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In multifamily housing, the top-performing properties maintain high rates of occupancy, rent and renewal.
Property valuations hinge on net operating income, and the person who impacts those valuations most directly is the property manager. In my view, property managers are among the most important assets in the multifamily housing business.
Property managers are the turbines that power their properties. They cultivate new renters, secure timely rent collections, arrange repairs, contract services, settle issues and complaints, and ensure compliance with fair-housing laws. The best property managers create a sense of community in which residents want to live. Finding those managers can be difficult. Retaining them is imperative, and often just as difficult a task.
Attrition rates in property management are high — 33 percent, according to the National Apartment Association, 50 percent higher than the national average of all industries. The Apartment Association of Metro Denver found that some real estate companies reported turnover rates as high as 70 percent in 2022. Turnover costs property owners in revenue (lost renewals, higher vacancies) and expenses (hiring, training, onboarding). Retaining talent should be our primary mission.
Thankfully, we’ve built a team of dedicated property managers who love their jobs as much as we love them. Our management team averages 12 years on the job, providing continuity essential to our residents and our business. Demonstrating commitment and support for property managers is essential in retaining them. Here’s how we do it.
Compensate your property managers well
Among the reasons people leave jobs, pay and benefits ranked No. 1 before, during, and after the pandemic. Gallup found that, after a 2021 turn in which respect and work-life balance gained importance, compensation once again was the driving factor of retention. As noted earlier, property managers drive revenue more directly than anyone. So real estate companies should compensate them properly.
The median annual salary for property managers is about $59,000, according to the U.S. Bureau of Labor Statistics. At MZ Capital Partners, we’re proud to offer above-market salaries for our managers, as well as bonuses and competitive benefits packages. We view this as an investment in our business. Skilled, successful managers get poached constantly; that’s probably why turnover rates are so high. We want to make leaving difficult.
We further offer a 30-percent rent discount for those property managers who choose to live on-site. It’s one of the industry’s great perks that benefits both parties. In particular, we value having representatives who live in and understand the communities where they work.
Take advantage of proptech
Property managers can face long, exhausting days spinning a variety of plates: collecting rent, showing apartments, appealing to new tenants, fixing problems, understanding tenants’ rights, planning community events, and so much more. They need help. We can provide that through a variety of innovative property technologies.
Virtual showings and digital rental payments are standard but represent only a fraction of the proptech opportunities available to property managers. Self-guided unit tours free property managers and leasing agents from having to attend Sunday showings.
Residents can schedule repairs via phone apps. Software that tracks HVAC systems, water heaters, and even in-unit appliances helps streamline maintenance schedules. Chatbots answer calls from residents and prospective renters, allowing property managers to prioritize requests.
Sometimes, property management consists of mundane, thankless work. Better to have the bots perform some of it.
Say thank you
According to Gartner, 82 percent of employees said appreciation at work is important, but only 45 percent actually feel appreciated. Employees who don’t feel valued disengage, and either their work suffers or they quit. Gartner found that, during the Great Resignation, employees also went through a “Great Reflection,” during which they assessed work’s value in their lives.
Property managers often confront these concerns since many work as on-site managers away from corporate offices. Leaders must invest time to check in with managers, even if the conversation only glances at work topics. We should make “no-agenda calls” more frequently. Recently I checked in with a star property manager with whom I hadn’t spoken in a while. We chatted for about 15 minutes, largely about family, and touched on some business. The property manager thanked me for making her day, even though she really made mine.
Our leadership teams also schedule quarterly visits to properties, where we can say thank you in person. We don’t necessarily make these visits to assess the business unit. A dashboard provides real-time data regarding occupancy, leases, and rental collections. We make them to buy lunch, say thanks, and let the on-site team know how much we appreciate them.
Be realistic about the job
Hybrid work is here to stay. Multifamily housing companies understand that better than anyone since we’re redesigning and retrofitting properties to accommodate residents’ work-from-home schedules. But the model just doesn’t work for property managers. Those who suggest it does work aren’t familiar with our business.
Property managers act as the face and voice of a property. In some instances, they come to view residents as members of their extended families. They can’t perform their duties from 800 miles away. As leaders in the field, we have to make that clear. You can’t sleep on the internet, and property managers need to be where their residents are.
Good property managers reach their retention targets (usually 60 percent to 70 percent) by being responsive to tenants’ needs and providing a quality living experience. Moreover, they help people build homes. We don’t allow those property managers to leave our company by choice. Attrition in property management is preventable. Successful property managers give their residents a reason to stay. As leaders in the business, we must do the same for property managers.
Michael H. Zaransky is the founder and managing principal of MZ Capital Partners in Northbrook, Illinois. Founded in 2005, the company deals in multifamily properties.