Last modified on October 27th, 2022
By Megan Eales Monroe
Back in 2021, AppFolio co-partnered with the National Apartment Association (NAA) to launch our Property Management Industry Pulse, which revealed that the biggest challenge facing property management companies last year was HR, staffing and recruitment. But a lot has changed in just one year, and we wanted to see just how much.
According to our 2022 Property Management Industry Pulse, controlling costs is one of the biggest challenges facing property management companies this year. It’s no surprise, given inflation, the aftereffects of a pandemic, and higher salary expectations stemming from “The Great Resignation.”.
While it’s tempting to try to cut costs at all levels of the business, it’s important to keep a long-term view. In fact, while seemingly counterintuitive, making smart investments in the right areas can protect your bottom line.
We spoke with Stacy Holden, Senior Director and Industry Principal at AppFolio, to get her take on the situation. Stacy explains that while spending should be carefully monitored, cutting in the wrong areas could have detrimental effects on the business.
Keep reading to learn more or tune in to the full podcast below.
Why are costs rising for property management businesses?
Property management companies have had to deal with shutdowns from the pandemic and an increase in demand due to people working from home and submitting more maintenance requests. On top of that, there’s a deficit of skilled tradespeople, making it harder to fill essential maintenance roles. With rising inflation, employees are looking for higher wages and better benefits, putting even more pressure on the bottom line. You can read more about this in our blog post, Supply, Interest Rates, and Inflation: What the Current Housing Market Means for Property Management. But as Stacy explains:
“Everything just costs more. I think it’s as simple as that. And to get the right level of output or the right level of quality, you have to pay more. And because those resources are scarce, they can demand more cost.”
What not to cut when trying to control costs
While it may be tempting to try to cut costs, Stacy believes there are two key areas you should really avoid cutting back on: your team, and your technology.
Investing in your team
Your team members are one of your greatest assets in property management, and Stacy highlights that it’s more important now than ever to retain quality team members.
The cost of recruiting and the time it takes to find the right people can have a significant effect on your bottom line. And with more people leaving their jobs following the pandemic, companies need to do more to boost employee retention.
Salaries and benefits are of course important, but there are also ways to boost retention that don’t necessarily cost money. Providing flexible working hours is a prime example. According to Stacy:
“I think a lot of times, we don’t recognize the financial impact of what employee turnover can be. And it’s very costly, both in the short and the long term. So make sure you know you as businesses are talking to your staff, meet them where they are and focus on their retention.”
Investing in technology
Stacy’s next piece of advice is to avoid cutting back on investments in technology.
Technology not only helps produce a rapid return on investment, but it can also help with employee retention.
In a recent survey, we found that 84% of respondents agree that technology makes their jobs easier. 64% of respondents say they prefer to work for a company that adopts the latest technology, and employee satisfaction was 31% higher among employees who are satisfied with the technology they use. As Stacy explains:
“It used to be that technology was a bright, shiny object or a super nice thing to have. Imagine if all of us were invited to go to work for the best company that we could possibly think of, but we had to start using a typewriter. Would you actually go to work for that company? In today’s day and age and the generations that are up and coming in the property management industry, the answer is no.”
Investment in technology impacts resident retention because it streamlines communication, maintenance, and the renewal process.
Invest for long-term success
By investing in your team and giving them the tools to do their jobs more effectively, you can start to run a more efficient operation. Technology allows for automating time-consuming, manual processes and reducing errors, making your team’s day-to-day simpler and giving them more time to focus on higher-value, more rewarding work.
Investing in your technology and team may be costly now, but in the long run, it can save you money in the long term.
To learn more from Stacy about managing rising costs in property management, tune in to the full podcast episode.