Increase Operational Efficiencies with PropTech

This article is the second in a series based on a panel given at eCore 2022, in Miami, FL, on November 8, 2022. The panel included our CEO, Bert Wray, as host and the following industry gurus:

• Cindy Clare, COO, Bell Partners
• Cris Kimbrough, Senior Director of Smart Building Technology, Greystar
• Jonathan Denton (JD), Managing Director, Cortland

The first article explored the building blocks of multifamily success. This article details how PropTech can increase operational efficiencies (and NOI) in 2023.

Investing in PropTech

There is a shift happening in the multifamily industry. Record-high interest rates have reduced available capital and are making returns more challenging. In the last 10 years, owners and investors could borrow money at low rates, making it easy to recoup their investments in a short period.

The fluctuating economic environment means that to succeed in the multifamily industry in 2023, you need to do more than just own property—you need the skills and knowledge to manage the property effectively. This change requires a shift in mindset from "buying and flipping" to "buying and managing." Property management technology (aka PropTech) helps make the necessary changes.

Your Tech Stack can include software or systems to help with marketing, tenant screening, rent collection, and maintenance. Embracing new technology can help multifamily owners and investors better navigate the challenges of the current economic environment.

Radical Disruption

In the panel, Mr. Wray quoted an article from Forbes that defines the US multifamily property management industry as:

"The work of caring for the more than 40 million multifamily units valued at $3 trillion and their renters. Over 800,000 people work as employees of the management industry, while tech and service vendor companies employ hundreds of thousands more. And the industry is growing, requiring 4 million more units by 2030 just to keep up with demand."

The author goes on to say, "Radical disruption is coming soon, made possible by the industry’s adoption of smartphones and smart locks." Really, he could have said, "Radical disruption has arrived." In April 2020, many businesses faced lockdowns and quarantines due to the COVID-19 pandemic.

Ms. Clare said that before the pandemic, "We were starting to look at new technologies. At Bell, we were looking at AI tools. We were looking at the things that could help us be more efficient and effective with leasing, renewals, and maintenance."

She continues, "The pandemic forced us to pivot quickly and put all those tools in place. Lead management tools, virtual leasing, self-guided tours, all of these technologies became a necessity because we could not interact with our residents and prospects in the same way."

Bell rolled out three new technologies to 250 properties overnight. Such rapid implementation was unheard of in the past. While property management companies never want to be on the bleeding edge, once COVID-19 hit, they didn’t have much choice.

JD added, "I would agree that the pandemic forced us to dive in. Just like Bell, we pivoted quickly to self-guided tours. That means the prospect shows up on the property with a map on their phone that shows them how to view the amenities and see the model apartment or vacant unit. The technology to do this involved electronic doorknobs, geofencing, and a software app. It allowed us to continue to lease through the pandemic."

While PropTech may have disrupted the property management industry during the pandemic, it's now reinventing the industry post-pandemic.

Tech Cannot Replace People

PropTech doesn’t, and indeed can not, replace your associates. Ideally, PropTech should increase efficiencies and make work more enjoyable.

Ms. Clare expounded that when using an AI tool for lead management, "My staff can spend more time with people who come into the office. I can ensure that we respond consistently to every prospect. Consistent messaging helps from fair housing and legal standpoints. I saw a 15% lift in our leasing after implementing this lead management tool."

Most leasing agents prefer to spend time with serious prospects instead of wasting time asking repetitive questions to a larger group of potential residents. In this case, the AI tool enhances the job by enabling associates to focus on real prospects and eliminating a part of the job that can feel tedious.

In the same way, smart locks help increase operational efficiencies while improving the job experience of maintenance technicians. If a technician doesn’t have to fetch a physical key from the office for each work order, they can get more repairs done with less effort. Of course, quicker repairs also increase resident satisfaction.

Increasing efficiencies by implementing PropTech adds up to a triple win.

1. Communities save money and time.
2. Maintenance techs avoid the frustration of going back and forth all day.
3. Quicker repairs lead to happier residents.

Mr. Wray commented, "I was at an Optech conference, speaking to a tech leader. He said, ‘The purpose of my technology is for my clients to use it less.’ He wants to create technology that automates everything that should be automated so that people have time to do the jobs that computers and technology cannot do."

