Property Management on the Rise

How major economic and demographic trends are creating new opportunities and challenges for property managers.

Motivation

Whether we embrace it with open arms or resist it every step of the way, we live in an era of rapid technological advancement and lifestyle transformation. Whereas previous generations could rely on similar patterns of work and personal life for decades at a time, we are faced with the need to adapt to significant changes occurring every few years. This rapid pace of change places unprecedented importance on forecasting and preparation. For those of us interested in growing our careers or businesses it is now a requirement to stay ahead of the curve. This paper aims to describe patterns that are deemed significant to real estate property management in the next two decades.

Property Management: A Robust and Growing Industry

According to the latest U.S. Census data the real estate property management industry experienced an average growth rate of 7-8% at the beginning of this decade. The data portrays a substantial and robust industry with over 140,000 active firms generating nearly $36 billion in revenues. By virtually all expert accounts the industry is expected to continue to grow at an accelerated pace in the next two decades as the urban landscape of America undergoes a major transformation. The following four factors are considered amongst the most important demographic and economic forces behind this transformation:

1. The Baby Boomer Effect

2. The Generation Y Factor

3. Municipalities and the Planned Community Concept

4. The Local Living Movement

In this paper we discuss each of these factors and try to understand their main implications for property managers. At the end, we provide a series of conclusions and recommendations for further action.

1. The Baby-boomer Effect

Perhaps the most significant and most frequently discussed demographic topic of the past two decades has been that of the baby boomer generation nearing and entering the retirement age at an accelerating pace. This generation which has arguably had the loudest say in forming many contemporary trends, stands to have an even bigger influence given the degree of wealth amassed.

Who Are They? Numbering around seventy-six million, the American baby boomer was born between 1946 and 1964. A demographic that would be significant on account of its size alone, this group’s characteristics include a higher level of education than previous generations and assumptions of lifelong prosperity and entitlement developed during their childhood in the 1950s. Aided by modern medicine and a better diet and exercise regime, the baby boomer generation refuses to get ‘old’ and continues to push the traditional age envelop by partaking in an active home, travel and work lifestyle.

Money Flows. After decades of gainful employment, running businesses and investing the proceeds, the typical baby boomer is looking forward to a prosperous and indulgent retirement. Multiple factors are at play that could make this dream a reality for many. For starters, baby boomers happen to be closing in on their peak earning years and by virtue of their higher levels of education enjoy healthy annual incomes. As another factor, consider that most baby boomers purchased their homes when home prices were substantially lower (as compared to household income) allowing most to pay off their principal residence mortgages early on. Most boomers offspring are also finishing college and forming their own families, further reducing expenses. Add to this mix the fact that this generation is increasingly in line to receive inheritance windfalls from aging parents and you have the recipe for a significant and unprecedented degree of liquidity in the next 20 years. In fact it is estimated that 10 to 30 trillion dollars will be spent by baby boomers on a variety of small and large ticket discretionary items in the next two decades.

New Digs. As baby boomers retire and are faced with an empty nest, they generally tend to downsize and move from larger single family homes to town homes or condominiums. In addition, given the ample funds at their disposal and the added free time to travel, they are increasingly purchasing second homes and vacation properties. It is quite imaginable to predict that the real estate picture in the next decade will be very different from what we have grown accustomed to in the past 30 years i.e., one that has been focused on owning a large plot of land in suburbia with a single family home built upon it.

What it means to property managers. Both types of transitions i.e., the move to smaller homes (typically condominiums or townhome complexes) and the trend towards vacation home ownership (especially resort properties) are foreseen as major drivers of demand for property management services as both of these trends happen to be away from unmanaged to managed or planned communities.

Not A Landlord, Will Invest. Real estate is a cyclical market with corrections taking place on average every ten to fifteen years. However history shows that well selected and professionally managed, real estate is a secure and stable investment vehicle with solid income generation and capital preservation characteristics. Whether you chalk it up to human nature, common sense or both, as we retire, we tend to want more stability and security in our lives and this is especially true when it comes to our nest egg. We tend to move our investments away from growth oriented, higher volatility assets such as stocks to more stable ones such as bonds. Today, despite the availability of many innovative financial products, real estate investment for the most part requires individuals to become landlords or take part in limited partnerships. While this is certainly possible and practiced gainfully by many, it is not for everyone. This requirement inherently limits real estate’s exposure as a mainstream investment class. It is foreseen that in the next 25 years, real estate will become increasingly productized (from current 2-3% to above 50% securitization) and made available as an array of mainstream investment funds by major brand name investment firms.

