owners and operators were actually able to find talent, but that all went away because many of those jobs in the leisure and hospitality and services sector came back.
Paula: And those people went to work. And now fast forward to when we did our survey, which was just this past summer, late July, early August, it was open. And we see a record amount of job openings in the country higher than ever. Right now there’s almost 11 million jobs available. And so that is making it particularly challenging because it’s an employee’s market, workers have choices. So they’re all these employers competing for this pool of labor and employees are, they have options.
Megan: The continued post-pandemic employment trend, where workers are voluntarily quitting or leaving their jobs in record numbers in search of work-life balance, higher pay and better benefits, has been coined by the media “The Great Resignation.” It’s something all industries are dealing with first hand. Here, Stacy Holden, Senior Director and Industry Principal at AppFolio, walks us through how this concept has impacted workers in the property management sector particularly.
Stacy: Challenges and staffing have manifest themselves really in different ways. These are just some examples of different sources where this staffing issue, and especially around recruiting is and has been and will continue to be a challenge.
Leah: Well, there’s definitely no denying that America is experiencing a Great Resignation. There were 10.9 million job openings at the end of June, according to the Bureau of Labor Statistics. And it’s the highest number of openings since BLS began reporting on them in 2000. And that means that there are more than one million job openings than unemployed people.
Paula: It really is fascinating.
Megan: Paula Munger, again.
Paula: So because it’s an employee’s market, they’re demanding a better benefits package, better pay. They want more flexibility. They want really a better work life balance, maybe more than ever.
Paula: And I think what happened with the pandemic, you think about so many people lost family members, friends. And so there’s nothing like unfortunately a tragedy to really make a person step back, evaluate their life, evaluate their career and say, ‘Hey, this is maybe not where I want to be.’ And, ‘Oh, look, there’s this new opportunity that just popped up so I’m going to quit my job.’ So we also have a record number of quits. We’ve never seen the BLS has been tracking that data for decades. And we’ve never seen this many, this number of people quitting their jobs. And that’s obviously also impacting the property management business.
Stacy: I’ve heard that everywhere. It’s the purpose and people are thinking differently than they’ve really ever thought before, myself included. So, okay, if we have increases in people that are leaving and part of that Great Resignation and you’re a hiring manager, you might look at something like this. What does the hiring environment look like right now?
Megan: The hiring environment looks differently for human resource managers in the apartment market with the uptick in employees leaving their jobs. And companies must grow and change to adapt.
Leah: Companies are definitely evolving their hiring process. Doing virtual interviews, just having to adapt to the current environment. That’s definitely what the environment is looking like. Also, the power right now, if you think of it like the housing market and the buyer’s power. The power has shifted from workers to employees, there is a shortage of talent. And so right now employees, they have the upper hand. And like I mentioned, there’s a shortage of qualified candidates. So everyone is trying to entice and have their company be front and center on online job boards. They want their company to be seen the most because there is such a shortage of qualified candidates. And also, candidates have an increased salary expectation. They know that they’re in high demand and they want to be compensated.
Paula: So we had an Affordable Housing Provider say they’re in the business of affordable housing. So they only get so much rent revenue. That’s capped. They know what that is going into a year and that they have lost maintenance technicians over $2 an hour more in pay. So I think when you hear a story like that, it’s just, it’s pretty astounding. And again, with so many jobs being open right now, and particularly in the Service’s Industry, that you can maybe find something that’s closer to where you live. I mean that’s a huge driver and just having all those choices, I think it’s just particularly challenging to find those people now and people thinking about opening their own businesses, we’re seeing a lot more of that. So trying to get those people to come to your job when there’s all those other jobs out there, within the industry, with all the new product coming online. It’s going to get more and more, I think it’s going to get worse before it gets better.
Megan: One thing we also need to address is the fact that there’s always been high turnover in property management. With that in mind, what makes what we’re seeing now different?
Leah: Well, employees are feeling overworked and overstressed. Property management has always been a 24-hour a day, seven days a week industry. However, with increasing renter demand, more maintenance requests, ensuring the safety of residents, helping financially burdened residents and other challenges brought on by the COVID-19 pandemic, and also with staff shortages, property management staff are just really feeling burnt out right now.
