State of Technology and Operational Processes in Multifamily Housing

Halfway through “conference season,” and with NMHC’s OpTech conference on the way, I thought it might be a good idea to comment on the state of technology and operational processes in multifamily housing.

The truth of the matter is that I just don’t see any “home runs” for operators right now in the technology space, and that’s been true for at least five years. When I left Holiday Retirement just a year after leaving Archstone, I thought long and hard about starting a tech company; but I just couldn’t see anything impactful enough to be worth dedicating a decade of my life. So I decided instead to help C - suites with the myriad of “singles and doubles” out there. And that was four years ago!

While there’s no home run strategy, the good news is that there are plenty of ways to still play “small ball,” scoring runs with a base hit here, a stolen base there and the occasional metaphorical sacrifice fly. One good place to start is to look at whether you’re getting everything you can out of the big scores from the past. For example:

• Pricing and revenue management. I’ve yet to do a PRM health checkup for clients and not found several ways to change configurations, improve coordination with operations’ processes and/or optimize ancillary (but important) things like unit amenity pricing
  
  
• Credit screening. Almost everyone uses automated credit screening but I find few who have their systems configured optimally. If your bad debt ratio is less than 50bps of revenue, you’re probably configured too conservatively. I recently helped one large company add 20bps of occupancy in a single month simply by taking well measured increased risk. Over time that will translate to 200bps or more of revenue increase with an expected increase in bad debt of no more than 10-15bps.
  
  
• Are you sure your PPC is optimized? If you haven’t employed an optimization algorithm to your PPC spend, I’m pretty sure it’s not. Do you know which ILS premiums are really worth the investment (or for that matter the base packages as well). If you haven’t done the hard math, again you very likely do not really know. That’s how D2DS has helped numerous clients improve the results of their marketing while actually reducing overall marketing spend.

There are several new technologies I’ve been watching that have some promise:

• CRM: There are at least three new CRM solutions that appear to offer easy-to-use fully functional CRM capabilities: LeaseHawk, Anyone Home’s Showpro and Rainmaker’s Intelligent Lead Management. (Full disclosure: all three are or have been clients of mine and I am an investor in Anyone Home)
  
  
• AirBnB: As I’ve written before, AirBnB offers a unique opportunity to tap into an incremental demand stream that is willing to pay a premium. There are several ways to leverage this to increase revenue with varying degrees of difficulty and risk and thus also varying degrees of incremental revenue.
  
  
• Other sharing economy applications: One example of this is a couple of companies that are working out ways to leverage empty parking spaces. This is particularly interesting for anyone with buildings in CBDs where parking space is at a premium.
  
  
• Communication tools: From simply using Facetime to more robust, purpose-built solutions like Realync, the ability to provide real-time video touring and/or save up a library of unit-specific tours is becoming a reality.
  
  
• Simplifying moving: Updater, winner of NMHC’s tech contest a year ago, is a simple but effective new entrant worth a look.

I’m sure there are others I’ve missed. What are some new technologies you’re interested in or are starting to use? I’ll be happy to include and comment on them in future newsletters.