The real estate industry is one of the last to undergo a technological overhaul, but it’s finally beginning to catch up.
As the co-founder of a multifamily tech startup, I’ve experienced firsthand how early-stage property technology companies are frequently told that while their business model might appear scalable on the surface, the principal challenge facing their ability to scale is adoption rate. The challenge is systemic, especially in the multifamily space.
With so much investment pouring into proptech and many new companies entering the space in recent years, management companies and their team members are constantly bombarded with pitches from new vendors — many of them with truly brilliant ideas. However, with so many bottom-line-minded stakeholders and pressure to widen operating margins, management companies are often dramatically understaffed, especially at the property level. They simply do not have enough time to hear pitches for, vet, get buy-in from their colleagues and implement the majority of the new technologies available to them. Even if a proptech company has managed to win a pilot opportunity with a new management company client, it is unlikely that they are able to expand throughout its portfolio at the rate they forecasted.
Additionally, management companies are often extremely fragmented when it comes to decision making for adopting new tech. One decision-maker might sit on one coast when another sits across the country. Just because the marketing team at corporate has bought in doesn’t mean all of the regional managers have, and the same goes for the community managers on-site. Third-party management companies face even more challenges, as they need buy-in from their ownership group clients as well.
With all the red tape and potential swirl, it can be challenging to implement new technology when you’re in the real estate space. To make it happen, you must become the champion.
This is the underlying key to the successful and widespread adoption of any new proptech. Whether you are in marketing, operations, leasing or finance, you have the ability to move the dial and see that new technologies are implemented. First, ask the proptech company for references, case studies and which of your competitors they’re already working with (they will definitely know).
Armed with information, ask your colleagues for their feedback, and ask the proptech company for a pilot. If your management company has already been piloting the technology and the handful of communities using it are seeing impressive results, become the champion. Extrapolate the technology’s success across your company’s portfolio and all of those stakeholders, and your colleagues will thank you and look to you for the next big thing.
Here are a few more tips on how to get started and deploy a new technology successfully:
If you’re going to pitch a new technology to your colleagues, one of the main threats to your proposition will be the potential increase in administrative burden for your team at corporate or on-site. To quell their concerns, make sure the vendor has some level of integration with platforms your team is already using. However, don’t let a lack of complete integration be a barrier for whether you move forward with them.
If you require more in-depth integrations before moving forward, you can help make it happen. Early-stage tech companies are agile. With a substantial commitment from a management company partner (and your nudge of the larger vendor), the timeline on some of these integrations can likely be reduced. The extra step or two added to your day-to-day by the new vendor’s platform, assisted by meaningful integrations, should eliminate several more tedious steps elsewhere.
Engage your on-site teams.
The success of most new technology will be ultimately determined by the level of adoption at the property level. Once the pilot is decided at the corporate level, make sure the value proposition of the new technology is clearly communicated to the on-site team and a proper introduction is made to the vendor’s implementation personnel.
Once you’ve achieved buy-in from all appropriate parties, do what you can to ensure success. The best thing you can do is to just stay involved. Request to be kept in the loop through implementation and throughout the pilot period. Request to be sent all applicable key performance indicators and metrics necessary to gauge whether the pilot truly has been successful.
If things get off course and you are not seeing the results that you expected, find out why. Determine if it is an internal or external issue, and if it is internal, work with the vendor or service provider to find a solution. They’ve likely run into similar issues in the past and can often offer simple solutions.
If KPI goals are met, celebrate your success. Next: Continue to be the champion, and make sure the rest of your colleagues know that this technology is out there, available and has been put to the test. If you’ve only been piloting the new technology at a handful of communities, get the other regionals on board and extrapolate your success. To ensure that the pieces are in place to support expansion, set appropriate expectations with the vendor at the beginning of the relationship. Prepare batches of communities where the technology will be rolled out as goals are met.
As more and more apartment supply enters the market and land prices continue to increase (especially urban infill), returns are being compressed. When you break it down far enough, value creation comes from only one thing: ideas. Innovation in technology can lead to innovative returns. The ability to marginally increase a community’s net operating income will be the difference between a deal penciling or not. It will be the difference between a management company winning and losing business from an ownership group.