Do you use chatbots to provide prospective residents with information about your property or specific units? Here are some reasons you might want to.
Chatbots seem to be popping up everywhere nowadays. And not just Alexa, but those helpful “people” who IM you on every site to help with customer service.
These are certainly not new. Back in the Stone Age when I was in college and iPods were gaining popularity, Joe Millionaire was winning over our hearts, and we were constantly perfecting our away messages on AIM, there was a chatbot called Smarterchild that we all talked to. Of course, we would just curse at it and laugh hysterically at it’s “offended” response. College was a wild time.
But now chatbots are getting smarter, or at least more responsive. And people are happily using them. We’re heading for Westworld-level customer service robots, people! Don’t say I didn’t warn you. “These violent delights have free-return-policy ends.” Or something. I don’t know, I’m still a few episodes behind.
Anyway, according to a study on Convince & Convert, “as of 2018, 15 percent of American adults say they have used a chatbot to interact with a company in the prior 12 months.”
And according to Ideal.com, 35 percent of people who use chatbots expect to get detailed responses to inquiries. Also, they found that 64 percent of people believe the top benefit of them is to get 24-hour service, and that 55 percent of people believe the top benefit is getting an instant response.
These chatbots can be programmed with specific keywords to answer questions about the community, which could be extremely useful for your leasing agents. This would free up their time, and when they talked to their prospects, the prospective renters would then have basic information about the property.
Though there are many benefits to chatbots in multifamily marketing, there are of course still some downsides. Some people might not yet know how to interact with these chatbots to get the right information out of them. That could end up being extremely frustrating for them, and could end up losing you a lead.
Also, and maybe it’s just me, but there always seems to be something off about talking with a chatbot. It’s not human, but it can answer seemingly random questions. Do you have to thank them? I know, I know, they’re robots, so no, right? If you talk to a different bot later, will you get different answers? And will the original bot get jealous? These things keep me up at night.
But, seriously, sometimes people do want to talk to an actual human. If your site offers chatbots, it might be beneficial to also offer that option. Then potential residents can get information in the way that makes them the most comfortable. And, who knows. In the near future, the chatbots might become so sophisticated that people won’t even be able to tell they’re talking to robots, and then the issue might become moot. Actually, maybe that time is already here. Maybe even the writer of this blog is a robot. Talk about a twist ending!
Do you use chatbots on your apartment websites? If so, what have you liked or disliked about them? We’d love to hear your thoughts. Post your comments on our Facebook page or send a tweet to @MHNOnline or @jfiur.
Ben Faunce, senior customer success manager at SOCi, discusses how marketing has been affected during the pandemic and what leaders should be doing going forward.
Clear communication and a strong online marketing strategy are more important than ever as multifamily property managers navigate the COVID-19 crisis. Multi-Housing News hosted a 30-minute “Snap Session” webinar last week with Ben Faunce, senior customer success manager at software company SOCi, to discuss the challenges that property management firms are facing and content and messaging strategies they can adopt.
“It’s important to get content out there now,” said Faunce, urging companies to make full use of platforms such as Facebook and Instagram to engage with current and prospective residents and make their properties stand out. Property managers can post appealing photos of available units. Companies that have taken advantage of prolonged closures to improve their amenities should let the world know.
Multifamily managers can also brand themselves as community builders by sending thanks to local hospitals and pharmacies, promoting local restaurants and grocery stores that may be open and giving weekly shout-outs to team members such as maintenance workers, Faunce added.
Companies should also use social media to support and engage current residents. Ideas include asking residents questions on Facebook and promoting fun and unique events, such as a cute puppy contest at an apartment community or a balcony dance party at a senior living center. “I see some really inspiring posts across thousands of properties I work with,” said Faunce. “At the end of the day, always be leading with empathy in everything you’re doing.”
The industry is currently gravitating towards virtual property tours as leasing has become challenging over the last month or so. Google’s Tour Creator is a useful tool for creating immersive, 360-degree views of a community. Self-guided tours are also an option to consider. The tours can be scheduled on Zoom and property managers can speak to prospective renters over the phone as they navigate the property. Having a messenger bot on the company’s website and Facebook page is an easy way to weed out prospects that aren’t serious.
