I began my career in multifamily at a strange time — 2006 — six months before the Great Recession. Many of the communities at a former organization were in some of the most economically-depressed areas in the US, so we had to suddenly get very creative to reduce costs and maintain revenues to maximize our profitability. It wasn’t an easy position to be in, but I was eager to partner with each of the business units to accomplish this goal. Initiatives were no longer “IT” projects but rather company-wide objectives where strategic collaboration was key to staying fiscally solvent.
First, we implemented resident statements, lockbox services and online payments within thirty days. At the time, this allowed us to process an administrative fee creating an additional revenue stream. We then implemented utility billing not only ensuring we were charging the correct fees to our residents but capturing overages from the utility companies. Next, we transitioned applicant screening partners and significantly reduced our annual screening fees. Finally, we implemented revenue management transitioning our unit pricing to an amenity-based structure. As a result of these efforts, we saw efficiency improvements across the board and overall, we secured $1.2 million in net profitability annually for the organization.
“Individuals and companies only change when staying the same is scarier than the change itself.”
I don’t believe in “no win” scenarios nor resting on “it has never been done before.” These are concepts that have crippled individuals, organizations and entire industries. That is because “Change” is scary. Individuals and companies only change when staying the same is scarier than the change itself.
The testament of any individual, team, and company is not how we manage in the “good times” but how we address and overcome the most challenging of circumstances. Rocky Balboa accurately states “winning is not how hard you hit, but how hard you can take a hit and keep moving forward.” The organization above beat the worst financial crisis since the Great Depression by working together, overcoming challenges and continuing to move forward.
Sometimes, the best way to effect meaningful change is to confront the biggest misunderstandings in your business. When multifamily teams weigh the risks and rewards of new tech solutions, they face the possibility of turning useful data into increased revenue. However, for operators to be successful with these initiatives, they may need to rethink the role of IT in their organizations altogether.
In the case of Real Estate IT, I think the first concern is that, when people look at property management, they don’t look at IT as a business partner but rather as a support service. To me, that’s a huge missed opportunity. The most important aspect in any given company is the human aspect. Without good quality people a company will fail. The second most important aspect is its data. Without good quality data, strategic decisions are unfairly influenced. The conduit to the data is the technology devise leaders rely on to access information that is designed, configured and administered by IT.
“…when people look at property management, they don’t look at IT as a business partner but rather as a support service. To me, that’s a huge missed opportunity.”
Not surprisingly, this leads us to the second major misunderstanding of Real Estate IT: that CIOs don’t understand the way the business works. Take the National Apartment Association Apartmentalize conference (20,000 attendees in June 2019), for example. The vendors are largely tech-oriented, yet Chief Information Officers are not typically at the “table” when vendor introductions, negotiations and accessibility are performed. Unfortunately, when teams make decisions without IT at the “table”, problems arise, as those in leadership and on the operations end don’t always understand the nuances of a product the way a specialist would. I believe that the individual who will manage the partner relationship, implement and integrate the technology and manage future enhancements: the people with the expertise to ask the right questions about technology should always be in the “room” to understand and communicate the nuances ensuring organizations are partnering with vendors to ultimately improve their bottom line.
It’s time for Real Estate leaders to rethink the role of IT in the industry. Rather than serve as support, IT leaders should be considered business partners — experts in the room when new technologies are under consideration. An article published in September 2018 in the New York Times stated that 3.5 billion was invested in technology startups the previous year that focused on real estate (aka Prop Tech). That is a five-fold increase from four short years earlier. Still, it’s important that the multifamily C-suite keep in mind when they adopt new technologies: it won’t be perfect on day one but rather on day 365 when they will realize the maximized value of their investment.
With these misconceptions covered, let’s review what it will look like when a Chief Information Officer takes on the role of decision maker for new technology in any organization. Most importantly, I’ll identify the audiences I collaborate with when weighing the risks and rewards of new technology.
Every Prop Tech decision should consider the needs of its three “clients” — residents, owners/operators, and the employees. Their experiences are fundamentally different. For the owners and operators, it’s necessary that they have real-time reporting with systems whose data they can trust.
“Every Prop Tech decision should consider the needs of its three ‘clients’ — residents, owners/operators, and the employees.”
For employees, they should be able to do their job without inconvenience enabling them to work smarter — not harder. Above all, the end result for them is to understand that technology makes their everyday processes more efficient than before.
