Sophisticated investors understand a fundamental principle: provide value first, capture returns second. You don’t expect your capital to compound before you deploy it.

At PEM, we look for operators who think the same way.

It sounds straightforward. But as 2.1 million new apartments hit the market from 2021 through 2025—including 608,000 units in 2024 alone, the highest level in 38 years—maintaining that standard has become increasingly difficult. The response across much of the industry? Lower the hiring standards to fill seats quickly.

We’re taking a different path. But we only found it after learning what doesn’t work the hard way.

What We Learned the Hard Way

For years, PEM operated under what seemed reasonable: we could develop operators to match whatever asset class we were pursuing. As our portfolio evolved through market cycles—Class C in Detroit, Class B with GE Capital, back to Class C post-GFC, finally Class A in 2016—we invested heavily in training and development. Some operators made the journey with us. But as we focused increasingly on Class A properties, the gap became undeniable.

The industry data confirmed what we were experiencing.

Property management turnover in our industry runs at 33%—eleven percentage points above the national average. That’s not just an HR problem. When staff turnover is high, resident turnover follows. Research from Grace Hill, one of the industry’s leading training and analytics firms, quantifies this precisely: every 3% reduction in staff turnover produces a 4% reduction in resident turnover. Properties with low staff churn achieve 70% resident retention at seven times the rate of high-turnover properties.

The costs compound quickly. The average resident turnover runs $3,872 per unit when you factor in advertising, repairs, concessions, and lost rent. And those costs multiply when you consider how staff turnover drives resident turnover.

Those are industry averages. But the real education came from watching our own properties perform.

We had one property managed by a Class B operator. Walk through on a Tuesday afternoon and you’d see it: residents waiting three days for callbacks, maintenance tickets piling up in the inbox, the manager’s desk scattered with half-finished tasks. Their asset knowledge was minimal, and they did the bare minimum. The property performed well enough—occupancy stayed reasonable, we collected rent—but it never excelled. We kept investing in their development, hoping the training would take.

When we eventually replaced them with a Class A operator sourced through a search firm, the difference was immediate. The new manager’s attention to detail, comprehensive action plans, and proactive approach to property management transformed operations within weeks. Resident reviews improved. Staff performance elevated. The property didn’t just stabilize—it began to excel.

That single comparison crystallized a truth we’d been reluctant to accept: too many people simply cannot rise to the demands of caring for others. No amount of training can change that core orientation.

We had been trying to teach what can’t be taught.

Why Training Can’t Fix Everything

Our experience aligns with broader hiring research. A Leadership IQ study tracking thousands of new hires found that 46% fail within their first 18 months. Here’s what matters: 89% of those failures are due to attitudinal issues, not lack of technical skills.

The breakdown tells the story—26% can’t accept feedback, 23% can’t manage emotions, 17% lack the motivation to excel. You can train someone on Yardi. You can teach them Fair Housing law. You cannot train someone to care—and everything else depends on that.

This insight isn’t new to service industries. The hospitality sector figured this out decades ago. When Herb Kelleher became chairman of Southwest Airlines in 1978, he pioneered the philosophy of “hire for attitude, train for skill.” The data has since validated his instinct: 85% of job success comes from soft skills rather than hard skills, and emotional intelligence accounts for 58% of job performance.

Property management is a service business. The parallels to hospitality are direct. Residents aren’t just paying for four walls and a roof—they’re paying for responsive management, for someone who genuinely cares when issues arise. The data bears this out: residents dissatisfied with property management are twice as likely to be actively searching for new homes—50% of dissatisfied residents versus only 24% of satisfied residents.

So what are these foundational qualities that must exist from day one?

At the foundation sits genuine caring for others—not just being friendly or polite, but true concern for residents’ living experience. It’s losing sleep when maintenance requests pile up. It’s treating someone else’s home with the respect it deserves. This orientation either exists or it doesn’t; no training manual can install it.

That caring must be paired with operational discipline—doing the hard work even when you don’t feel like it, maintaining standards when no one is watching, taking ownership of problems rather than deflecting. It’s what separates a manager who documents every work order meticulously from one who lets them slip through the cracks.

And perhaps most telling is the self-motivation to operate at high standards. The best operators see property management as a craft, not just a job. They set their own bar higher than any corporate policy requires. They take pride in excellence because that’s who they are, not because someone is checking up on them.

You see the difference immediately. One manager walks the property every morning before office hours open, spotting the irrigation issue before it becomes a landscaping problem. Another waits for residents to complain. One manager knows every maintenance technician’s strengths and assigns work accordingly. Another just dispatches whoever’s available. One follows up on move-ins with a personal call. Another checks a box on a form. The gap between these approaches isn’t knowledge—it’s orientation.

Operator quality determines outcomes more than almost any other factor. Class A properties are expected to have professional management as standard, while Class C assets require intensive management to handle challenging tenant and operational issues. But here’s what matters: research shows that a poorly managed Class C property might otherwise be upper C or lower B-class if not for management quality alone. While age and amenities define the starting point, operator quality determines whether a property reaches its potential—or falls short.

This isn’t about elitism or writing people off. We invest heavily in training and development—our team members receive continuous education in systems, compliance, industry best practices, and leadership skills. We celebrate internal promotions and career growth. But we’ve learned that training amplifies what’s already there. You can develop someone’s technical skills, refine their processes, and expand their knowledge. What you cannot do is install the foundational orientation toward service and excellence if it doesn’t exist from day one. Training builds on the foundation—it doesn’t create it.

The Strategic Shift: Hiring Proven Performance

Once we accepted what can’t be trained, our strategy became clear: hire operators who already possess the foundational qualities, then invest heavily in supporting and retaining them.