Now is also an opportune time for companies to create videos. If the budget is available, it’s a good idea to spend the extra money to make them look sharp and professional. If not, keep the videos loose and engaging. “Video is just skyrocketing across social media,” said Faunce, noting that video-sharing service TikTok was the most-downloaded app across Android and iPhone over the last 90 days.
Finally, as parts of the U.S. gradually lift restrictions related to the pandemic, property managers should think about putting together a social campaign around the reopening of amenities such as gyms, pools and rooftops. Each reopening milestone can warrant its own post, complete with an explanation of why it makes sense, as well as quotes from the relevant government or public health guidelines.
Social distancing is a new phenomenon for many. As humans, we are instinctively social creatures, who like to be surrounded by family, friends, and loved ones, and there’s nothing we look forward to more than sharing experiences. Though the evolution of human social behavior is not fully understood, researchers believe it was a gradual process, evolving from couples to clans to larger communities. Once The Digital Age took hold of the globe, our social interactions ceased being limited to in-person exchanges. Now that we can email, text, direct message, and video chat, digital interactions often supplement face-to-face contact, and some people even prefer it this way.
In the wake of COVID-19, an infectious disease caused by a virus not previously identified in humans, many government officials and medical professionals are promoting social distancing to prevent overwhelming the health system of our country. More than just a buzzword, social distancing is vital in stopping the spread of the illness, which happens when an infected person coughs, sneezes, or otherwise releases droplets of saliva from the mouth or discharge from the nose.
As of this week, COVID-19 cases surpassed 1.6 million people worldwide. Although nearly 100,000 people have died from the illness, over 350,000 have successfully recovered. With America now being the most infected country in the world— with over 450,000 confirmed cases—experts have recommend self-isolation for everyone to “flatten the curve” of infection rates, which are adding up at lightning speed.
Across the globe, social distancing has been difficult for many countries to implement successfully, including Italy, Germany, and France. America has been no different. As a result, government officials have started enforcing stricter guidelines on our daily lives. The majority of states have closed gathering spaces, such as schools, restaurants, gyms, churches, movie theatres, and more.
Yet, despite this, Americans aren’t completely without social outlets. Unlike other pandemics, wars, and crises, COVID-19 is unique in that we have the Internet, social media, and other web-based resources at our side—all of which support constant connectivity and can help multifamily housing professionals weather the storm of the coronavirus pandemic.
The Internet can provide more than entertainment during this time of uncertainty. We will depend upon it to connect us to the outside world – whether that means placing online orders for food and grocery items or providing crucial digital services to apartment residents and prospects. Since 95 percent of the country is under stay at home orders, American citizens must self-isolate, especially older, more vulnerable populations with co-morbidities.
Although share economy apps, like Uber and Lyft, have suspended rideshare services during this worldwide health crisis, food and grocery delivery apps, such as Uber Eats and DoorDash, are stronger than ever. At the end of last year, Forbes reported that the food delivery industry is expected to supersize to a 200 billion-dollar industry by 2025.
With people stuck at home and states limiting restaurant operations to delivery and pick-up only, both Uber Eats and DoorDash experienced their highest customer spending over the last eleven weeks, with their weekly customer spending increasing by 15 percent since Q1 of 2020. The numbers clearly show that many people are turning to these stay at home tech services to protect their health and well-being when a degree of separation is needed most.
TechCrunch has also recently reported that grocery delivery app downloads are soaring amidst the health crisis, with Instacart, Walmart Grocery, and Shipt experiencing a surge in daily downloads by 218 percent, 160 percent, and 124 percent, respectively. Grocery store delivery and pickup presents an easier option to stock-up on essentials, while limiting one’s exposure to other people, and in turn, the virus. With its added workforce of 100,000 warehouse and delivery employees, Amazon Prime is also fighting hard to meet online shopping demands during the coronavirus outbreak.