Finally, with respect to the resident experience, it is about understanding how residents use technology to engage the management companies. A millennial (aka Gen Y) will pay their rent online, while a baby boomer is more likely to send a check. As Generation Z begins residing in our units, we should pay just as much attention to their needs and behaviors, as Gen Z will very likely want different options than Gen Y.
When Brooksville purchased Spring Creek Towers, the property management process at Spring Creek Towers was completely manual, a setup that had been unchanged for 30 years. Residents on the waiting list were handwritten into a ledger, checks were collected on site then FedEx’d to a check processing facility when they could have been processed via a local check scanner. Two million dollars was sitting in inventory, from stoves and fridges to paint supplies, being tracked by handwritten work orders that were not being recorded. Finally, residents would wait online, regardless of weather conditions, at 6am to enter the building at 7am to receive a number at 9am to schedule their annual recertification validation. Looking at these problems as an owner/operator rather than a technologist, we identified the range of inefficiencies, let alone the staggering sum going unmonitored. From the employee perspective, it was terribly cumbersome for leasing agents to have to store and retrieve information in paper form — a system that easily spelled lost or incorrect data. From a resident perspective, it was inconvenient that residents could not pay rent or engage with management through a digital platform. To address these concerns, we identified the right technology to solve problems from each group’s vantage point.
From a resident perspective, it was inconvenient that residents could not pay rent or engage with management through a digital platform. To address these concerns, we identified the right technology to solve problems from each group’s vantage point.
With all of these perspectives in mind, we introduced change management on multiple fronts. By working with our partners, we established a plan to replace the paper leasing process with a digital option ensuring future data sources are “clean”, accurate and structured. From an operational perspective we will be tracking the full life cycle of our purchases through a proper database that will allow us full transparency with our spend and inventory management.
Finally, we were able to boost the resident experience by setting up an online payment system. By promoting the digital payment option in English and Spanish, we were able to reach 20% adoption within just 90 days. Brooksville also hoped to transform the resident experience with consistent phone support should tenants have a complaint. To meet this need, we developed a relationship with a third-party vendor to ensure that if a tenant’s call went unanswered for 5-6 rings, we would have it pushed through to a call center, 24/7. Finally, we implemented an online self service for residents to schedule their annual recertification appointments. Since June 2019, we have seen 2,300 appointments scheduled through this process. That is 40% of our units scheduled within three months.
In the end, when you use the right technology to transform inefficient systems, your data suddenly presents immense possibilities. You can now trust the data to make strategic decisions about leasing approaches that actually close deals.You can leverage your purchase power by thoroughly understanding your spend management. Finally, you can apply resident support mechanisms that help build a community residents do not want to leave.
By empowering your IT leaders to identify at your multifamily problems through the right lenses — operators, employees, and residents — you can set the stage for improved efficiency and increased profitability.
“In the end, when you use the right technology to transform inefficient systems, your data suddenly presents immense possibilities.”
Project Management 101 states that if you manage time, scope, and costs properly, you will have a successful project. I disagree. There is a fourth factor: adoption. If the individuals do not adopt and apply your initiative, you will have a failed project. As such, I’ve always looked at the culture of a company very carefully before deciding to invest in a technology product. Adoption will only prove successful if the culture embraces what’s presented to them.
Even when my IT peers at other companies swear a product works perfectly for their staff, I always ask myself: would the teams at my company embrace it? We are not Goldman Sachs, we do not need dark fiber to the internet. We are not a REIT, nor any of my previous real estate organizations. Every company, every culture is different. To make the right technology decision, I recommend that IT leaders learn their work culture well and gauge its limits — and its possibilities.
Still, I don’t believe that every product should be accepted at face value. I believe strongly in the power of vendor-client relationships as true partnerships. No matter what, I think a partner should prioritize my organizations best interests — even if that means certain customizations are in order. Only when we can trust that their implementation team will be sensitive to our organizations’ needs and abilities before we genuinely consider engaging. Without a doubt, IT leaders have to accept that successful adoption hinges on culture — always.
Whether I’m transforming a paper system or building a resident support network, I feel very grateful to be a problem solver in this business. More than anything, I like to find the toughest issues and solve them by making people’s lives better. When Real Estate companies start rethinking the role of IT, I have no doubt they’ll make powerful things happen from the data suddenly at their fingertips, information that will improve strategic decisions, internal processes and, most of all, their profitability.