Smaller property management companies are turning to new methods to cut costs and improve the tenant experience amid stepped-up competition, and shipping certain tasks overseas is beginning to play a role.

As an amenities arms race rages, well-priced units and focusing more resources on customer service are key for small operators, according to panelists at Bisnow’s Chicago Property Management Summit at Loews Hotel Chicago last week.

Offshoring some roles can help further those goals.

One property management company, 33 Realty, has begun employing 25 workers out of its 150 total employees overseas in Mexico and the Philippines, Principal Drew Millard said. The offshore employees handle skilled roles such as accounts payable and receivable as well as mundane tasks like calling utility companies to start and stop service, Millard said.

This frees up 33 Realty’s U.S.-based team to concentrate their efforts on other tasks, namely improving tenant experience, Millard said.

“If you integrate them into your teams, they're very intelligent and very capable people and they can reduce costs greatly so that you can pay your U.S. resources more and have better customer service,” Millard said.

However, Millard said, it’s important to not just hand offshore employees a task and “forget about it,” but instead to work with them as if they were sitting next to you in your office.

In 2022, 7% of senior managers surveyed by the Atlanta Fed said they were moving more jobs abroad due to the rise of remote work, and that number could soon increase. While the outsourcing of unskilled labor has been going on for decades, the new trend is an uptick in more highly-skilled jobs requiring a college education moving abroad, with some economists predicting up to 20% of all white-collar service jobs ultimately moving overseas

Amid a rocky economy, Peak Properties Managing Partner Mike Zucker said it was not surprising that property management companies are looking overseas for lower-cost employees.

The potential to save roughly half or more of a U.S. employee’s salary is “going to resonate,” he said, especially as companies look to cut costs and remain competitive.

Property managers are also focusing a lot of effort on keeping current tenants as the multifamily market grows more competitive, with bigger players engaging in a race to the top, offering bigger and more expansive amenities.

To retain existing tenants, Zucker said the two key strategies are competitive pricing and quality service. The typical buildings Peak Properties manages don’t have popular draws like gyms, he said, so it aims to keep rent increases reasonable and services top-notch.

As a result, this year the company retained about 75% of its tenants, which is “off the charts,” Zucker said. A typical year will see about 60% to 65% retention, he said.

“Everyone that we have in our units is not paying $5 a foot for a 500 SF one bedroom, they can't afford $2,500 a month,” Zucker said. “It typically costs around $2,500 to $3,500 for someone to move, so as long as we can keep our increases moderate and our services high, we seem to be keeping a lot of our residents.”

Millard echoed a similar belief that high-quality service is one of the most important drivers for successful small property management companies. As a data-driven company, 33 Realty consistently sends out surveys every time a tenant moves in or has a maintenance request, and reviews the results weekly, he said.

With frequent reviews and a consistent stream of data to analyze, the company can get ahead of concerns before they lead to bigger problems like high tenant turnover, Millard said.

“What we're trying to do is uncover issues,” he said. “These issues could be that they're just overwhelmed, that they haven't been trained correctly, etc.”