Like every other sector, multifamily professionals must turn to digital tools to meet consumers’ needs during this unprecedented time. Because there is currently no vaccine to prevent COVID-19, it’s safe to say that we can expect similar outbreaks in the future that will require the same amount of social distancing. Therefore, we must collaborate, communicate, and cooperate with one another and come up with ways to reduce the impact of this very real scenario on our industry.
One way to do so is by devoting time, money, and other resources to our own versions of stay at home technology within the real estate sector. Consider investing in products that align with social distancing, such as interactive chatbots, livestream tours, and other digital marketing and leasing tools, to keep prospects satisfied, occupancies up, and rents paid.
By finding ways to minimize the severity of current and forthcoming social disruptions— such as the novel coronavirus— with solid online user experiences and workflows, you will set your community up for success during future challenges – and who doesn’t crave a bit of certainty during times of emergency, instability, and change?
Kerry W. Kirbyis a renowned entrepreneur, speaker, and technology innovator. He is the founder and CEO of 365 Connect, a leading provider of award-winning digital marketing, leasing, and resident service platforms for the multifamily housing industry. Kerry has propelled 365 Connect from a scrappy bootstrapped startup to a globally recognized company, which has won an array of highly acclaimed international, national, and regional awards, including the esteemed Louisiana Governor’s Technology Award.
Today’s renter pool comprises a wide range of ages that can pose challenges to developers, owners and operators. Eric Clark of Bainbridge Cos. shares four tips on how communities can appeal to anyone.
Millennials, Millennials, Millennials. Peruse some industry trades or attend a multifamily conference, and you might get the impression that the renting population consists entirely of this generation.
The focus on Millennials in multifamily is certainly understandable. According to the Pew Research Center, in 2015 Millennials became the largest generation in the U.S. workforce. Furthermore, they are set to become the largest living adult generation next year. So, of course, they are at the very heart of the renter pool.
However, the truth is that renters are a diverse group. As Baby Boomers age, they are selling their homes and opting for the ease and convenience of apartment living. And as Generation Z reaches early adulthood, they are emerging as a sizable segment of the renting population. The post-Millennial cohort will account for 33 percent of the global population by 2020, and they already contribute $44 billion annually to the U.S. economy, according to Commscope.
Clearly, multifamily developers—unless they are building communities specifically targeted at seniors or students—are tasked with creating and marketing properties that appeal simultaneously to different generations. How can they go about doing that?
FLEXIBLE COMMON SPACES
Baby Boomers, Generation X, Millennials and Generation Z all enjoy common areas at apartment communities, but they want them for different purposes. For example, Baby Boomers love onsite group activities that allow for ample socializing. Think dance lessons, wine tastings, cooking classes and brunches with room for large groups to sit together. Gen Z’ers, on the other hand, prefer the “alone together” concept. Yes, they want to spend time in the community clubhouse, but they want to be in their own nook while on their mobile device.
The result is that developers have to strike that balance of designing a community’s common areas so that they can easily accommodate group activities but still allow individuals to use them and have their own space when a group activity isn’t taking place.
UNDERSTAND THE DIFFERING TECHNOLOGY NEEDS
Today we all use technology. Suffice to say, though, each generation has a different relationship with mobile devices and technology.
Millennials grew up immersed in the Internet. Gen Z—they haven’t known a world without the Internet, instant access and as such, they are absolutely wedded to their smartphones and mobile devices. Communities need to offer blazing-fast Internet speeds in both common areas and apartment homes. Similarly, younger residents are perfectly happy, and even prefer, to fill out maintenance requests online and then communicate with the service team exclusively via text afterwards. In fact, they often view phone calls related to the requests as unwelcome encroachments on their personal time. They want to control when and how they communicate with their community; be sure your technologies and platforms can meet that demand.
At the opposite end of the spectrum, Baby Boomers are generally happy to complete that initial service request online, but afterwards they want to speak with the technicians and leasing staff as the work order proceeds and is completed.
On another technology note, apartment owners and operators looking to appeal to a broad swath of renters should outfit their units with enough smart-home technology—say, Nest thermostats and smart locks—to be attractive to younger renters but they shouldn’t go so overboard that they intimidate the older crowd.
