Until recently, long term real estate investors were the only ones using property managers, but recent years have changed the real estate market dramatically and this has turned many homeowners to the rental market, including:

• Investors that purchased a new home with the intent of flipping it

• Investors that fixed up an older home with the intent of flipping it

• Investors that purchased a condo conversion

• Homeowners that couldn't sell and are stuck with two mortgages

• Homeowners that need to relocate, but live in a market with surplus inventory

This new breed of captive homeowners, many in middle class or higher communities, must now manage through an unintended situation of holding a property for a longer period of time then they would like. Most of these homeowners did not purchase using the same investment strategy as a typical long term investor and view the role and expense of property management differently. In fact, many of these “trapped” owners are facing losing money every month while renting.

The new breed of long term investor is also different then long term investors of the past. The previous generation of investors were patient and welcomed reports that arrived in the mail once a month, quarter or year. Todays investors are used to managing their own money, having real time information and tools to evaluate their investments at their fingertips whenever they choose.

 

Are property managers changing in order to cater to these new potential clients? These customers have different priorities. Just because the end result needs to be the same, they do all still need property management of some sort, they do not want or need to be pushed to services and choices that are one size fits all. In fact, many feel they can do certain aspects themselves, but are the property managers willing to actually partner with their customers? Without a marketing effort to demonstrate this willingness, many of the new breed of potential customers will opt to do the whole thing themselves, even the items they would rather have a professional handle, to avoid paying someone to do what they feel they could on their own.

The new breed needs the ability to pick and choose which services they are willing to pay for. Most property management companies still offer only two choices, full service property management or tenant placement. This does not address the homeowners that are inclined to personally handle the maintenance or the ones that would rather handle the rent collection. Also, many do not see the value in needing to pay for full service management on a new property or condo conversion that has warranties included that the builder will be covering the first year.

 

These new customers also need real time access to every piece of available data regarding their property. Document that are in the property managers file need to be made available on the web, along with all the financial and maintenance data for the property. Owners need to be able to pull their own reports about whatever they want, whenever they want to. This is how they do banking and how they manage their stock investment portfolio, why shouldn't they be able to manage their real estate investments this way? The technology exists to enable this, are property managers working to provide this capability?

There is clearly an emerging market that can be captured by a property management company that is willing to redefine their value structure in order to grow. History has demonstrated that most companies, in any industry, are unwilling to change an entire value structure in order to capture business with a lower margin, only to risk margins of current customers. This means new property management companies will have to emerge to fill this void with innovative solutions for new customers. This shift to online services can already be seen as many online advertising solutions have already obsoleted the newspaper for finding tenants in middle class neighborhoods and many helper sites are popping up to help this emerging class of landlords with tenant screening and other services. New property management companies can harness these solutions to provide a more customizable, cost effective solution for homeowners while still providing them with personal professional service from a licensed professional.

 

The author of this article is a Real Estate Broker in Tampa, Florida that has recently opened a property management company to serve the needs of investors in the New Tampa area of Hillsborough County.