It’s no secret by now that we’re in a period of high inflation, and if you’ve found yourself here, you’re probably wondering how to navigate this changing economic landscape. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index, a key inflation metric, increased by 8.2% from September of last year–a historically high rate. So what does this mean for the real estate industry, and what can you do to adapt?
The Impact on Property Management
Let’s be blunt: no one is safe when it comes to inflation, and as a property manager, you’re no exception. The rise in operational costs seen across industries may be the most significant burden your rental business faces, and you’re likely already feeling this. Between the rising prices of supplies and higher market rates for contractors, the new cost of maintenance and repairs at your property has the potential to be a big hit to your bottom line. Further, paying your staff at a rate that aligns with the higher cost of living is important to attracting and retaining top talent–and is going to cost you more today. Other factors affecting our profit margins during a period of high inflation: higher tax rates and costly insurance premiums–all of which need to be accounted for if you plan on adapting.
How Property Managers Can Adapt
The good news is that you can take action to help protect your rental business’ bottom line and get through this time with minimal impact. So how can you reduce and offset these rising operating costs as a property manager?
- Leverage Tech to Optimize Efficiency
The first–and our favorite–way to combat rising costs is to optimize the efficiency of your operations. The best way to achieve this? Leveraging PropTech. From automating payment systems to streamlining maintenance at your properties and everything in between, property management software maximizes your business’ efficiency and will ultimately help you cut costs. Any place where you can automate or increase the efficiency of a task will help you cut down on the rising cost of labor and in turn improve your profit margins–and help you offset the effects of inflation.
- Make Informed Purchases
With the cost of goods and services skyrocketing across industries, being particularly intentional about your sourcing will be crucial to keeping costs down. Take the extra time to track down good deals, and when you find them, consider buying in bulk to save yourself from future price increases.
- Add New Revenue Streams
Alongside cutting costs, consider how you can add new revenue streams to your business model. Whether it’s adding a paid specialty class to your multifamily property’s offerings or partnering with local businesses to offer residents new services, these small streams can add up and make a significant difference in the health of your bottom line.
Navigating a high period of inflation can be a stressful task on top of the everyday stresses of managing a business. You may have no choice but to adapt to the changing times, so you might as well view this as an opportunity to improve your management model, rather than as an extra stressor. No matter the economic landscape we find ourselves in, it will almost always serve as beneficial to employ new technology, make informed purchases, and explore new ways to bring in revenue.
No matter your business goals, ManageGo has your back. To discover just how our software solutions can benefit you and your unique property management needs, request a demo today. Or, connect directly with one of our experts and get started on your journey to better property management.
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