That means being willing to use executive search firms when needed. Multiple specialized firms serve the multifamily industry because Class A operators aren’t browsing job boards. They’re employed. They’re performing well. They need to be pursued.

Yes, it costs more upfront. But the return on investment is substantial.

Research from the Society for Industrial and Organizational Psychology demonstrates the impact of rigorous hiring practices: organizations that effectively leverage personality assessments see a 24% increase in performance and a 30% reduction in turnover rates. These assessments measure alignment with the qualities that drive success—hire more people like your best people. We’ve adopted similar assessments at PEM for the same reason: if you know what excellence looks like, you can screen for it from day one.

Once you find a manager that cares for the asset and the residents, they are worth their weight in gold. Supporting them means competitive compensation—top performers in major markets can command higher salaries, reflecting both their expertise and the value they deliver. That’s a meaningful investment, but far less expensive than the cost of repeatedly hiring, training, and replacing the wrong people.

Why This Matters to Investors

Every conversation we have with prospective investors eventually comes around to the same question: How do you protect capital while generating strong returns? The answer always includes flawless execution, but that phrase means nothing without the right people delivering it.

Stable property management teams produce predictable net operating income. When the same experienced manager oversees a property year after year, they build institutional knowledge that can’t be replicated quickly—they know which vendors are reliable, which systems need attention, which residents need extra support. They spot maintenance issues before they become emergencies. They understand seasonal patterns in traffic and leasing. That expertise directly impacts the bottom line.

The inverse is equally true. When a community leader leaves, operations suffer during the transition. The new manager must learn the property’s systems, build relationships with vendors and residents, and understand the nuances that only come with time. During that period, resident satisfaction drops, maintenance issues slip, occupancy can suffer—and that doesn’t capture the resident turnover that often follows.

The data validates this relationship. Analysis from Moody’s Analytics REIS shows a 55% correlation between occupancy and resident retention, demonstrating the powerful connection between keeping residents satisfied and maintaining strong occupancy levels. Poor management creates a selection problem—quality residents who have choices leave for better-managed properties, while those with limited options stay.

Research from Zego, which surveyed over 1,000 renters and 600 multifamily companies, found that companies with low resident retention rates are twice as likely to have delinquency rates above 10%.

PEM’s performance metrics reflect what happens when you get the operator equation right: 55% NOI margins, 95%+ occupancy rates, and resident retention consistently above market averages. Take a typical 200-unit property at $1,400 average rent: stable management generates roughly $335,000 more in annual NOI than the same property with high turnover—$1,675 per unit, compounding year after year. These numbers don’t come from finding better deals or having insider market knowledge. They come from execution—from having property managers who care deeply about the resident experience and operate with discipline day after day.

As our core values emphasize, integrity in investing means honest assessment of where you are and what you’re equipped to handle. For us, that meant accepting we weren’t going to train our way to operational excellence. We needed to hire it.

Which brings us to the central tension in today’s market.

When Everyone Else Lowers the Bar

The multifamily industry is responding to the talent shortage by making hiring faster and easier—lowering requirements, shortening interview processes, hiring anyone who seems reasonably qualified. Job postings that once required five years of experience now say, “entry-level welcome.” Interview processes that once took weeks now take days. The urgency is understandable. The consequences are predictable.

It’s a race to the bottom.

We’re taking the opposite approach: more selective, longer hiring timelines, higher compensation for proven talent. The short-term cost is higher. The long-term outcome is better for everyone involved.

For operators, it means they’re set up for success rather than struggle. We’re not asking them to perform at a level they’ve never reached before. We’re asking them to bring the standards they’ve already demonstrated elsewhere.

For residents, it means consistent, professional management from day one. No learning curves. No inexperienced managers figuring things out on the fly. Just exceptional service from someone who already knows how to deliver it.

For investors, it means predictable returns backed by disciplined execution. The confidence that comes from knowing the people running your assets have proven they can do exactly that.

And for our team culture, it creates a reinforcing cycle. High performers want to work with other high performers. When you maintain high standards, you attract exceptional talent. When you compromise, you create an environment where excellence is the exception rather than the expectation.

You simply cannot train someone to genuinely care about people if that orientation isn’t already there. You cannot teach self-discipline to someone who lacks internal motivation. You cannot instill a service mindset in someone who views their role as transactional.

Either they have it from day one, or no amount of training will produce the results you need.

The Compounding Advantage

Over 2 million apartment units have hit the market in recent years, and the competition for quality property management talent will only intensify. Companies that maintained high standards will have the stronger hand. Quality operators will gravitate to organizations that demonstrate they value excellence.

This selectivity isn’t elitism. It’s stewardship—of investor capital, of resident experience, of our team’s potential for success. The same discipline sophisticated investors bring to capital deployment, we bring to team building: prove value first, then earn returns.

When you find the right person—someone who genuinely cares about residents, who maintains operational discipline, who takes pride in excellence—hold onto them. They are worth their weight in gold. Everything else depends on getting that foundation right. Because in property management—just like in investing—you prove value first. Excellence can’t be trained in after the fact.

If this approach to property management and capital stewardship aligns with how you think about investing, feel free to reach out.

About the Author

Paul Mashni is the Founder and CEO of Professional Equity Management (PEM), a vertically integrated real estate investment firm specializing in multifamily properties. With over 30 years of experience and more than 25,000 apartment units acquired, Paul has successfully navigated five downturns while maintaining an average IRR of 20%+ since inception. His investment philosophy is guided by the principle that it’s “better to sell a year too early than a day too late.” His background in accounting and finance, along with his law degree from Wayne State University, informs PEM’s disciplined approach to investments. Paul holds a Bachelor of Science in Accounting and an MBA in Finance from Michigan State University.