Leah: COVID has changed so many lives. Some are now caring for their elderly parents. Some now have their kids doing school from home. So their life has really taken a change and it can be difficult to balance the demands of being in the property management industry with now the sudden changes that they have in their own personal lives. And another factor I think it’s just a huge number of options that workers currently have. If they are willing to return to the workforce, they really have a large selection of job opportunities to choose from.
Megan: Training is more vital than ever as property managers seek out entry level employees who may not have as much experience as a result of continued worker shortages. Still, hiring managers must find a balance to avoid employee burnout as work piles up with new hire trainings.
Paula: And some of the things I’ve already mentioned, like flexibility, having a work life balance. Being able to, when necessary, focus on their family, if they need to. But in terms of training, we’re seeing something interesting with training, which is because it’s so hard to hire right now. A lot of our owners and operators are having to hire people who aren’t as experienced, which means more training.
Paula: And it kind of leads to a vicious cycle where you have, you have people who are doing the training, they’re being taken away from their work, and those people get burned out because they’re doing so much training and not, their own work is piling up.
Paula: And when you think about that, if it’s inexperience and you invest all this time and resources in training, and the employee goes elsewhere after six months, you have to start that process all over again. So I think it’s just really important to keep your team members engaged and communicate with them so that they know that hopefully there’s this light at the end of the tunnel and they’ll be able to get their team fully staffed soon.
Paula: Training, just particularly that they’re not, again like they’re having to do more of it than they used to, even in the past. And we did see outside of the HR challenges that with certain technologies, training employees on how to use those has been a little challenging and they need to do more of it. So to bring their employees up to speed again. When I mentioned giving them resources and tools, they need to know how to use those resources and tools. So as we see more and more tech proliferating, the Apartment Industry, it’s really important to make sure your employees know how to use that tech.
Megan: But simply incentivizing employees with training for new skill sets isn’t enough in today’s competitive job market. Hiring managers must compete with salaries and benefits to stand out.
Paula: You got to be creative and you got to really put your money where your mouth is. And we’re seeing that sign on bonuses are common even for all levels of positions, higher pay, better benefits, more flexibility. Not all jobs are suited to remote work, but certainly if you could provide some sort of flexibility and using recruiters actually, more than they have, we have some people saying they’re advertising a lot more than they did in the past. And then finally, if you just can’t find somebody to do your maintenance work, you’re going to have to hire a contractor to fill in those gaps until you can and find the talent and recruit that talent.
Megan: Getting an overall pulse of team wellbeing and how employees are responding to the current culture is vital to boost retention. This can all be done through a digital engagement survey to get a sense of how team members are responding to things like increased work loads. To keep morale and engagement up, don’t forget about the incredible value of mentorship programs — and remember to constantly acknowledge employees for their efforts.
Paula: I mean the engagement factor is huge. And if companies haven’t done an employee engagement survey by now, they really should. Because that could be very telling and just letting you know, I think everyone’s just running so fast right now. Right now we have a lot of demand in apartments. And when you have the demand and residents also wanting demands. And residents have choices too. So not only is it an employee’s market, it’s a resident’s market right now. So they have plenty of choices and they’re wanting their maintenance requests handled quickly. And so the combination of a short staff and more and more demands, and we also have people who are still remote working. So they’re in their apartments just about 24/7. And that means more stress on the property management team and more stress on the maintenance professional.
Paula: So certainly, again, making sure you have a competitive package. You’re going to have to bring the pay. You’re going to have to bring the benefits. You have to give them the flexibility and a sense of ownership. We hear a lot about teams. One of our comments in the survey was, well, we started to have leaderboards. So kind of making it a little competitive and we’re starting to have mentorship programs. And I think those are the things that keep people, feel like they belong to a team, a community and keep them engaged.
Megan: There’s definitely some new and different expectations from people when it comes to where and how they work. More employees are looking for a greater sense of purpose and flexibility. Leah has more on this.
Leah: Employees are now expecting that their jobs bring a significant sense of purpose into their lives. So McKinsey & Company conducted a survey of employees and they found that nearly two thirds of U.S. based employees said that the COVID pandemic has caused them to reflect on their purpose in life. And nearly half said that they were considering the kind of work that they do because of the pandemic. In addition to the sense of purpose, the flexibility, we’ve heard this over and over again, but employees are looking for flexibility and they’re looking to choose a work schedule and also work environment that works best for them.
