Residential property management is easiest to do well and profitably when a large number of units are concentrated in a small number of properties located in close proximity. Many managers of residential rental property consider 150 to 200 units a minimum threshold for undertaking the management of a property. Many managers of affordable housing throughout New England and elsewhere, however, are operating without these advantages: their portfolios are modest in size; individual properties typically have less than 50 units and are often scattered over a large geographic area.
Economies of scale can prove elusive for small properties or small portfolios. It is difficult to deploy management staff to administer and maintain properties over large geographic regions. Finally, many rural communities in New England have faced declining populations and softening real estate markets in recent years, creating further obstacles to profitable property management.
We visited seven property management firms, both non-profit and for-profit, who are widely regarded as doing good work even in difficult environments to learn how some property managers faced these challenges successfully. They have portfolios that range in size from 65 to 2,000 units and from one to 65 entities. (An entity is any building or number of buildings that have the same ownership structure. All but one of the organizations manage less than 1,000 units. We also spoke with four firms in other parts of the country that face similar challenges. We found that while it may not always be possible to turn a profit, a well-run company can sustain high-quality affordable housing even in the face of these challenges.
This article will highlight some of the successful strategies we observed are significant in managing small, rural or scattered properties.