It’s little wonder that real estate is considered such a sound investment. As the world’s population continues to grow, real estate only becomes more and more scarce and, therefore, more and more valuable. Indeed, the tendency for real estate to only appreciate in value over time is why it’s one the oldest of human endeavours — being tied, arguably, to the roots of civilization itself.
The long history of the real estate industry, however, is in no way an indication that is archaic. Rather, the ability of property owners and managers to evolve best practices and adapt to changing market conditions is part of the very reason that the industry has persisted throughout the ages. And never before has the managed property industry been in such a state reinvention.
Specifically, from hotels to senior residences to student housing, technology is changing the way owners and operators manage their properties and revenues — and the multi-family residential property sector is no exception. Indeed, an array of technologies that span the gamut of marketing and operations (and everything in between) have empowered multi-family property managers with insight and tools that are allowing them to reduce costs and maximize revenues at every level of their operations.
1. Property Management Systems
Simply put, a Property Management System (PMS) allows property managers to take control of every aspect of their business, including rent, vacancy, maintenance cycles, finances, and accounting. In other words, a reliable PMS removes the need for time-consuming administrative tasks like collecting rent, bookkeeping, and monitoring cash flow, and allows property managers to save on labor costs and focus on managing their portfolio and and optimizing their revenue strategy.
2. Revenue Management System
While a reliable PMS can help reduce overhead and collect invaluable data, multi-family property managers can take things a step further by integrating a Revenue Management System that can then leverage that data in making more strategic decisions. Indeed, there are several benefit to integrating an revenue management system with a PMS, including:
- reducing Fair Housing infractions by setting pricing according to predetermined objective sources
- removing the guess work in pricing by accounting for real-time variables such as available inventory, leasing velocity, recently achieved rental rates, and market position
- creating urgency and setting ideal rates based on up-to-date information, and incentivizing lessees to sign on a great deal while it’s still available
- and increasing the control and flexibility property managers have in setting rates based on move-in date, lease length, and amenities
Indeed, by leveraging real-time data and accounting for a variety of market conditions, a reliable revenue management system improves the renting process for all parties involved.
3. CRM Platforms
Customer Relationship Management (CRM) software is widely used across a variety of business verticals, and multi-family property managers have adopted CRMs for their own unique purposes. Specifically, CRMs allow property managers to create, segment, and maintain their database of tenants, owners, contractors, and other suppliers, and streamline communications with those segments.
For instance, while property managers can use a CRM to notify all tenants in one or several properties of upcoming maintenance or changes in amenities, they can also use it simultaneously contact all suppliers or contractors to solicit quotes on upcoming maintenance needs or other projects. This not only reduces administrative costs, but creates new revenue opportunities by increasing occupancy through targeted communications and improved tenant relations.
4. IoT Smart Home Technology
When most people think of smart home technology, they think of devices that tend to beyond the amenities that multi-family apartment managers are expected to provide for their tenants — e.g. smart home assistants like Google Home and Alexa, smart refrigerators, and smart doorbell cameras. It’s little wonder, then, why a recent survey found that smart home technology was not a priority for multifamily executives.
IoT enabled smart home tech, however, includes so much more than consumer creature comfort devices. Indeed, several pieces of smart home tech can help multi-family property managers (on the operational level) reduce costs, as well as better understand those costs structures when determining rental rates.
Smart Thermostats & HVAC Systems
Just as most people think consumer creature comforts when they think smart home tech, they also get the wrong idea about smart thermostats. Sure, consumer smart thermostats such as Nest and Ecobee offer residents more convenience than their ‘dumber’ counterparts, but they can’t manage larger properties or offer multifamily managers the insight they need to optimize their operational costs. After all, not all smart thermostats are created equal.
Indeed, multi-family properties managers face energy consumption realities that are unique from single family home owners or other REITs. Not only are utilities (such as energy) often included as an amenity, but common areas within the property face varying degrees of traffic and thermodynamic fluctuation.
Fortunately, smart machine learning technology has completely reinvented commercial HVAC energy management. While smart thermostats and occupancy sensors allow property managers to monitor (and adjust to) fluctuations in occupancy, smart energy management systems monitor both private units and common areas and for motion, body heat, and temperature, and then use that data to adjust room temperatures in that very moment. This not only significantly reduces energy costs, but creates better tenant experiences — not to mention a value-added amenity that multifamily operators can factor into their rates.
For instance, Verdant’s EI energy management system uses machine learning and AI algorithms to track multiple variables, such as local weather patterns, thermodynamics, and peak demand loads, and constantly analyzes that data to continuously optimize energy consumption in real time. Indeed, because of their cost saving potential, smart energy management systems are already commonplace in the hotel industry, and have even been shown to increase the resale value of commercial and residential properties alike.