CHOOSE THE RIGHT LOCATION
As the old saying goes, real estate has always been about location, location, location. That’s especially true in today’s multifamily industry.
Overall, renters have become more inclined towards in-town living in recent years, but downtown properties can be tough to build in a way that appeals to a mass audience. Instead, development sites that are located about 10 minutes away from a central business district can offer real advantages. These less expensive and bigger sites can allow developers to build units at a size and with a finish level that attract residents in their mid-30s and older, while still allowing younger renters to be within an easy and inexpensive Uber or Lyft ride of downtown. These locations also provide the walkability and proximity to jobs that renters of all ages are seeking.
Each generation responds to different marketing tactics. But when trying to generate leads for an apartment community, it’s best to heavily consider geography. For instance, in urban markets that skew younger, chat bots and robust text campaigns will prove to be invaluable tools. In southern suburban areas, you’re going to need to focus more on face-to-face hospitality, regardless of the age of prospects.
Also, don’t underestimate the power of marketing methods that some in the industry might be quick to dismiss as “old school.” You might be surprised at how younger Millennials and Gen Z’ers respond to guerrilla marketing. For example, I’ve seen communities enjoy considerable results from having a leasing agent set up shop in a local coffee house, unobtrusively strike up conversations with the patrons and even offer to pay for their coffee.
Today’s renter pool comprises a wide range of ages. The diversity in age can pose some real challenges to developers, owners and operators. But in the end, these are challenges that, with planning and strategic thought, can be readily overcome.
Eric Clark is vice president of Marketing & Strategic Development for the Bainbridge Cos. He oversees the strategic planning and execution of marketing and branding at the corporate and community level in addition to the company’s training and team development initiatives.
Zlatko Bogoevski, Founder and CEO of Betterbot, Mike Brewer, COO of RADCO, and Michael Myers, Founder and CEO of Hayven explain when and how technology will replace people in multifamily. The truth is it’s already happening. Technology is slowly taking over our simple tasks and freeing up time for humans to focus on what they do best. Are the tasks you are doing right now suitable for AI? Which parts can be replaced and which can’t? Is moving towards more automation going to be beneficial? You have to watch to find out.
Five technology advancements that are likely to hit the apartment industry in a big way in the year ahead.
There’s little doubt that 2019 was the year for PropTech. We saw record levels of investment in not only real estate tech writ large but also multifamily-specific tech. These new technology companies and platforms are challenging our traditional ways of operating our communities and serving our residents, giving us new tools for marketing, leasing, connectivity, security, business intelligence, resident finance, community management, and much, much more.
We saw this at our recent NMHC OPTECH event in Dallas, where more than 2,000 apartment executives and technology partners gathered to explore new software and technology solutions, discuss evolving multifamily tech needs, and get practical advice on implementing new technologies. Here are five big things the leaders in tech and innovation were talking about that we believe will have meaningful impact on the industry in the year to come.
The industry continues to be slapped with the sobering figures of how many leads go unanswered because leasing agents can’t—or won’t, as the case may be—return a phone call or reply to an email. Sometimes they are too busy with other tasks. Sometimes the inquiries come in during off hours. Regardless of the reason, it’s costing operators money to not only have to market but remarket units.
Operators are searching for low-cost solutions to getting more prospects into the sales funnel, and call centers just aren’t cutting it in a lot of cases. Enter the latest generation of AI-powered chatbots. But please don’t call them bots. These digital leasing assistants have gotten so sophisticated that prospects often can’t tell that it’s a robot responding to the thread. Fueled by machine learning, these digital leasing assistants also get smarter over time, improving performance. We expect that they could become a leasing agent’s new best friend.
2. Self-Guided Tours
With the dual goals of unburdening leasing staff and delivering a better on-demand shopping experience for prospects, many apartment operators are experimenting with self-guided tours. For some it’s a be-back strategy, available to prospects who are making a return visit; for others, this is a shift to a whole new touring model.
