Lessons from this difficult market- for property managers

It's not really a silver lining, but I realized the other day that, as tough as 2009 has been property owners and property managers, I will have some good lessons from it to help me in the future. The thing is, when markets are booming, marketing a property management company to new clients can be tough, because people think it's easy and there are 6 tenants for every unit (not so much, but more on that later). We spend quite a bit of time educating property owners of the benefits of professional property management, as opposed to them going it alone, and the hardest thing to quantify is the value of a firm grasp of the market, what's needed to market and fill units in the most timely and beneficial way, and how to keep them that way with good maintenance and tenant relations. In a really difficult market though, the value of a good property manager really becomes clear, which makes at least that part of my job easier.

This epiphany came to be when I saw a newsfeed article on the front page of a local independent owners association, (which, even though we compete for the same clientele, I do peruse along with a number of sources of market and industry news each week to keep up with the latest information and influences to the business). The article was titled "Why you should ask for lower rent", and outlines general national trends and a depiction that in this economy, everything might be on the table for tenants to negotiate, and implies that tenants should strike a deal, in essence, while landlords are down. It was an ironic choice of articles for a property owners association to be highlighting, but I did a double take because I could just imagine these owners getting pelted with calls from tenants, having read the article, threatening to move and demanding concessions. Only toward the end, almost as an aside, did it mention that markets are local and conditions will vary from one area to another; what it didn't mention was the need to do apples to apples comparison of property rents based on location, size, age, features, amenities, and condition. The problem this kind of article causes for owners is that these are the most important factors in a property's relative rent within the market, and people too often overlook this (and indeed the association didn't include this additional analysis alongside the article either).

You see, a good property manager works in the field day in and day out, and knows what's happening block by block with the market. And certainly, rents in Seattle, depending on the area you're in, have been volatile this year; layoffs, unemployment, a thinning pool of qualified renters, and lots of inventory are all taking their toll. However, our company has been adjusting rents (where appropriate), working hard at retention and tweaking the management plans for each property to balance the value, quality, and highest/best use of the property all year. So our tenants and owners are in relatively good shape and aligned with the market realities. As we lease units, of course we get questions about price and concessions, and tenants can see by the comps and information I provide that the unit they are in, or looking at, is priced appropriately for the market based on all the criteria above; tenants with expiring leases are offered renewals based on the same information, and occasionally we offer a longer lease term or other items to keep them there.

So when there's an article that kicks up dust about demanding lower rents or other market alarms, my owner clients don't have to sweat it, because navigating the market is the biggest part of the value I provide as a professional property manager. Except that in good markets, it's not as tangible to owners; but in this market, my value becomes crystal clear. And to those owners who are fielding demanding calls from frantic tenants, it makes that part of my marketing message all the more tangible to them.

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