5 Ways Tech Is Changing Multifamily Management

Many people know what it’s like to find a new apartment to rent, sign lease papers and deal with a maintenance emergency in the middle of the night. So, most attendees of the September CREtech 2023 conference in New York City were already keen to aspects of the rental experience they’d like to see improve. The thought leaders speaking at the event were aware of them, too, but their advice was to the managers of these properties who are trying to balance customer demands with the costly decisions behind implementing tech solutions.

That’s because any new tech venture starts with the balance sheet.

Bringing any sort of new technology into multifamily property management is like playing tug of war. “You want to generate revenue,” said Doug Pearce, executive vice president of information technology at Waterton, “but you don’t want to turn residents off.” Take EV stations, for example. “It’s not free,” he said. “So, how do you pay for it?” Do you pass your costs on to the resident by charging by the hour, the kilowatt or the space — or do you give it away as a perk?

For panelists like Pearce, whose Waterton manages $3.8 billion in multifamily and hospitality assets, or Karen Hollinger, managing director of international private equity conglomerate KKR, which oversees a massive portfolio of apartments, there is no right answer.

“You have to look at each and every asset,” Hollinger said. “What is [that property’s] staffing model? What's the maintenance model? What is its revenue stream? How much support do you anticipate? Do you want to be a luxury apartment with rates above market, or just a steady eddy that’s not going to be a headache?”

A simpler, binary way to consider such questions might be to look at the investment strategy for each asset. For a short-term hold strategy, return on investment is the most important factor, according to Hollinger. “When you’re only managing an asset for plus or minus five years, especially when you have lots of distributed operating partners or distributed owners, you have to think about how you’re going to achieve ROI within the hold period.”

For longer-term hold strategies, you really have to ask what excites the residents, she continued. “What is the experience you want to deliver for the resident? What adds to the overall experience of living?” Once that’s answered, “then you look for ROI, sustainability, well-built technology and everything else.”

Then, she continued, “you can start thinking in terms of journeys. There is a maintenance journey; an applicant journey; a resident journey. And technology is the supporter of those journeys.”

When it comes to the resident journeys in 2023, panelists agreed that there is a reason why dozens of vendors were marketing digitized access control systems on the events’ expo floor, and that’s because tenants are increasingly demanding frictionless access. “Most residents want mobile credentials,” meaning using an app on their phone as their key, “to get into the parking garage and then into the building and the fitness center — all the way up through the front door of their unit,” Pearce explained.

Yet the decision as to whether to install and implement a potentially costly digital access control system still depends on the specific asset, its market and its demographics. Younger-leaning markets almost unanimously demand mobile credentials, and the same goes for certain regions such as South Florida, according to Cris Kimbrough, senior director of smart building technology for Greystar, the country’s largest multifamily developer.

In contrast, Hollinger and Kimbrough both said they couldn’t imagine their aging mothers being forced to use their phones in lieu of a “good, old-fashioned key.”

But residents want that frictionless access for guests, too, and that’s where physical keys prove extremely limiting. “Security is as much about keeping the wrong people out as it is letting the right people in,” Kimbrough said. “In many properties now, staff has to approve each and every guest, and that’s not ideal.”

Visitor management is a massive issue in the multifamily sector, according to Rob Leef, business development manager at Motorola Solutions. “Depending on what system you land on for access control, say you finally appease that college crowd by giving them access to the building using mobile credentials, but then mom comes to visit and she can’t get in. Not to mention the dog walker, the package delivery driver and the Uber Eats service. Someone might want to let a few friends in for Monday Night Football. How do you make sure that doesn’t turn into a pool party with 300 people?”

The answer is that multifamily managers need reliable third-party solutions. Pearce mentioned Fetch as one of the digital providers that facilitates access between residents and visitors, noting that “it takes the property manager out of the equation.” Hollinger agreed with that sentiment, and said she’d gladly opt for solutions that the third-party and resident work out independently with one another. “I don’t like anything that the owner has to pay for.” Kimbrough concurred, emphasizing that it’s almost impossible to find one solution to fit across a portfolio as larger as Greystar’s.

And so it all comes down to finding that balance, Pearce concluded. “Streamlined access control is clearly a nice benefit for the end-users, but it doesn’t generate revenue.”

Another way that mobile phones play a big part in the relationships between resident and property management is through chat-facilitated customer service — or chatbots, specifically.

“One of our top priorities at Avalon Bay currently is what we refer to as the transformation of our operating model,” said Benjamin Schall, AvalonBay Communities CEO and President. “We recognize that we need to meet the customer where and when the customer wants to be met. And increasingly, for most customers, most of the time, that now means mobile-based and digitally oriented interactions.”