Finally, smart energy management systems offer benefits that extend beyond automating and optimizing energy consumption across units. For example, Remote Management features of IoT-enabled smart energy management systems also allow multifamily managers to monitor HVAC performance, and ensure that climate systems are running at peak efficiency. This includes HVAC diagnostic alerts whenever the HVAC system isn’t performing within required parameters.
Smart Lighting Systems
HVAC systems aren’t the only area where multi-family property managers face energy management challenges. Indeed, lighting energy requirements (especially in common areas) also represent significant overhead. Here too, however, smart energy management technology is reducing both consumption and costs.
Similar to how smart HVAC systems operate, smart lighting systems help multifamily managers (1) monitor their energy consumption, (2) better understand their energy requirements, (3) optimize energy consumption, by (4) adjusting to changes in tenant occupancy patterns in real time.
In other words, just as IoT-enabled HVAC systems do, smart lighting systems leverage occupancy sensors and time-based lighting schemes to reduce energy costs. For instance, IoT-enabled lighting systems will adjust lighting intensity according to the time of day, providing a seamless and more comfortable experience for tenants.
It’s worth noting, moreover, that some smart lighting systems can be interfaced with smart HVAC energy management systems. This means property managers can monitor both HVAC and lighting energy consumption patterns through a single interface. Verdant’s line of occupancy sensors, for example, are able to integrate with third party lighting systems to ensure that lights automatically turn off or on based on whether anyone is in the room.
Preventive & Predictive Maintenance
Just as a reliable PMS or Revenue Management system can help multifamily operators optimize their rates while smart Energy Management Systems empower them to reduce costs, smart tech is also helping them prevent costs. Essentially, maintenance costs represent a significant expenditure for any multifamily operator, and IoT devices are helping multi-family properties predict and mitigate those costs.
With certain amenities being part and parcel of a lease agreement with tenants, it’s imperative that critical infrastructure remains operational, and experiences as little downtime as possible. Not to mention, if left undetected, infrastructure decay will not only lead to disruptive tenant experiences, but inflated repair costs as damage spread throughout (or to other) systems.
Predictive maintenance, however, allows multifamily operators to leverage smart sensor data to flag maintenance issues before they escalate into much more costly and disruptive issues. For example, if HVAC systems aren’t performing within expected parameters, a smart energy management system will alert maintenance staff to wasteful malfunctions, allowing them to diagnose and address them before energy consumption costs rise further and/or equipment failure reaches a critical level.
Similarly, a single leaky toilet can cost as much as $840/year. Add to that any additional costs of potential water damage that goes with that water leak, and it’s easy to see how quickly maintenance costs can be inflated when infrastructure issues go unnoticed. By monitoring water lines with smart water meters, however, multifamily operators can detect and prevent such issues, and even generate an ROI on their water consumption in about 4 years.
Essentially, maintenance issues are predicted and mitigated before tenants feel the effects and, more importantly, before multifamily operators incur inflated repair costs. Indeed, the very same sensor data can also be used to create maintenance schedules based on real-time data, allowing property managers to plan their maintenance activities (and costs) around peak tenant occupancy times.
5. ERP Technology
Smart IoT tech offers multifamily operators so much more insight into their investment, allowing them to make better decisions and optimize their operations. But then there’s the question of implementing those decisions. This is where Enterprise Resource Planning (ERP) tech comes in. As Oracle puts it:
[…] take a step back and think about all of the various processes that are essential to running a business, including inventory and order management, accounting, human resources, customer relationship management (CRM), and beyond. At its most basic level, ERP software integrates these various functions into one complete system to streamline processes and information across the entire organization.
Essentially, with so much data available from their PMS, Revenue Management System, CRM, and Smart Home Tech, multi-family property managers face the risk of paralysis from analysis. ERP tech mitigates that risk by helping them take action based on their available resources and prioritize efforts based on business value. On other words, it provides somewhat of a lense through which to analyze the data and intelligence provided by other technologies.
All families share one thing in common: they’re made up of different members with different strengths, weaknesses, and needs. As a business investment, multi-family properties are similar, with different tenant profiles, different market realities, and different infrastructure.
So the mix of technology that’s right for any multi-family property will vary according to a number of factors. For instance, while all properties can likely benefit from a smart energy management system, not all multi-family operators will require the heavy lifting power of an ERP. What is clear, however, is that certain technologies have so much potential to improve performance of a multi-family property investment that they cannot be overlooked.