Give Them the Tools They Need

JD commented, "We have a few properties in Tampa where we’ve installed performance monitoring equipment on our AC systems. I get a weekly report that summarizes each AC system, and when that predictive software anticipates when a part or parts will fail. Instead of the customer having to call us when their AC fails, we can go in a day or two before it fails and replace the part."

PropTech enables managers to give their staff tools to solve problems before they become a crisis. A crisis is ten AC units failing when there is 80% humidity, and the temperature is in the high 90s. When this happens, the maintenance technicians and community managers get yelled at. That means you have unhappy (and hot) residents and staff. The more we can find those tools that let us fix things before they happen, the easier it is on our teams.

Ms. Clare said, "Technology helps with efficiencies. The more time I can give our teams to spend with residents, the happier our residents are going to be, and quite frankly the happier our teams are going to be."

Digital tools for the multifamily industry include:

1. Maintenance management, like AppWork!
2. Lead management with artificial intelligence
3. Automated tenant screening
4. Virtual leases with digital signatures
5. Using blockchain technology for secure payments
6. Smart homes with the Internet of Things (IoT)
7. Performance monitoring with special hardware
8. Accounting and billing software platforms
9. Targeted marketing campaigns with geofencing

Virtual Training?

This is a people business. We’re managing people’s homes. As Mr. Wray likes to say, "It takes a special level of patience to do our jobs on the operational side. It’s a unique model. We work where people live, and they live where we work." He noted that the demand for maintenance is going up while the availability of skilled labor is going down.

To work on-site in a community, technicians must be savvy with technology, people, and maintenance. This combination of needs makes it difficult to find staff. All the panelists agreed that training makes the job more compelling and increases the likelihood of technicians seeing their jobs as a career.

Ms. Clare said, "We’ve created our own training programs for our maintenance teams. It has to be hands-on training. We’ve gone to virtual reality training. They can put on a headset and fix an HVAC unit or a plumbing problem. We actually had one of our VP of Operations who electrocuted herself, but fortunately, it was just virtual reality. Those are the kind of tools you can use."

She continued, "The skills have gotten more complicated with the sophisticated systems we’re putting into buildings now. You have to have people who have those skills. By training them, we’re giving them a career path."

On the other hand, JD said, "Cortland has a branded semi-truck that we roll across the country. It’s outfitted with example appliances in the trailer, and they can work on those appliances: HVAC, plumbing, and electrical panels. We drive that from property to property to give our teams some hands-on training with the facilities experts in our company. But there’s no substitute for in-person training on the site they work at."

They also work with regional trade schools to help build out their property management and facilities management programs. They have a systematic approach to giving employees credentials and certifying the completion of specific training modules.

He feels that the training and the education give them a career path within the organization, saying, "If we provide the opportunity, they’re going to be loyal."

Overcoming Resistance to Buy-in

Ms. Kimbrough said that post-pandemic, "We have a new initiative to focus on customer experience. I personally sit over smart homes, managed wi-fi, and access controls. We are looking to put these technologies in a lot of properties. We’re putting in locks that residents can open with their smartphones, smart thermostats, leak detectors, smart switches, and smart outlets."

That sounds like a lot of change for an industry steeped in tradition. How does Greystar overcome the challenges that arise when asking residents and staff to make such significant changes?

She answered, "Communication. A lot of communication. We spend time crafting our communications for both our on-site teams and residents. We have to explain the benefits of the technology; explain that the technology is creating a career path."

"Once we explain the benefits to them, it overcomes their resistance to change. I’ve seen that once they see the upside of it, our on-site staff are excited and enthusiastic about getting this tech in. They have to deal with change management, but they are so excited about getting the new technology that we're not having such a horrible time with buy-in."

The Real ROI of PropTech

The multifamily space will always be a people business. In light of this, PropTech should always center around improving the lives of residents, staff, managers, owners, operators, and investors.

The panelists agreed that some amenities, such as managed wi-fi, have a clear and significant profit. It's also clear how improved efficiencies increase NOI.

However, investing in PropTech as a way of investing in people brings more than financial gains. Your return on investment can include happier residents and more loyal teams (which in turn creates more profits).