Now’s the time: Market forces and AI align to make property management an appealing option for brokers

The residential real estate market today is fundamentally different than just a few years ago. In April, 5.8% of homes were taken off the market, reaching delisting rates not seen since March 2020. Plus, economic uncertainty and rising inflation have made generating sufficient income a challenge for many agents.

Despite this, many brokers operate as if transaction volume will return to normal. That’s a risk. If the last decade has taught us anything, it’s that you can’t predict where the market will go.

To set your business up for long-term success, brokers need the recurring revenue streams that property management delivers. Property management was once so labor-intensive that it risked distracting brokers from their primary business. But today, property management has been streamlined by AI and automation. It’s more scalable than ever.

The revenue problem: Transactional businesses need stability

Existing home sales have fallen to roughly 4.1 million annually, well below historic norms. These aren’t the conditions that many brokers built their cost structures around, and the slow market means many are struggling to turn a profit.

As earnings have declined, fewer agents are working in real estate full-time. Only 71% of agents list real estate as their only profession, a record low number since the National Association of Realtors began tracking the data in 2005.

If they want to retain productive agents and create additional revenue streams that make their business more resilient to the ebbs and flows of the market, brokers need to offer new opportunities.

Enter property management. Unlike intermittent real estate sales, property management generates regular monthly revenue. This means stability and certainty during slow sales cycles. And beyond that, recurring payments can also be a source of fuel for your company’s growth.

What many brokers still get wrong about property management

Historically, property management earned a reputation for operational headaches because it required time-consuming and difficult-to-scale activities:

• Managing inquiries around the clock
• Coordinating showings
• Processing applications
• Screening prospective renters
• Managing owner communication

In the past, that reputation for being labor-intensive was largely earned. But today, in part due to cloud-based software and increasingly to AI, it’s a different story. Those workflows that made property management difficult to scale are increasingly automated. It’s time for perception to catch up with this technological reality.

How AI and automation have made property management more scalable

Today, AI and automation tools remove much of the repetitive, manual work of property management. 

AI virtual agents respond instantly to prospective renters at all hours, day and night, answering questions and even qualifying leads before moving them through the leasing funnel. Self-scheduling tools let prospects schedule a tour without your agents lifting a finger. And the boom in self-guided showings means you don’t even need a real estate agent present during the tour.

And that other big headache: The midnight mechanical failure. Well, maintenance request routing and tracking are now easily automated.

The result? Small teams can manage significantly larger portfolios than before. Here’s a perfect example: We work with a two-person property management team that doubled the size of their portfolio from 80 to 160 units, all because of the technology they use.

And the best part is, the right AI and automation tools even help convert more leads because the data shows prospective renters like the flexibility these tools deliver.

In fact, our customers see 61% of conversations with our virtual AI agent happening outside of business hours, but that technology means you don’t have to deal with phone calls or emails that interrupt dinnertime or weekends. And in addition to giving you your time back, faster responses mean happier customers for you, as their properties have fewer days on market. 

The accidental landlord opportunity is already sitting in most CRMs

Of course, before you even get to property management, you’ll first need to find property owners to work with. You might not have to look too far.

More and more homeowners are opting to rent out their properties rather than sell for less than their asking price. Accidental landlords are on the rise nationally.

But brokers don’t need to sit idly by while properties stay off the market. Single-family rental inventory is increasing, and the owners of these homes are being thrust into property management, many for the first time. They’re likely looking for help — that’s your opportunity.

In fact, you probably already have relationships with some accidental landlords. Check your CRM for clients with expired or withdrawn listings and former sellers who delayed moving.

When a homeowner becomes an accidental landlord, they often need guidance on how to price the rental, market the property, screen tenants and follow compliance requirements. Brokers are uniquely positioned to provide these services because you already have the local market and industry expertise.

The best time to diversify: Right now

Some brokers have already broadened their service mix, expanding into mortgage, title and other related services. But when your goal is to create more resilient, recurring revenue, property management is a natural fit.

Not only does property management leverage your existing market knowledge, but it’s also an opportunity to strengthen relationships with clients who are thinking about renting instead of selling. And when they do eventually sell, you’re ready to help with that, too. You’ll remain part of a homeowner’s journey for years rather than weeks.

Now, AI and automation have made property management easier to scale by eliminating much of the tedious administrative work and repetitive tasks that have historically bogged down property managers’ time.

For brokers willing to embrace modern technology, property management is one of the most practical and scalable growth opportunities in residential real estate.

Vanessa Anderson is the CEO of ShowMojo and Tenant Turner, leasing platforms for single-family and multi-family rentals. 
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: zeb@hwmedia.com.