Paula: And we have seen jobs that we didn’t really think were well suited to remote work are having remote work, but you’re always going to have those jobs where if you’re operating a piece of equipment, if you’re fixing a faucet like a maintenance tech, obviously you need to be there in person. But I do think that we’ll see more and more job seekers looking again, just looking for that flexibility and that balance. And you know, I want to work when I want to work and if I can get the work done, what should it matter where I am or what time I’m working?
Megan: In many ways, the lasting effects of the pandemic have changed expectations for employees in property management who may now have an increased workload since more residents are working from home. Leah explains how some roles in the industry, like maintenance technicians, are impacted more than others.
Leah: So that would be the front line roles, particularly maintenance technicians. They’ve always been difficult to retain and also to recruit, but now more than ever. And that’s mainly due because of salary. Over the years there’s always been a battle for minimum wage hikes and also the lack of benefits for frontline workers, and all of a sudden they have the choice for who they want to work for and what they expect in return.
Paula: We always hear about maintenance technicians are hard to find, and now that’s even more the case because what’s also happening, and we really dug into the open ended comments in the survey and we saw a few that said, well, we’re losing them to the construction industry or we’re losing them to government jobs. So they tend to be lower paying jobs and there’s plenty of lower paying jobs available right now. And we had a small operator that said, look, I can’t possibly compete with the benefits package that a government job would offer someone. So it’s rough out there.
Leah: Sure. Well times are busy for property management teams. They’re doing more with less, which makes things hectic and everyone’s just trying to play catch up right now. People are also resistant to change and would rather do things sort of the way that they’ve always been done as opposed to look for innovative solutions. And like we just learned in the poll results, the backlog of maintenance requests and repairs due to lack of supplies and quality vendors has really been an issue.
Megan: So, are we seeing these changes as temporary, or are we expecting this new state of affairs to become more permanent?
Leah: Well, I think that will honestly depend on how a company is willing to evolve. So if a company is seeing that they’re having issues with the backlog of maintenance requests, or they’re just taking more, I guess, more paperwork for leasing consultants and they don’t have as much time to actually meet with residents and meet with prospects. If companies are facing those kinds of challenges, but they don’t take a step back and analyze how these can be improved, then it will be permanent. But if they do make changes, then I think that it’ll be temporary.
Megan: It’s clear that the pandemic has increased the workload on property management teams across the industry, and that has real consequences. Employees may be feeling fatigued, tired or even disengaged. These are all telltale signs of burnout. Dr. Jacinta Jiménez, a psychologist and author of “The Burnout Fix,” shares how to identify burnout and the importance of mental wellbeing at home and on the job.
Dr. Jiménez: The interesting thing about burnout is that it was growing. It was a growing epidemic even before COVID so much so that the world health organization officially recognized it and it’s ICD or the International Classification of Diseases 11 in May, 2019. So people were already feeling it, and that’s because we’ve entered into this really exciting new world of work in a lot of ways, right? We have hyper-connectivity globalization, artificial intelligence, machine learning, increased amounts of information, and that’s changed the nature of our work. We can work remote, hybrid, all of these things, which are very exciting advances. But like anything that shines bright, it also can cast a shadow.
Dr. Jiménez: What research has found is that burnout happens when there’s a mismatch between our capacities as humans and the nature of our work. So think of it like a scale and it’s okay. It’s never going to be in perfect balance. Burnout happens when we try to avoid being human for too long, when we deny our humanness for the sake of productivity. In other words, we need to learn, lean into building pro resilience mindset, skills, and behaviors in order to keep us feeling like humans in the face of the uncertainty.
Dr. Jiménez: And the more we can do this, the more we can build out protective buffers towards that uncertainty. We have to understand that we’re humans, we can’t just keep pushing forward in the face of uncertainty. There’s things we can do to lean into our core capacities as humans. We need to tap into these things that we know have allowed us to flourish and thrive for centuries.
Megan: Maybe you’ve been there: there is simply too much work on your plate and not enough time or emotional bandwidth to address the heavy load. Naturally, burnout affects us all differently. And your role in an organization has a lot to do with it.