What it means to property managers.This phenomenon will see the flow of trillions of dollars of new capital into real estate properties that will by definition require professional property management services to maximize yield.

2. The Generation Y Factor

Large suburban lots, quiet cul-de-sacs and spacious 5-bedroom homes may have sounded like the epitome of high living to the baby boomer generation but to the typical gen Y’er the same phrases spell isolation and a maintenance nightmare. While not talked about nearly as much as baby boomers, generation Y whose leading edge turns the home buying age in 2008, constitutes a powerful market force to study, comprehend and plan for.

Who they are. Gen y’ers, sometimes referred to as echo boomers were born between 1980 and 1999 and number upwards of 80 million as a large subset of the American population. This generation which is an even larger demographic than baby boomers is already entering the home rental and purchase market, a trend that will be accelerating in the next few years.

Technology & Media. Whereas computers and the Internet represented new tools to be learned and gradually incorporated into everyday work and home life for baby boomers, they are the natural bedrock of daily communication and social interaction for generation Y folks. Gen Y’ers are highly proficient and perhaps more importantly very comfortable with technology. More than 80 percent use the internet for school related work as well as for social networking. It is not a leap of faith to imagine that they will be making major purchase decisions such as those related to renting or buying homes based on information and research found on the Internet. Keep in mind that generation Y grew up being bombarded by mainstream marketing and branding messages and therefore developed a healthy dose of disdain for mainstream media. The advent of the Internet and explosion of niche media has afforded this demographic the luxury of being highly individualistic. In essence they take it for granted that they can tune into the information they like (be it music, news or home listings) when they like and in as much, or as little detail as they like. This is in sharp contrast to the TV generation who was essentially at the mercy of the broadcaster for type and timing of content being delivered.

Real Estate Preferences. Survey after survey shows that core city living and walking urbanism are hallmarks of generation Y preferences for real estate. As it turns out this demographic has a strong attraction to living and working in close proximity to downtown or at least re-styled suburban city centers where shopping, entertainment and work can all be readily accessed without having to drive. In his article titled Gen-Y Reshaping American Cities Rob Goodspeed quotes an important statistic: 77% of generation Y plans to live in core urban areas. This is a noteworthy figure to property managers considering the size of this demographic group (more than 80million) and their impending entry into the home buying and rental age. According to Goodspeed the bulk of this generation will be entering the housing market around 2012.

What it means to property managers. It is reasonable to predict that we will be seeing a massive surge in demand for managed real estate as Gen Y enters the home rental and purchase age. The current downturn in the housing market positions them well as first time home buyers and it is reasonable to expect they will be the primary force carrying the market in the next 5 years. The significance: property managers need to carefully consider how to appeal to this generation and its unique communication style.

3. Municipalities and the Planned Community Concept

Recent surveys show municipalities across the country and especially in the Sun Belt have been increasingly embracing Home Owner’s Associations (HOAs) and other forms of managed communities with open arms. The so called planned community model is quickly surpassing the traditional single family lot subdivision as the preferred form of new community development. Upon closer examination the phenomenon is easily explained as a matter of economics: managed / planned communities allow municipalities to download costs while still maintaining similar property tax revenues-what is affectionately termed light governance by experts in the field. To this point, HOA’s and other community associations are often responsible for trash pickup, code enforcement and landscaping of common areas, all responsibilities previously held and paid for by the cities. According to a recent paper by Jones L. Warren, the number of homeowners associations grew from 8,500 in 1970 to over 300,000 in 2005. By conservative estimates there are currently close to 400,000 Home Owners Associates (HOA’s) and other types of managed communities in the United States with an estimated 80 million residents. In the next decade, HOA’s and other managed communities are expected to grow at approximately 8-10% per year as the most preferable form of new community development for municipalities.

What it means to property managers. This is another driver increasing the number of properties requiring professional management and therefore another long term contributor to the rise in demand for professional property management services.

