Rental Home Suite | What’s a Property Manager to do as Vacancy Rates Near All-Time Lows?
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What’s a Property Manager to do as Vacancy Rates Near All-Time Lows?

What’s a Property Manager to do as Vacancy Rates Near All-Time Lows?

3-vacancy-rate3Here in Northern Colorado we are seeing ridiculously low vacancy rates.  In fact Fort Collins landed at #2 in the nation with a staggering 0.2% vacancy rate according to Business Insiders and RealtyTrac.  This steady downward trend in vacancy rates is not something new to seasoned landlords as the early 80s and mid-90s hit some impressively low vacancy rates.  So many of old guard of property management have seen this cycle before and are approaching it as they have in the past.  Rents are high, turnover is low and life is good for property managers. However, while the cycles in the 80s and 90s had similar entries and exits from the cycle, this tight market may be a little different for three key reasons.


      1. New Entrants – While previous vacancy rate reduction cycles saw new entrants to the market, this is the first time home builders have entered the space.  Large homebuilders like Lennar, Toll Brothers and D.R. Horton have entered the single-family rental home market.  This is significantly different than a new property manager popping up across town or a group of investors managing their properties on their own.  These builders have a considerable market advantage.  First and foremost, builders are the only investors who can get a property at construction cost so their initial investment is lower.  They also have lower operating costs.  With on-staff brokers, large real estate specific accounting and legal departments, they can often take on new properties without additional headcount.  Not to mention they built the property so they can likely maintain it very cost effectively.
      2. Property Management Software – When the last constriction of vacancy rates hit, most property managers were still running a paper ledger with a file cabinet full of property listings, and rent checks came in the mail.  Today, with a minimal upfront investment, a company looking to get into property management can get up and running with a completely automated property management accounting system (like PropertyBoss), get a website (, sign up for online rent collection (at, setup a lease to be eSigned (on DocuSign) and even get market opinions and rental appraisals online (from  And they can get it all ready in a matter of days and run it from an iPad.  Combine all of those tools with the reduced need for a storefront, there is the very real possibility a builder can begin a property management company in a matter of days and build their own inventory.
      3. The Internet – We haven’t seen vacancy rates this low since the advent of the Internet so no one can really say how this will impact the cycle.  One thing we can say for sure is the Internet has had a profound impact on every other cyclic marketplace so it seems naive to think it will not impact property managers.  Just like the existence of property management software, the Internet is the delivery channel for all of those services, AND everyone carries the Internet around in their pocket.

So while rents continue to move up and the property management business booms, this cycle will certainly end, it is important for property managers to approach this cycle with an entirely new perspective on where their competition is going to come from and what they can do to defend their business against all newcomers.

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