Dr. Jiménez: I think the biggest difference for frontline workers and supervisors is what contributes to burnout. There are six person job mismatches that lead to burning out. And one of them is kind of that overload. And I think frontline workers can often experience compassion fatigue. It doesn’t mean you have to be a caregiver necessarily, but you’re constantly having energetic exchanges with people. You’re in the trenches kind of dealing with it. And a lot of times you’re not getting the rest and recovery and that can take a toll over time. And it’s a really real thing like, and especially people who are frontline and really care about doing a great job in terms of customer service, in terms of really, you know, providing a great experience if we’re not resting and replenishing, that can take a toll.
Dr. Jiménez: And eventually we slip into cynicism and that’s like, what compassion fatigue shows up as, which is really heartbreaking again, because these people have the greatest intentions. For supervisors. You know, I think a big one is that lack of control, noticing that your people are burning out and maybe not knowing what to do about it and feeling very responsible for great supervisors care a lot. And when we care a lot, that’s hard and, we’re trying to, you know, decrease work streams. We’re trying to, but we’re constrained too. I’m not saying it’s easy to reduce workload. So you’re kind of that smushed in between person going, I want to help you. I see you’re burning out, but I don’t know what to do.
The first step is just to remind yourself ‘why is prioritizing well-being important?’
It’s not just looking for red flags, it’s looking for the green flags and then using the data to optimize, to give you more control than letting burnout just happen to you and then react to it. It’s all about prevention as much as possible.
Megan: If we’re not actively monitoring for the symptoms of burnout, we may not realize it’s happening to us before it’s too late. So, what solutions are available to leaders and their teams?
Dr. Jiménez: It’s all about taking little breaks to allow your nervous system to recover. You rest and it allows you to stay kind of right in that sweet spot.
I know people are busy. I know we’re already emotionally and psychologically packed. So I’m not saying like, go start a huge yoga practice for an hour every day. It’s small behaviors, even one minute, five minutes, three minutes. These little tiny moments of micro replenishment placed in strategically throughout your day that allow you to feel human can make all the difference. They can be as simple as petting your dog. Taking a couple of deep breaths, looking at nature. These little tiny deposits.
Small incremental changes so that you do something, you feel great about it. You learn about it. And then you start yourself a little more and then it’s called, I call it a stretch spiral. And so it teaches you how to do that without overwhelming yourself.
This is about evaluating your effort. How do you stay true to your core principles, your core values and instill meaning and purpose in your work? When we have those things, we’re much more resilient. We’re able to take on more challenging things. And we gain control of our time and our priorities as well. So it, it results in this periodic table of elements for resilient life.
Megan: As many as 62.8% of property managers from the NAA survey said operational efficiency is one of the top challenges, including finding high-quality vendors, freeing up teams from labor-intensive processes and reducing costs. Stacy shares some of the inefficiencies she’s seen property managers face when it comes to workflows, accounting, leasing and maintenance.
Stacy: Well, I think that based on the survey, let’s take a step back and let’s focus on the maintenance part first. And really it’s coupled not just with how we have to handle flexibility as in, we don’t necessarily have maintenance techs that are at a property 24/7, we’re doing again more with less that they’re transitioning across multiple properties, or we’re having to use a vendor that maybe we’ve never used before. So there’s that, but then there’s also the training issue, and not necessarily having a supervisor to show them the way things are done. And having to not necessarily be in the place to pick a work order out of a basket, and it has to be something more technology based. And so I think especially around maintenance, it’s more of that technology automation and making sure we get our residents’ issues to the right people in the most efficient way is really kind of the biggest challenge that I’m seeing around maintenance today.
Stacy: Leasing is the typical usual suspect, but maintenance I think is more challenging today now than ever.
Megan: There are many ways that property management teams can become more efficient. Leah lists a few.
Leah: So better alignment is definitely one of the ways that they’re looking to become more efficient. They’re providing more training, more communication among onsite staff, corporate and suppliers. That’s a big thing. It’s just making sure that everyone is on the same page can really increase efficiency. And they’re also using better software, vendor compliance, procurement process optimization and also decision making. So those are definitely some of the ways that they’re being able to increase efficiency.