4. The Local Living Movement

Increasing energy costs, the shift towards greener living, mounting pressures on family schedule and last but not least a renewed longing for a sense of community can be cited among reasons contributing to the appeal of core urban living. In her article titled Urban living offers ‘vibrancy’ not found in suburbia Maureen B. Aikins a free-lance writer living in Greensboro, N.C. argues that when urban living is done right it offers a kind of vibrancy which contrasts sharply with the isolation of suburbia. Aikins cites greener living, ease of getting around and a desire for a more intimate community setting as the three main reasons people are attracted to the walking urbanism concept. As further evidence from the academic arena, a recent noteworthy CNN article titled Is America’s suburban dream collapsing into a nightmare? quotes Christopher Leinberger an urban planning professor at the University of Michigan and visiting fellow at the Brookings Institution as saying “this trend [toward core urban living] stems not only from changing demographics but also from a major shift in the way an increasing number of Americans — especially younger generations — want to live and work. The American dream is absolutely changing”. He further cites a recent market survey indicating that up to 40 percent of households surveyed in selected metropolitan areas want to live in walkable urban areas. All in all the above factors translate to further upward pressure on demand for core urban living which in turn contributes to further demand for property management services.

Summary & Conclusions

The demographic and economic factors discussed in this paper translate to a significantly growing demand for property management services. However this does not mean that property managers can simply continue business as usual and expect their share of this pie to grow. As droves of sophisticated, well-off and technology savvy consumers migrate to life in managed communities and as real estate becomes increasingly securitized, the standard of property management service will rise sharply. This will likely accelerate the current consolidation trend in the property management industry as quality leaders take market share. In a nutshell, property managers need to change their game to meet and exceed the established norms of service or risk seeing the erosion of their market share in the years ahead.
Property managers are seeing and should expect a significant influx of aging yet uncharacteristically active residents into managed communities in core urban areas. These new residents demand upscale finishings, high end appliances and availability of amenities such as hi-speed internet access as well as well-equipped social, recreational and fitness facilities. Be prepared to change your preconceived notions of a seniors apartment complex.
A large swath of generation Y will be entering the housing market in the next few years. This generation communicates using the language of technology and implicitly expects personalized and prompt access to information. Property managers need to meet this generation on its own terms by providing powerful web presence and rich, up-to-date and interactive content about and access to their properties.
The above two trends will see communities of two distinct age groups: baby boomers and generation Y living side-by-side. Interestingly many of the property features and amenities that appeal to the boomer generation are also attractive to generation Y (e.g., hi-speed internet access, social space & fitness). The challenge here is in the details of how these services are configured, presented and delivered. Each generation has its distinct tastes, life schedule and communication preferences. Property managers need to examine these differences in detail and then tailor the services to accommodate these preferences in a cost-effective manner.
There is massive upside potential for property managers who are willing to be flexible, open minded and progressive. These property managers will prepare their business with a combination of technology and respond to the needs of this new breed of residents, owners (and increasingly shareholders). There seems to be little doubt that these property managers will see tremendous increases in their occupancy and resident satisfaction rates and ultimately their market share.
On the horizon are exciting opportunities for fresh revenue streams from new categories of goods and services tailored to the distinct tastes and needs of both the baby boomer and generation Y residents.
About Trusterra

Trusterra is a web software development company focused on pioneering solutions and products that leverage the latest web technologies to streamline business processes, reduce costs, increase customer satisfaction and boost profitability. We place a great deal of importance on researching key markets and understanding and connecting with individuals and organizations in these markets. Publications such as this one are one way we use to share our understanding of the market with you. It is important to emphasize that we view this and other publications as tools to generate dialog. We want to hear from you and understand your every day challenges so we can ultimately build the right tools for you.