Operators also have varying definitions of self-guided. Some are investing in the high-tech version with virtual ID checks and remote or keyless entry to provide a truly self-service experience; however, others are rolling with a low-tech version, where IDs are held in exchange for a unit key and returned at the end of the tour. Operators are still struggling, though, with the question of when humans should reinsert themselves into the leasing process.
3. Intelligent Buildings
While apartment operators haven’t quite found the perfect solution, most are testing the smart home waters and figuring it out as they go. But with the benefits of consumer-facing smart tech going to the resident, they’re also looking at scalable smart building tech to net new operational efficiencies.
These intelligent building platforms hem together smart home tech with digital remote access for maintenance and guest access, energy-saving solutions, and systems monitoring technologies like leak detection for a comprehensive, real-time community management solution. While the focus today is on asset protection and preventative maintenance, the technologies are likely to make predictive maintenance a mainstream reality soon enough.
4. Curb to Community Room Connectivity
Residents certainly want it, but increasingly our building systems are also demanding seamless connectivity. From controlled access to sensor technology, future-proofing begins with getting the broadband and cellular infrastructure right.
Two new and interesting telecom advancements are on the horizon. The Federal Communications Commission is opening up some additional spectrum—this is 5G and CBRS—that could positively affect connectivity. While that’s good for the residents, it’s also potentially good for owners and operators. The expectation that 5G and CBRS will deliver better, faster, and more reliable mobile connectivity could be a boon for the rollout of IOT-based systems, not only smart home features but also intelligent building technologies.
5. Resident Finance Solutions
With housing affordability becoming a bigger issue in markets nationwide, new renter-focused FinTech solutions are emerging. These solutions aim to lower upfront costs and provide more financial flexibility for renters while providing operators with more efficiencies and protections against lease loss. These platforms are providing new alternatives to traditional security deposits, guarantors, and late rent payment hurdles with more modern takes on old-school insurance or payday loan solutions.
Can direct investment in emerging PropTech shield multifamily operators from disruption while creating a preferred asset class for investors?
With Real Estate Technology Ventures (RETV), John Helm is sitting at the fulcrum between emergent PropTech startups and the multifamily REITs and owner-operators seeking both first mover advantage and a hedge from disruption by directly investing into the technology innovations RETV funds and helps bring to market.
Billed as the first industry-backed, early-stage venture fund connecting emerging real estate technology companies with a network of multifamily influencers and their portfolios, RETV was successful last year in raising $108 million from limited partner investors, including Aimco, Boardwalk, Essex, MidAmerica, UDR, Starwood Capital Group, and Cortland, to fuel its Fund I.
In total, 23 LPs representing over 1 million multifamily units signed onto RETV’s debut fund, hoping to gain competitive advantage from early access to technology while managing the risk of deploying unproven or even antagonistic solutions across their properties. In return, the LPs serve as a proving ground for RETV technologists, offering up portfolios for product testing and development, providing direct feedback to tech company innovators, and ultimately serving as a catalyst for systems to quickly scale across a portion of the fund’s units.
“It’s a safety in numbers sort of thing,” says Helm, the former Marcus & Millichap chief financial officer turned entrepreneur who successfully piloted both AllApartments/Springstreet and MyNewPlace from fledgling startups to pay-dirt exits. (Homestore acquired AllApartments in 1999 for $150 million, and RealPage acquired MyNewPlace in 2011 for $74.4 million.) “The pace of technology is speeding up, innovation is speeding up, and the mainstream VCs in Silicon Valley see real estate as the last, big, wide-open opportunity for investments. A lot of capital is flowing into real estate technology whether the industry participates or not, and we think it is much better for them to have a horse in the race.”
While it may have been first to the stage, RETV certainly isn’t alone in offering a vehicle for multifamily operators to invest directly into emergent PropTech companies. In July, Los Angeles–based Fifth Wall announced the close of a $503 million fund backed by firms such as Cushman & Wakefield, D.R. Horton, Equity Residential, Hines, Lennar, and The Related Cos. Lennar is also running a pilot program as an LP for Chicago-based 94 Ventures, which will likewise seek to connect multifamily operator investors with early-stage tech companies for product development and deployment.
