Lessons Learned from Property Management Expert Brian Setencich

Market challenges are often the leading factor that determines which companies succeed and which fail. In property management, for instance, favorable conditions can help a newly founded enterprise double its value in under a year. Similarly, however, potential challenges could also cripple a new business and slow down its growth. Also, depending on the area in question, consequences of market conditions may be amplified.

Consider a property management company located in a high-profile region like the Bay Area. Although one can come up with countless benefits of owning real estate here, there are a few shortcomings as well. Thus, to better understand the concept of market volatility, reflect on the following examples.

Increasing Costs of Living

One of the cities in the aforementioned area, Gilroy, is a testament to the rising costs of living. Shockingly, just the median home cost here is four times that of the average home cost for the nation. As far as the overall cost of living, it currently stands at 190.4 in Gilroy. For comparison, the nation's cost is used as a measuring metric and sits at 100. Thus, this city is a prime example of how much more expensive it is to live in the Bay Area.

The reason why this matters for property management companies is quite simple. Just like any other business, these organizations have employee costs. For instance, most firms have multiple maintenance teams, office-based workers, as well as customer service representatives. Given that the cost of living is rising, employee salaries go up as well. Consequently, profits are reduced as revenues are decreased by the additional expense.

Competition: Relentless and Limitless

Although Gilroy is populated by less than 60,000 people, the overall Bay Area is a home to 7 million individuals. In translation, the number of property management companies and real estate agents is astronomical. Sadly, this can be quite a challenge for new businesses. In fact, even those organizations that may be popular are always at risk of getting overshadowed by innovative newcomers.

This is where brand awareness comes in. Luckily, in order to develop a public image, new companies can start off very slow. Instead of aiming to target the entire population of the Bay Area, they can just focus on cities like Gilroy. So, they will redirect their energy on the Northern Santa Clara County. Once they discover campaigns that work well, they can scale them elsewhere and expand all over the region.

Turning Obsolete

Although Gilroy's proximity to the Bay Area is important, it can also be a shortcoming. This is because it means that the city is very close to the Silicon Valley itself. For those unfamiliar, this is the region where technological advances are made at a blistering pace. Naturally, making progress when it comes to technology is great. It enables people to automate operations and be more efficient.

For property management companies, however, it can also be a threat. For instance, if some company's opponent has a technological competitive advantage, they could steal their clientele. So, the only way to avoid losing customers is to implement the same technology. Unfortunately, doing so can be quite expensive and profits could diminish once more.

Countless Benefits

After a solid list of challenges that Gilroy and Bay Area companies face, it is time to look at some benefits. Namely, the most important one is the popularity of this region. It is the primary reason for the high demand and landlords' ability to charge premium prices. Not to mention that it helps minimize marketing costs as people will generally line up to be residents anyway. Also, the warm climate and numerous festivities that happen in California further help with potential clients.

Other advantages of starting a property management company in Gilroy relates to more business-oriented topics. For instance, the Bay Area tends to help companies obtain a higher valuation. Meaning, selling the entire brand for a steep price will be possible. Additionally, this region is where millions of investors operate. So, organizations in search of funding will be able to find financial contributors almost effortlessly.

Models to Follow

Lastly, an area like Gilroy is great for businessmen who may not fully understand their market. This is because they can follow the footsteps of those who already created successful firms. For property management startups, looking at Brian Setencich and his company would be a good idea.

Not to mention that Brian Setencich is an experienced real estate investor himself. Thus, even understanding the types of properties that someone like him looks for could be useful. Ultimately, each businessman will have to create their own path and find a way to streamline operations well.