by Ed Wolff
As property technology broadens its foothold in multifamily, property management companies are finding new angles to tackle long standing industry inefficiencies. The greatest leaps in property performance have been realized not through adding on new technologies but implementing more comprehensive solutions that completely supplant outdated practices and actually solve the right problems.
Purging antiquated aspects of business eliminates drag on operations. Industry leaders continually seeking out opportunities to shake the restraints of outmoded methods and engage best-of-breed technologies free themselves to maximize financial performance and asset value.
“There’s always a better way to do things,” said Kurt Blanton, Vice President of Accounting at Pegasus Residential, a third-party management company based in Atlanta. “Anything we can do to make the leasing process more efficient and easier on our residents and our teams, that’s our goal.”
Blanton said Pegasus keeps close tabs on new tech developments in multifamily and strives to deploy viable solutions as early as possible in order to demonstrate the benefits and value to owners.
“We want to show our clients the leading technologies that they’re probably not seeing at other property management companies,” Blanton said. “We are constantly looking for better ways to serve our clients, whether it is the best reporting or giving them insight into their properties that they don’t see everywhere else. We’re looking forward and showing our clients what we want to do next year. In 2020, we were one of the first property management groups to do virtual leasing. Now, about 65% to 75% of our leases are conducted virtually.”
Proptech has long since expanded beyond property management solutions and virtual leasing platforms. New solutions like insurtech and rentech software, automated evictions, as well as short-term and flexible housing options are reshaping the renter experience while also revolutionizing multifamily operations. Instead of just optimizing historically burdensome and potentially contentious processes for on-site teams, property management companies are rethinking the purpose of traditional business practices. This leads to identifying the right problem which is allowing operators to approach it with more effective solutions. As a byproduct, these new solutions eradicate the problems caused by outdated tools and processes.
Let’s take, for example, the problem with security deposits: relative to the risk they are designed to protect against, deposits often compound it. However, when operators view deposits as a leasing tool rather than a risk mitigation tool, they become focused on modernizing security deposit management rather than the shortcomings when it comes to risk mitigation.
In recognizing the financial, administrative, and regulatory issues associated with this outdated instrument, operators have turned to lease insurance, which replaces security deposits with optimized coverage by property. In addressing the root of the problem (insufficient coverage), it also accelerates move-ins by providing financial flexibility for residents while alleviating deposit administration and regulatory burdens in the leasing office.
On the back end, it spares on-site teams the struggle of managing deposit refunds and recovering outstanding balances at move-out, while improving resident relations and online reputation scores on the front end. More importantly, once final account statements are closed, claims are automated in the native receivables workflow, speeding up claims processing and allowing properties to recoup losses quickly.
“When we looked at the archaic nature of security deposits and the time spent dealing with them, that sacrificed leasing velocity,” Blanton said. “With lease insurance, our property managers aren’t chasing down a resident to get a new email address or telephone number or a forwarding address. It’s a way to create efficiencies not just for the accounting group but for the property management group and the on-site staff. And it protects our clients’ assets because after a resident moves out we can just file a claim and move on.”
Typically, operators can pass through the implementation costs of game-changing solutions like lease insurance to residents. In today’s fee-based society, renters are comfortable with the model and crave the flexibility and value that such services and amenities provide. Identifying technologies mutually beneficial to residents and operators enables operators to deploy more solutions and optimize operations while bolstering the resident experience at the same time.
“It’s all in the lens you view things through,” said Dave Marcinkowski, founding partner at Madera Residential. “Property owners see operational efficiencies and a revenue source, and residents are demanding convenience and these types of solutions. It’s about offering someone a much more comprehensive package. It’s important for operators to realize that they’re lifestyle providers now, not just shelter providers.”
Bundling technology and service fees has also become a popular practice, creating convenience for residents and operators alike. However, while the economic mindset of today’s renter prioritizes convenience, residents are also wary of hidden fees and demand full disclosure.
“We can’t just nickel and dime our residents,” Marcinkowski said. “But if you’re creating a revenue stream, and also providing convenience to your residents, bundling things they would be paying for anyway, that’s giving them value. That’s a no-brainer.”
Renters have fully embraced technology and desire a convenient, consolidated lifestyle. Operators are starting to recognize that providing that coveted modern experience also benefits their bottom lines. But it requires a willingness to discard outdated practices and adopt proptech solutions that set out to do more than just streamline and simplify operations.
“Technology is moving so quickly in today’s world. If you don’t embrace change and you don’t embrace technology, you’re going to be left behind,” Blanton said. “The great thing about technology – especially insurtech or CRMs or several different applications we’ve put in over the last several years – it’s made for efficiencies. Work smarter, not harder.”