Over $14 billion in venture capital was invested globally into emergent PropTech companies across the first half of 2019, according to a midyear report by CREtech.com. That’s a 309% increase in funding over the first half of 2018, with the report noting a continued trend toward larger deal sizes and an increase in corporate venture capital as real estate companies turn to PropTech for solutions to help with streamlining processes and optimizing operations.
“You could certainly invest to make money off of the fund or you can also become an LP to find products to enhance the customer experience, and I think we go for the latter,” says Jerry Davis, president and chief operating officer of UDR, an early signatory to RETV Fund I and a major supporter of the fund’s investment into SmartRent, a smart home technology solution for deploying and controlling smart locks, thermostats, light switches, and leak sensors.
Deployed across 20,000 UDR units, SmartRent is part of the REIT’s strategy for enhancing the prospect and resident experience with a self-guided touring platform and self-service control of in-unit smart technology and voice-command devices. “We have chosen to go early in multiple investment situations because of the prospect of enhancing the portfolio and moving UDR closer to where we want to take our operations from both a resident experience and cost mitigation standpoint,” Davis says.
Busting the Multifamily Tech Vendor Paradigm
The mechanics of RETV Fund I allows LPs to do just that: Sign on as passive investors and gain visibility into emerging tech, or act as a testing bed for new technologies to gain disproportionate advantage to solutions that eventually scale across the industry, as early-stage corporate venture capitalists typically enjoy deep pricing discounts not afforded to the general market.
The test bed model is likewise embraced by Nine Four Ventures, a similar real estate technology fund in pilot and co-founded by Laramar CEO Jeffery Elowe and venture capitalist Kurt Ramirez. “It’s really a land and expand approach that allows the tech companies to play in a sandbox,” says Ramirez. “Aside from just building relationships early on to get opportunities to scale, the pilots are an interesting way to provide honest two-way feedback that could otherwise be challenging under a traditional vendor-client model.”
Steve Lefkovits is a partner with RealtyCom Partners and the executive producer for the Joshua Tree Conference Group, which launched the Multifamily Technology and Entrepreneurship Conference in 2013 with the same thought of connecting early-stage technology entrepreneurs with C-suite multifamily owner-operators and venture capitalists, partly in an effort to break away from the vendor-client mentality that had spawned plodding and combative sales and deployment cycles in apartment tech.
“These funds are an investment-level reason to get together and talk about technology and align as partners to finance innovation. It’s a much better conversation than the adversarial process of a vendor selling to a suspicious buyer,” Lefkovits says. “Investors/multifamily owners are investing to capture the benefits of large-scale growth in the multifamily industry among their peers and competitors while drastically shortening the time from idea to development to scale to deployment to the benefit of the tech startup.”
For SmartRent, the acceleration has been remarkable, progressing from a $3 million seed round in September 2018 and a $5 million Series A allotment in November 2018 to a Series B funding of $32 million in July, which included direct investments from UDR, Essex Property Trust, Starwood Capital, and Bain Capital Ventures in addition to RETV capital. In terms of unit count, the company has installed into 40,000 units in just 15 months, with another 66,000 units under agreement for 2019, representing a year-over-year increase of 149%.
“The idea of the fund has been in the back of my mind since MyNewPlace and Rent.com,” Helm says. “Quite a few large REITs had invested in Rent.com, and when I raised capital for MyNewPlace, Essex, UDR, Lane, and ConAm were all investors, and it proved to me the value in having operators on board for proof of concept and scalability—the value of having some guys on the same side of the table so I wasn’t just a vendor, I was an investment, which opened their organizations up.”
Preferred Technologies, Preferred Assets
While the altruistic vision of nurturing tech entrepreneurs into the historically luddite arena of multifamily operations is a laudable one, there is also a defensive posturing built into owner investment in PropTech. By moving from client to influencer to investor, REITs and owners participating in funds like RETV are playing a decisive role in electing the technologies that are offered broader access to the nation’s apartment communities, and buffering themselves against the kinds of industry disruptions that Airbnb and Uber exacted in hospitality and the taxi industry, respectively.