Avalon Bay was an early investor in EliseAI, a machine-learning chatbot technology firm striving to deliver conversational artificial intelligence specifically geared to residential rentals, Schall said. Now, “95% of Avalon Bay’s interactions with prospective residents” are handled through email and text conducted entirely by its branded version of the technology called Sydney.

“Most people are comfortable getting answers through a chatbot,” he continued. “Of course, customers wanting to ‘speak to a human,’ are shifted to our call center, but that's not happening at 8 p.m. So the next layer is to kick over to a chatbot that is able to have a pretty strong and consistent communication with a prospect around a set of questions. Relative to a lot of call center experiences out there today, it sounds natural enough in comparison.”

The next step in Schall’s personal vision is for the apartment rental process to be as easy as processes in some more technologically advanced industries. “If you need proof of car insurance to buy a car, Geico can underwrite you within five minutes on your phone,” he offered as an example. “There's a long way we have to go as an industry to catch up to that and other general customer experiences.”

RXR CEO Scott Rechler said that his firm employs AI for a more back-of-house approach. His vision entails “predictive analytics to determine whether or not residents are likely to renew their lease or not based on how things like how long their mail stays in the mailroom, how often they get food delivered and whether they attend events.”

RXR is also using AI interpretation of data for sentiment analysis, he continued. “We are able to use natural language processing, and see if residents are using positive words or negative words when they communicate with our staff. All this data goes through an algorithm that provides a prediction,” he said. And it helps RXR make decisions on what and how to change when it comes to “almost every aspect of the tenant experience.”

As customer service and access control is increasingly digitized, less staff is now necessary on-site. “Everybody's looking towards centralization,” Kimbrough said, noting that having fewer employees at each property in favor of handling relationships and data from a centralized location mostly equates to increased operational efficiency.

Security cameras are a great example, Pearce said. “From a Waterton standpoint, everything is in the cloud; we host nothing locally. All our providers — including our camera provider, Cisco Meraki — are cloud-based.”

As drivers of that shift, he mentioned security incidents in which the police or fire department showed up at a property to find that the camera that would have caught the necessary footage had been dead for months, for example. So now, every camera is connected directly to the cloud-based system. “It took some convincing of our portfolio management team because now you're adding somewhat significant upfront costs … say 40 cameras costing over $100,000 to install. But one lawsuit wipes out any concern about costs.”

“It’s not a solution that adds revenue,” he said. “But it makes you sleep a little better at night.”

All this talk about collecting data and being in the cloud means nothing if there is not a nearly flawless connection at the asset level, Kimbrough said. “You have to get the base level infrastructure correct because it provides that connectivity for all the technology you’re using. It’s not just about [net operating income],” she said. “It’s all-encompassing.”

For Kimbrough and Greystar, that means managed Wi-Fi. Managed Wi-Fi is a cloud-based wireless internet network that’s controlled by a third-party provider. Managed Wi-Fi also happens to be the technology Pearce said he’s the most excited about. “The first question that every technology vendor on that expo floor asks me is whether we have managed Wi-Fi. They’re looking for that level of connectivity.”

He mentioned trying to test out water conservation and leak detection tools, and the vendors struggling with it because of poor connection. “We haven't really been able to get an accurate representation of their capabilities because every time they get it up and running — when they’re trying to either use the resident Wi-Fi or use their own hotspots — everything drops.”

Throughout most of 2023, he said, Waterton has been pushing for a conversion to managed Wi-Fi at most of the communities in its portfolio. Unlike some of the other solutions being discussed, he continued, “there is a clear ROI win with managed Wi-Fi. We've got properties that are making maybe $6,000 per year today in revenue share with some of the old providers, and managed Wi-Fi is going to [indirectly help them] bring in $125,000 in revenue.”

Managed Wi-Fi goes hand-in-hand with building-wide Wi-Fi. “Just like when you check into a hotel today and you can get on the network and access your apps and data from anywhere on the property, whether it be the pool or your room or the conference facilities, that's now happening in the multifamily industry as well,” RET Ventures partner John Helm said. “I think in 10 years, every multifamily asset is going to have building-wide Wi-Fi. But it’s not simple, especially if it involves a physical placement of equipment on an asset that that might be spread over acres of property.”

So while it may be an effective change, residents are likely to be unhappy early on, KKR’s Hollinger said. Whatever the change is, she said, “residents don't like it when today you do it one way and tomorrow you do it another. They like consistency.”