Since the COVID-19 pandemic began, many franchise developers and brokers have seen a drop in sales as the brands they’ve been recommending and selling have seen a decline in interest, specifically with concepts that require personal interaction, such as restaurants and personal care.
During the previous recession, the number of franchises sold and revenue per door actually increased and Property Management, Inc. is seeing a similar trend today. Steve Hart, CEO of Property Management, Inc., shared that the number of franchises being sold today is outpacing what was sold in previous years. Since the outbreak began, franchisees have also been able to add an additional pillar to create additional revenue streams.
With these trends in mind, let’s discuss three reasons why the Property Management, Inc. (PMI) business model is recession resistant:
- Tenants are paying their residential rent, home owners are paying their HOA fees, and a pent up demand for travel is growing.
Regardless of what you might hear in the news, the reality is that tenants are actually paying their rent. According to Leaselock, “So far, May seems to be on a similar rent payment trajectory to April, including a slight bump in first-of-the-month payments — roughly 4% more total rent was collected on the first day of May compared to the trailing three month average. This suggests that as federal relief and unemployment checks roll in, Americans are prioritizing rent payments first.”
NARPM (National Association of Residential Property Managers) shared that “property managers reported that 91-100 percent of their tenants had paid April 2020’s rent in full and on time” in a national press release.
Homeowners are also prioritizing mortgage payments and HOA fees. According to Blake Sanford, Property Management, Inc.’s association pillar leader, reports from franchisees and other industry leaders indicate that payments are continuing to come in on time.
While short-term rentals saw a decline as people had to cancel vacation plans at the onset of the pandemic (and travel restrictions were put into place), those in the short-term pillar have reported increases of people waiting out the quarantine in vacation properties away from the city. Eddye Bean of PMI Grand Tetons in Driggs, Idaho shared that she has seen people booking longer stays as they have waited out the quarantine. Along with that trend, vacation property managers are seeing an increase in bookings for those who can’t wait to get out of their homes and vacation again.
The Vacation Rental Management Blog (VRMB) predicts that “vacation rentals will topple the hotel industry this year.” Think about it: If you had a choice between staying in a hotel packed in with other guests or having an entire home to yourself away from others once you begin traveling again, which would you choose?
Growth in the vacation pillar between 2008 and 2009 nearly doubled from $100 billion to $169.7 billion. Trends indicate that this growth will continue to expand in the months and years ahead.
- PMI has predictable, consistent income streams and the systems to implement them already in place. Savings from the best vendors also help property managers save money.
With over 50 revenue streams in place for residential property management, Property Management, Inc. franchisees are well poised to continue to grow their businesses in these times with these proven systems and processes.
The other part of helping your business be recession resistant is having the best vendors at the very best pricing. Patti Robertson of PMI Virginia in Virginia Beach, Virginia recently shared her thoughts about the advantage of being in a franchise in these times. She said:
“We like being in a franchise brand for a lot of reasons. One, the camaraderie, the push. Our franchisor is not our boss in any way, shape, or form. We are reporting numbers. I’m very competitive. I want to know what everybody’s numbers are because you got to put your eyeball on somebody and do better to get than the next level. Most property managers belong to NARPM. I do too. I like them. They’re friends. However, they’re still my competitors. Whereas, the PMI franchisees, we are all supportive of one another. I personally would love to have more franchisees right in my own market. I don’t consider that to be competitive. I consider that to be raising the level of marketing dollars that are in my market. The more marketing dollars we have, the more we can affect the other brands. So, I see that as a benefit. I want more franchisees here. Having access to the pricing – We are paying less through PMI for all of the vendors we are using than we were on our own. PropertyWare is free. I think we were paying $1,100 a month at the time for AppFolio. When we converted, our PropertyWare software is now free. There’s a lot of advantages.”
Franchisees are implementing these revenue streams to help meet the needs of their tenants and property owners. Tenants and owners are looking for stability from professional property managers to manage their properties now, more than ever. PMI is already working on adding nine additional revenue streams to be added in the residential pillar with systems and vendors in place for its franchisees.
- Market demand is increasing.
The percentage of people who are renting today has dramatically increased over the past several years and one-third of Americans are now renting homes. That demand will increase.
According to the NARPM 2020 State of the Property Management Industry Report, “millennials and generation Z are renting longer, 40% of renters today are 45 or older, and baby boomers are the fastest growing rental segment.”
Demand for great property management is increasing across the association, commercial, and short-term property management pillars as well. PMI is well poised to assist property owners, association board members, and investors / owners of business buildings.
Not only is market demand fueling an increase in a need for more property managers, a well-run property management business will increase in value over time if built correctly. PMI teaches its franchisees the systems to build long-term equity. With rents consistently increasing each and every year, property managers continually provide value for the owners and tenants they serve with these additional services they offer. Having the systems in place to help them offer these services really helps PMI franchisees stand out from other property managers in the marketplace.
Donna Littleton of PMI Georgia in Atlanta, Georgia recently shared: “If we had known about PMI when we first started our property management company, we would have bought it back then. Doing it on our own was a lot of work that we could have avoided. There is so much in place, it takes off so much of a burden, and PMI helps you do all of the little things that bog you down. PMI is definitely a good choice for someone who already has a property management business. If you want to be in property management, you want to be in PMI.”
A big reason why successful property managers today are converting their business to the PMI model revolves around having a nationwide brand with the system, training, and high tech tools that can improve and help their existing business grow.
In conclusion, property management is a recession resistant business because people need a place to live and they prioritize paying their rent, the predictable income streams that PMI systems provide in multiple pillars allow franchisees to grow regardless of what is happening in the economy, and most importantly, the demand continues to grow for great property managers. If you would like to learn more about how you can benefit from being a part of the PMI franchise experience schedule an appointment to talk with a franchise developer here: https://propertymanagementincfranchise.com/contact-us/