In the property management industry, it’s common to encounter a myriad of statistics and claims that can make it challenging for investors to discern reality from hype. For instance, a company boasting a 98% occupancy rate suggests that each property is vacant for merely about seven days a year. However, such figures can be misleading without proper context.
Over the past couple of years, as rental rates have seen a decline and property owners have faced tough market adjustments, our vacancy rate has extended to approximately 6%. While we aim for an even lower rate—ideally around 3% if we had full control over pricing—the ultimate decision on rental rates lies with our property owners. We invest significant effort into providing persuasive guidance, and achieving a 6% vacancy rate in today’s market is quite commendable, equating to less than one month of vacancy annually. It’s important to note that underpricing properties to reduce vacancy is not our strategy, as seasoned professionals recognize that vacancy represents one of the most substantial expenses an investor can incur.
The Real Story Behind Vacancy Rates
Our approach to maintaining a low vacancy rate doesn’t involve underpricing properties. It’s not solely about creating outstanding listings or advising owners on key property priorities, either. Our primary focus is on retaining proven, high-quality tenants who are willing to pay top market rates and remain in the property for extended periods. Relying on vacancy rates alone can be a misleading metric. Yes, it’s possible to rent out every property quickly by underpricing, lowering application standards, waiving security deposits, and employing other questionable management tactics. However, these methods can compromise the long-term profitability and integrity of the investment.
The Pitfalls of Underpricing Rentals
Underpricing is a tactic some property management companies use to generate a high volume of applications, thereby increasing application fee income. Instead, we advocate for starting with a competitive rental rate and implementing a structured reduction plan—decreasing the price by $25 to $75 each week during most of the year. This strategy allows us to secure the highest possible rent without unnecessary delays or speculation. By approaching pricing methodically and removing emotional bias, we align our incentives with those of our clients, ensuring that both parties benefit from a fair and effective process.
Navigating an Efficient Rental Market
In today’s market, rental properties are often rented efficiently when they are well-presented—a specialty of ours. We attract dozens of online views and multiple showings weekly, responding promptly to all inquiries (a process where we excel). Beyond this, there’s little that additional advertising can accomplish. To expedite the rental process, property owners have two main options: enhance the property’s appeal through updates and upgrades or adjust to the appropriate market rent swiftly.
Consistent Application Fee Income Amid Market Fluctuations
Interestingly, even in a slower market, our application fee collections remain comparable to those during the unprecedented market conditions of 2022. That year was one of the most volatile in our two-decade history. We listed properties at some of the industry’s highest prices to regulate the flow of applications and minimize the disappointment of declined applicants. Our commitment to maintaining our reputation and focusing on long-term objectives took precedence over short-term profits. We refrain from manipulative practices, prioritizing sustainable growth and delivering exceptional results at a fair, justifiable price. We firmly believe that our performance justifies itself, even before considering tax deductibility.
Focusing on Net Operating Income (NOI) for Long-Term Success
We take immense pride in our efficient management practices and our ability to create mutually beneficial outcomes for both property owners and tenants. The metric we prioritize above all is the “annual net operating income” (NOI), or even better, achieving industry-leading NOI over a span of five or more years. Our long-term perspective drives every aspect of our operations. By delivering significant NOI for our clients, we often earn the opportunity to manage additional properties on their behalf. While many of our competitors are preoccupied with acquiring new clients, our goal is to retain clients for life by maximizing their profitability.
Delivering Exceptional Profitability Amidst Market Challenges
Since 2020, despite facing negative economic headlines, inflation, and one of the most challenging housing markets in history, we have successfully remitted 80% of the rental funds collected back to our property owners. This figure accounts for our total management fees, repairs, maintenance, and various miscellaneous costs. Such a level of profitability is exceptional and underscores our commitment to our clients’ financial success. Our recognition with the statistically verified Inc. 5000 Award during these years adds credibility to our performance in an industry where verifying true results can be difficult. We understand that investors prioritize profitability above all else, rather than being swayed by isolated metrics that may lack substantive meaning.
Partner with Us for Long-Term Profitability
We invite you to partner with us and benefit from our proven strategies—just as thousands of other property owners have. By following our expert advice, you can look forward to another five years of exceptional profitability. Our focus on transparency, efficiency, and aligning our goals with yours ensures that we not only meet but exceed your investment expectations.
By choosing a property management partner that values long-term success over short-term gains, you position yourself to maximize your investment returns. We are committed to navigating the complexities of the rental market with integrity and a focus on your financial well-being. Let’s work together to achieve sustained profitability and growth in your real estate investments.