A Home Based Business and the 4 Pillars

Starting a home based business is a good option for those who want to have a great work life balance. Care should be taken to make sure money is not poured down the drain in the name of starting a business. People preach the many pitfalls that can be avoided and the wise do take heed and tread with caution.Is it all Doom and Gloom?The fragile world economy features in the news everyday and so does how things are expected to get even tougher. A lot of people are anxious about how to support a decent lifestyle. For most families it is almost impossible to cover expenses on two salaries with increase in food costs, household bills and other basic needs. A home based business is a great consideration for anyone who wants to supplement their income or create flexible working hours to meet family demands, get rid of unemployment or solve other issues.Working from home is a great way to earn some extra income and for some people their entire income comes from their home business. The best thing about this type of set-up is the low start-up costs. A home based business is not as easy as it sounds though; it requires a lot of planning with the right knowledge and skills.Pillar 1 – If It Is Too Good To Be True It Probably IsYou probably have seen a lot of adverts online about how someone made £10,000 in one day. We will all like to strike it lucky and find that deal of a lifetime. But beware, if you are thinking of working from home, do not get sucked into these false claims of making millions in a few months. There are businesses that generate a healthy profit but think about it, if those claims were true everyone will be doing it.Consider the risks involved before you take up any offer for a home based business. Carry out adequate research about the business before you commit funds to it. Search yourself, if this is what you really want to do or if you are doing it for the love of money. Remember the love of money can only satisfy temporarily.Pillar 2 – Start with Minimal CostStarting a home based business should not cost the earth. Just because you are not renting an office space, does not mean you should blow your budget on a state of the art computer system, an executive desk and a recliner chair with a built in massage service. Manage your budget effectively especially when starting off as money may not come in immediately but bills still need to be paid. Beware of the stationery habit; it can spiral out of control especially for those who work from home.Pillar 3 – Dream Big Start SmallDon’t bite off more than you can chew when starting a business from home. Consider your working hours, family schedule, space within your home and other important factors before you commit to your customers. Do you have the space to store the raw materials for your products? Can you manage more than 10 clients a month without impinging on family time? These are some of the important factors you need to consider when you start your home based business. Remember your business reputation is at stake if you do not deliver on your promise.Pillar 4 – Easy MaintenanceMany people who choose to work from home are probably tired of the status quo. So why complicate things even further by setting up a home based business that is too complicated to run. This opportunity should give you the chance to follow your passion and run a business too. Working from home should be a pleasure not another daunting task you hate to wake up to. You should set things on your own terms and within certain guidelines. If you intend to laze about the house and pretend to be working, you might as well stay in your current job. It takes a lot of dedicated hard work to get any business off the ground – a home based business is no exception.All these pillars might sound like child’s play when it comes to starting a home-based business, but one wrong turn can lead to a frustrating experience. Make sure you follow your passion when starting a home based business and understand the basics of running a business. Consider the 4 pillars stated above in addition to other relevant information when starting out to help you stay on the right track and enjoy the process.

Considerable Factors Involved in Product Creation & Marketing

The niche you have chosen should allow creation of more than one product or service. With the technological advancements in the hosting industry, from automated control panels and scripts that simplify creation of accounts, to complete turnkey solutions; there is no need to worry about spending time on the real products sold to the customer. The main ones are keyword selection, sales copy principles, graphics, affiliate programs, product creation, online payment processing, auto responders, and search engine optimization.

Once you’ve earned money from this type of information product business, you can invest in the creation of your own products if you want, or start offering more informational products that allow you to sell your knowledge. But the creation and production costs of a similar big ticket in sequence product, although higher, are still pretty low. A key by-product of this process will be the creation of 3-D, Computer Assisted Design art.

The Association for Financial Professionals permits the following activities for repatriating funds: Research and Development activities, advertising and marketing programs, hiring and training new recruits, acquiring patent and other rights to intangible property, improving transportation, funding capital investments with the purpose of job creation and job retention & funding product responsibility or environmental claims.

It prohibits certain activities like: Tax payments, Payment of executive recompense, Payment of dividends, Redemption of stocks, Debt investments and Portfolio investments. Therefore, before repatriating the money, you must consider whether it is worth or not.

Checklist on what artist and product development necessitate includes: Exceptional vocals, musicianship and/or songwriting skills, Continued education and enhancement of musical skills, Quality equipment, Performance ability, Image creation and maintenance, Plan of action, goal setting, excellent promotion materials including photographs, press releases and artwork, Business management skills, Marketing, Publicity and Promotion knowledge, Online and Offline Professional management, Basic knowledge of recording, producing, engineering, and mastering, Basic knowledge of manufacturing, distribution, and sales online, brick and mortar and air-play, Good choices in members, staff and advisors, Physical and mental preparedness, Basic knowledge of finances, accounting Law and legal issues etc.

The goals for doing so are for the product owner to: Communicate the whole, Determine and communicate when releases are needed, Determine what functionality is sufficient for each release & focus on business value derived from the releases. The delivery team on the other hand will see the whole, learn about the steps to realize the vision, learn the business priorities, provide technical input to the roadmap and provide estimates for the projected features. The salesperson must lead the prospect through the various decision criteria needed in order to secure a sale. Whether your idea is the development of a product, launch of a service business, or even the creation of an event or program for a non-profit, creativity is the root of all entrepreneurial efforts starting with the vision itself.

People quickly learn to spend their time on marketing and product creation, rather than repetitive tasks. Apart from empowering companies and individuals, there should be a particular focus on identifying labor intensive businesses that have the potential to make a significant and positive impact on employment creation as well as those businesses that have a product or service offering for export markets with the final objective of booming local economies.