In an era of rising resident expectations and operational costs, property management companies are finding traditional methods insufficient. AppFolio's 2025 Property Management Benchmark Report, based on a survey of over 2,000 professionals, highlights an industry in transition, with a rapid increase in the adoption of artificial intelligence (AI).
Shifting Industry Economics
Property managers face rising operational costs, with insurance costs being a critical concern, especially in the southern and western states prone to natural disasters. In 2025, 43% of property managers are concerned about maintaining high occupancy rates, up from 35% in 2024. Rising insurance costs (39%, up from 29% in 2024), taxes (29%, up from 26% in 2024), government regulations (24%, up from 21% in 2024), and maintaining positive net operating income (NOI) (19%, up from 16% in 2024) are other top concerns.
Rental Income and Vacancy Rates
Rental income has remained flat due to slowing rent growth and higher vacancy rates. According to Apartment List, U.S. apartment vacancy rates closed 2024 at 6.8%, with year-over-year rent growth at -0.6%. To counter these pressures, property management businesses are exploring new revenue streams and operational efficiencies. A notable trend is fee managers offering additional services to residents and bringing maintenance in-house.
Opportunities to Increase Revenue
For owner-operators, key revenue opportunities in 2025 include updating units and raising rents (59%, down from 61% in 2024), updating the building to increase property value (55%, down from 58% in 2024), raising rents without improvements (44%, up from 41% in 2024), offering additional services to residents (32%, up from 26% in 2024), and implementing additional fees for residents (22%, up from 20% in 2024).
Fee managers are also exploring various revenue opportunities. In 2025, 28% plan to raise rents without improvements (up from 17% in 2024), 36% aim to offer additional services to owners (up from 31% in 2024), 28% will offer additional services to residents (up from 17% in 2024), 36% will charge owners for maintenance (up from 31% in 2024), 32% will implement additional fees for residents (up from 28% in 2024), and 24% will implement additional fees for owners (down from 25% in 2024).
Technology Reshaping Operations
The survey highlights a significant shift in technology adoption. In 2025, 28% of respondents plan to adopt or leverage AI tools, up from 17% in 2024. Additionally, 36% are looking to adopt new technologies (up from 31% in 2024), and 32% aim to make better decisions using data (up from 28% in 2024).
AI adoption has surged, with usage increasing from 21% in 2024 to 34% in 2025. Furthermore, 29% of respondents plan to use AI in the future, while 37% have no plans to start using AI, down from 51% in 2024.
Cybersecurity Concerns
As digital transactions and online interactions become the norm, property management companies face increased cybersecurity risks. Approximately 40% of property managers are more concerned about online fraud, and 37% are more concerned about data security compared to last year. Operators must choose property management software that prioritizes security and offers robust safeguards.
A Bright Outlook for 2025
Looking forward, the majority of respondents anticipate increases in revenue, NOI, and units under management. In 2025, 75% expect an increase in revenue (21% expect a decrease, 4% expect it to stay the same), 65% expect an increase in NOI (28% expect a decrease, 7% expect it to stay the same), 46% expect an increase in headcount (49% expect a decrease, 5% expect it to stay the same), and 65% expect an increase in units under management (32% expect a decrease, 3% expect it to stay the same).
AI users are notably more optimistic. For instance, 83% of current AI users expect an increase in revenue, compared to 72% who plan to use AI and 71% who have no plans to use AI. Similarly, 73% of current AI users expect an increase in NOI, compared to 61% who plan to use AI and 61% who have no plans to use AI.
Final Thoughts
Overall, companies adopting new technologies and focusing on resident-centric services are better positioned for growth. For a comprehensive look at the technologies driving change, download the full 2025 AppFolio Property Management Benchmark Report. The report provides detailed survey findings and insights to help align your outlook with industry trends.
By Sean Forster
Industry Principal, AppFolio
As an Industry Principal, Sean works with operators to drive innovation in property management. He stays ahead of technology and market trends, speaking on how operators can leverage these insights to thrive in their markets. Previously, Sean led the product launch of AppFolio’s embedded generative AI solution, Realm-X. Beyond AppFolio, Sean volunteers on NAA’s Next Gen Committee and AI Workgroup.