Paula: I mean, technology, the thing that was maybe good about the pandemic is there were a lot of, especially smaller owners and operators who were putting it off. Yeah, we’re going to do the technology, and then all of a sudden COVID’s here and you don’t have a choice because in order to survive, you better make sure you’re doing those virtual tours and virtual leases and just using more tech in general. And I think just, especially, and you have to be careful which tools you choose. I know that’s very challenging for a lot of owners and operators choosing the right tools. They’re concerned that they’re going to choose a tech tool and then it’s going to be outdated soon. So, but once you get those tools and if you can get your teams to be more efficient by using those tech tools, we clearly were seeing that not only in leasing, but in maintenance. Being able to open up your phone and have your maintenance request and have somebody see it in real time is really valuable.
Megan: Property managers must continue to put technology to work to help streamline workflows — this can really help to free up employees’ time. Here’s how.
Stacy: Well, I certainly know from my perspective that really technology is where this can play and play really, really well. So imagine taking your steps, A, B, C, D, and instead of having a manual or a Word document or something that someone has to refer to, imagine taking all of those and putting it into your application so that when someone moves out there’s workflows that happen. When someone moves in there’s workflows that happen. And in the example of a maintenance tech, they actually get a notification, and it tells them not only what to do, but if there’s data entry required, it will take them the exact space and time in the application to just enter what they need to enter. So they don’t even have to remember how to navigate the system itself. It will take them where they need to go.
Stacy: And what does that do? Well, it basically takes those complex processes, because there’s, especially moving in and moving out, there’s so many things that need to be done and it simplifies it into an easy to manage and easy to look at process from a supervisor level. Even employers don’t have time to manage people’s performances. And that’s exactly what you can do with this workflow tool in AppFolio is be able to see where things are going well and see where things are not going well. And is that a property issue? Is it a training issue? Is it a supply chain issue? So having these things at a higher level enables leaders to see what’s going on across their portfolio without not necessarily needing to be there. So what does that do? That increases our level of engagement for leaders to help out their people and unblock things which keeps those frontline workers focused on the high value tasks.
Megan: With the many challenges related to hiring and attracting talent in property management in the age of the Great Resignation, it’s important for property managers to be open minded when recruiting and retaining new talent. That means considering candidates from other industries, who may be entry level and less experienced, but who are open to learning new skill sets. Paula expands on this, explaining how important it is for leaders in real estate to build inroads at trade schools to attract new workers to jobs in the industry, especially maintenance. Additionally, showing younger workers that property management is a desirable career path should be a top priority for the industry.
Paula: NAA has an Education Institute and they actually partner with some colleges and universities who have programs, and Property Management programs, but we need to go further than that. And that it’s actually getting the word out in high schools, in trade schools. And we hear a lot from our members. There’s that maintenance tech, that’s their toughest nut to crack. And it’s because, and it’s really hard to get around this, but younger people right now don’t necessarily want to work with their hands. That’s something they don’t find attractive. We see similar things in the construction industry. It’s hard to get people to realize, this is a good job. You can make decent pay, you can have a stable income. And so we need to get the word out that this is, it could be a career path for people and you really don’t need, for some of these positions, you do not need an advanced degree. So I think to get to that high school level, trade school level and get people in working in the trades and working with their hands is super important.
Megan: Maximizing revenue and profits is another major challenge. 47.6% of those surveyed called it out. And with budgeting season well underway, property managers are looking out for their bottom line and how they can increase Net Operating Income while still prioritizing their employee wellbeing and hiring the right talent.
Leah: So profitability. Under the topic of maximizing revenue, increasing net operating income, mitigating bad debt loss and returning performance to pre-pandemic levels were rated as the most challenging activities. So this was one of the comments that we received. Costs are escalating much faster than rents can be raised, and housing is becoming less affordable for many of our clients. And that’s a huge issue that we’ve been hearing.
Leah: So there’s a couple of things. On revenue property managers have been hesitant to raise rents during the pandemic, and they’re also burdened with the cost of rent non-payment. For more specific insight on revenue challenges, NAA conducts an annual income and expenses survey for professionally managed properties and this year’s survey supports what we just discussed and also revealed just how hard the industry was hit across most income and expense categories. We found that total revenue measured as a percent of gross potential rent fell nearly 200 basis points from 2019, while operating expenses rose 60 basis points. And for costs, what we saw was that the pandemic forced additional operational costs from cleaning, sanitary capital expenditures, et cetera, raising wages, which we just talked about earlier. And another key finding from the income and expenses survey as it relates to costs were that property taxes, insurance and repair and maintenance were the main drivers of cost increases. So overall total operating expenses increased 2.6% per unit from 2019.
