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5 Predictions For Property Management In 2014

Happy New Year!

The turkey roast is over, the presents are unwrapped, and the champagne bottle is uncorked. It is time for a new page. Or, at the very least, a new shovel with all this crazy weather!

As we head into 2014, there is a tremendous amount of uncertainty regarding real estate markets. The property management side of the industry saw a number of notable changes in 2013-lower foreclosures, significant upticks in prices in many markets, new multifamily units coming online and the increased role of institutional investors. Here is what we predict will be the most important market drivers in 2014:

1) New entrants into the property management industry will slow, but beware of disruptive players like Airbnb to try to enter the rental brokerage arena.

Many “casual” realtor/property managers will likely return to their traditional sales development activity. This should mean less price-based competition from new entrants and an opportunity to capture share by buying out rental management portfolios from those who would like to exit the business. However, there may also be some new competition from non-traditional sources that have brand recognition and may try to expand into the residential rental management space. Companies like Airbnb and HomeAway are trying to secure regulatory rulings to expand their presence. Be watchful in your markets and sharpen your messaging about the benefits of full-service management.

2) Web marketing will be harder and more expensive

Google is continually changing the rules on how to get free internet exposure for websites. They are now giving local winners top placement and relegating others to lower levels of exposure. Craigslist is reducing the ability to post enhanced ads, a precursor to up-charging for those ads. The shift towards social sites requires more effort to keep sites “fresh”. Any way you look at it, it will cost more for internet exposure at a time when over 70% of consumers rely on the internet to do research for new products and services. The result will be higher costs for site optimization, reputation management, paid placement and in general, the need to monitor and respond quickly to changing trends.

3) Tenant quality will improve

The increasing difficulty in qualifying for low down payment loans, higher interest rates, student loan debt burdens, and the vanishing benefits of owner-occupied housing as an investment all point to increased demand for well-maintained rental housing. The implication of this to property management is that a new class of tenants will offer much better outcomes for rental property owners. Finding them and supporting them will be a key benefit to offer. The disparity between good and bad tenants will increase, so tenant screening will have heightened importance.

4) Homeowners associations will grow in importance

With the bulk of HOA and Condo Association defaults in the rear-view mirror, there will be resurgence in the focus and resources to enhance the value of properties by better governance and empowerment of Community Associations. Management Boards will seek out property management organizations who can spruce up common areas to aid in the appreciation of units. Deferred maintenance will drive higher expenditures and hence higher fees for property management companies that specialize in this category.

5) Do- it- yourself managing will be more difficult in 2014, opening the door for greater use of professional property managers.

Though lower vacancy rates will still create tight demand, higher rents and lower expectations from many tenants in certain markets, there are some highly favorable trends that will make professional property management services more important than ever.

Why? In many markets, large numbers of multifamily units are coming online, increasing the need to market vacant units more aggressively. The aforementioned change in tenant profile will drive higher expectations for maintenance and customer service when problems occur. Even as technology entices DIY managers to build their own solutions, the risks pertaining to self-management will increase. The disparity in tenant quality will increase, impacting yield and vacancy rates. As more owners turn an eye towards resale, unit upkeep will increase in importance as will the need for market intelligence.

Despite the advent of many technology-oriented enablers for DIY management, these same features are being offered by savvy property managers, creating a wider gap between “best practices” and standard management practices. 2014 will be a great year for aggressively marketing to the Do-it-Yourselfer.


All these trends bode well for professional managers that provide top-notch services and the advisory skills to counsel owners on issues such as rental rates, when to sell versus rent their house and other value-add services to optimize real estate holdings. The property management industry has played a key role in stabilizing the US housing industry by providing an alternative to disposing of depressed properties, improving the efficiencies of owning and managing rentals for both homeowners and investors and facilitating the necessary shift from owning back to rental for millions of families and individuals throughout the US.

Here’s to a great 2014!

I welcome your feedback, thoughts, and insights. Please feel free to contact me.

Reggie Brown, CEO

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