We’d better get real about “our” rental market. It’s not the same it once was. Whether you’re a renter or a property owner, there’s more to consider now. I just read today that market experts predict another 1 million rental households will be created each year. That’s a pretty incredible opportunity for those that pay attention to what that means, however most aren’t paying attention to the right metrics. There are flexible duration options, different financing options, different types of properties, different amenities, etc.. but navigating this new ecosystem is nearly impossible. But don’t you worry.. you’re not in this alone.
If we don’t listen.. it’ll get a lot harder…
but what is the actual problem?
Some quick stats:
Over the last 20 years.. nearly 20 million more people have entered the rental market - continuous growth
25% of all renters in US spend over 50% of their income on rent - low value
In urban areas, 50% of renters move after their lease ends - no loyalty
Majority of the renter demographic is millennial - digital natives
Property management tools are fragmented or too cumbersome - out of date
Consumer demand is rising w/ 40% using reviews before purchasing - out of touch
Consumer awareness is changing everything. Companies are becoming wise to the fact that appealing to the consumer is imperative to survival. Consumers demand is fundamentally changing the way companies run their business.
There’s a massive disconnect in the rental game. Property owners and operators wanting to rent to consumers are in for a wake up call they haven’t had before. No longer will a simple lease and welcome card pass for today’s savvy renter demographic.
RENTING IS CHALLENGING, BUT WHY? - Volume 1 (of 3):
Renting is a tough game. It doesn’t matter if you own the apartment or home or you’re the one renting it. It’s endless… high turnover, decreasing margins, more tools that don’t cooperate with each other, consumer demands and hard to navigate service offerings. I could go on but the point is, things are changing faster than ever.
Don’t kid yourself. The rental market was built to strengthen properties, not renters. The driving interests have always resided in maximizing income through a rental asset. As you can tell.. no where in there does ‘catering to the renter’ come up. Overall, the industry tends to define the renter as a necessary evil and at times - a walking, talking, ticking time bomb of issues and complaints. This is one of the only industries that hasn’t responded to the end user until just recently. As in all evolution, having just started means we have a long way to go.
For instance, though offering a renter portal seems like a feel good, the motivation for property managers to offer them was based on mixed motivations. What the portal offered ultimately was a more efficient way to ensure rent payments were received on time and that documentation and follow up on late payments was easier for accountants. Making it easier for the renter was a byproduct and good tag line.
The majority of services provided tend to alienate renters. Renter acceptance standards, software platforms, lease terms and business models that make up the rental market are disadvantageous for renters. These consumers, who may be spending over half of their income on rent, lack a voice. We’ve built a structure to makes sure renters “stay in their lane”, don’t damage the home and pay their rent on time. This has not been good for renters.
As a result, the market has experienced systemic issues such as diminishing profit margins, heightening renter turnover that tends to be extremely expensive and limited ability to alter course since even the very software platforms were built to serve this quickly failing race to the bottom.
We have the signs but..
we simply haven’t been reading them.
ARE WE READY FOR CHANGE?
The short answer is that we must be ready. Almost all other industries have heeded the call and are making the tough decisions to leverage new technological opportunities, to listen to the consumer’s needs and to effectively leverage partnerships, service groups and offer fresh approaches to old business models.
We have to think more holistically about the market and the influences that have only recently come to light in a big way. The larger organizations will innovate through acquisition as they have for many years, but disruption to these large organizations may come in the form of all new business models adjacent to everything these older organizations were built off of. It could in fact come from a consortium of innovators. We believe this reality may reach communities near you within next year.
If you’re interested in hearing more.. we’ll cap things off in this helpful 3 part series or you can go to Leasera to see what the new era of leasing looks like. We’re excited to provide a New Life On Leasing.
HOW DO WE NAVIGATE THE ROAD AHEAD?
We’d really enjoy the opportunity to hear your thoughts. We’ll also share some of ours as well as solutions to the challenges ahead.
Property Managers and owner: What are you doing in and for your communities? What seems to get the best response from your renters?
Renters: What do you love about your property or management team? What bothers you or what would you like to see more of?
We are here to influence and create positive change. We’re continuously trying new things and innovating for better, stronger communities.
Thank you and we appreciate all of you. Please stay tuned for our next two additions to this series. We’re excited to talk more about what’s going on in the industry, what our thoughts are and how we see major opportunities taking place as we speak!