Megan: Stacy again, with more insight on how data specifically can help with insights into operating expenses.
Stacy: Let’s talk about the data itself. So being able to see things through insights, which we’re looking at here today in AppFolio. Being able to trust the data that you’re looking at is super, super important. Not only does it help make the decisions, but again, let’s think about that high value time that employees would want to be spending. It’s not collecting the data, it’s actually looking at the results. So being able to have real-time results like you can within AppFolio.
And it’s going to be really interesting too, I think with the supply chain issues that we’re seeing. That doesn’t seem to be slowing down as much as I thought it would, that it’s still remaining a real issue. And it’s not just getting the supplies to the U.S. but then it’s truck drivers and it’s the delivery. And it’s all the things that I think we all need to take in consideration, especially when we’re talking about actual cost for those repair and maintenance issues.
Megan: On the flip side, here’s how property managers have been solving for this and how they’re adapting.
Leah: Absolutely. So property managers have been assisting residents in rental assistant signups, starting to increase rent a little bit. We’ve seen a lot of publications highlight how rent has now increased, but it’s important to know that a lot of those data points are comparing it to 2020. There are a lot of markets who are still struggling with their rental rates when compared to pre-pandemic rents, so that’s important to note. But they’re also upgrading units to attract new residents. And as far as optimizing operations, they’re cutting costs, hiring staff, and also new vendors.
Megan: Property management roles are indeed multifaceted, especially since so many wear multiple hats due to job shortages and high turnover. Navigating operating efficiencies, managing resident expectations and making the most out of technology tools to see the data to streamline processes — these are just some solutions to these pain points in the human resources department. The pandemic has proven to be a major challenge when it comes to recruiting and retaining top talent in the property management space, especially with such high demand as many residents continue to work from home. Our guests sum up what’s next for the industry in terms of human resources and recruitment.
Leah: I think it’s so important that just to recognize that today’s environment has changed. And if you are wanting to recruit and retain your employees, you have to adapt and realize that what they’re looking for is far past salary. They’re looking to have a sense of purpose. They’re looking for a strong sense of company culture. And so have this conversation with your current employees, do a check in with them and see what’s working, maybe, what’s not. And that’ll help with retaining current employees, but also with recruiting.
Stacy: I think the two things for me is self-service and empowerment. And what I mean by that is creating an environment where employees can serve for the answers that they need, whether that’s the automation through a workflow or whether that is the data that’s presented in such a way that they can have more ownership, and that then turns into empowerment. No one likes better than knowing that they’ve done a good job. And to be able to either see that through the data or see that through a survey result of a maintenance request. Having that instant feedback and giving them the tools to actually make the difference. Those are the things that employees want to work for a company that do.
Megan: So much has changed about the way we live and work, and for property managers, the impact is being felt especially when it comes to recruiting, hiring and retaining top talent.
As the Great Resignation has resulted in thousands of employees leaving their job posts, it’s no wonder that 50% of property managers surveyed said HR staffing and recruitment was their number one challenge.
Employee burnout is on the rise, but property management companies can mitigate this and retain more workers by making incremental changes. Remember to prioritize employee wellbeing, by making sure your team is well equipped with the resources they need to be successful in their roles — whether that means technology that is easier to use, or resources for mental health and wellness. Above all, our guests agreed that creating an environment where employees feel seen, heard and supported is not only the right thing to do, it’s key to attracting and retaining a strong team.
Special thanks to our guests, Paula Munger, Vice President of Industry Analysis at the National Apartment Association; Stacy Holden, Senior Director and Industry Principal for AppFolio; Leah Cuffy, a research analyst at the National Apartment Association; and Dr. Jacinta Jiménez.
Sean: Thanks for listening to The Top Floor and remember to join us here monthly for each new episode. For more information about today’s guests, visit our industry insights page at appfolio.com. And to view the latest property management insights as they’re published, follow AppFolio on LinkedIn, Twitter and Facebook. Don’t forget to subscribe to The Top Floor on Spotify, Apple Podcasts, Stitcher or wherever you listen. We’ll see you next time.
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