“Honestly, disruption is putting it mildly,” says Ramirez. “Technology has begun to enable every part of every facet of the industry, challenging owners to play more offense, get smarter on leasing and marketing, use analytics to target the best renters, and differentiate properties to offer something that makes people want to stay there more than somewhere else. What we are seeing is increased pressure for operators to apply tech solutions to their business, and they are doing it because renters are demanding it and investors are demanding it. They are getting squeezed on both fronts to operate at peak performance.”
For the winners in that endeavor, Ramirez sees the kind of portfolio-wide income enhancement that catches institutional investor interest and follows a logic that where the technology goes, the capital investments into development and large-scale acquisitions and dispositions will follow.
Operators like UDR see PropTech funds, particularly those steered by multifamily industry veterans like Helm, as a way to clear through the white noise of technology offerings and move forward with point solutions that have been vetted, tested, and show promise of scaling to bona fide, long-term service providers that can boost elusive net operating income increases.
“The amount of competing technology solutions for one business line can get confusing, and a lot of times those options are close in capability,” says Davis. “RETV goes through the vetting process pretty extensively, and some innovations we have jumped into and reaped a big benefit. Sometimes those solutions are more suited for another LP or we may have already solved that problem, and as always there are only so many things you can roll out at one time.”
Likewise, the $108 million in RETV Fund I is probably positioned to deploy only a handful of technologies, hardly making Helm and the fund’s LPs the arbiters of ops future in multifamily, at least not yet. Other entrepreneurial startups can still benefit from direct, off balance sheet investments from firms, and the major property management software platforms—including AppFolio, Property Solutions, RealPage, and Yardi—continue to develop their own solutions or position themselves for acquiring the companies that find a niche and scale.
James Grady is the founder and CEO of Package Solutions, the maker of package management solution HelloPackage, which counts Gables Residential (among other apartment owners) as an investor and early adopter. “RETV is on our radar, and we have been in discussions with them,” Grady says. “The fund offers a tremendous opportunity to connect with forward-thinking apartment operators who are open to, and actively seeking, technologies that will best improve both their operations and the resident experience. Gables likewise has been intimately involved in developing and refining the software platform from both an operational perspective but also in how we bring the product to market.”
Like many tech entrepreneurs, Grady has given some thought to exit strategy in the multifamily space and thinks the most likely scenario would be an acquisition by a larger player. To that end, owner-operators who have either invested directly into startups or have become an LP in RETV or other funds will ultimately get the win-win from going all in on technology investment, by realizing not only the early access to technology and investor discount pricing, but by scoring on the multiple should a startup be acquired by a platform player or external tech company like eBay, Amazon, Apple, or Google.
“We’re looking for technologies that are going to transform an area of our client’s businesses,” says AppFolio senior vice president of investment management Nat Kunes, who points to the company’s January acquisition of conversational AI startup Dynasty as emblematic of where the firm finds acquisitive value in the apartment tech arena. “AI for leasing essentially replaces all the back and forth of scheduling showings and prequalification, but unlike the scripted response of chat bots, conversational AI gets smarter and learns from its interactions with prospects. That was very unique and different in the market, and those types of game-changing technologies are what we look to acquire in our business.”
At RETV, Helm is mum on the prospect of signing on LPs for a Fund II (the SEC strictly prohibits the marketing of funds in advance of filing a Form D notice of offering of securities), but to think the career entrepreneur is one and done with helping to bring a new model of technology deployment to multifamily is likely missing the greater point: that the disruption of RETV isn’t so much about bringing new, transformative technologies to multifamily as it is bringing the multifamily players (along with their deep pockets of capital) directly to best-in-class technologies as they emerge.
Count UDR, for one, as sold on the model. “We’re always excited to learn and have product being brought to us that enhances our platform,” says Davis. “As long as new technologies are being invented to make our operations and our residents’ lives easier, the funds create a more robust pipeline of innovation. That’s a format that works for us, and one that has become a preferred avenue for investing in technologies.”
At NAA’s recent Apartmentalize conference in Denver, the future of apartment tech was the subject of several of the educational session. Here is a summary of some of what was presented.
Setting a focus
The Apartmentalize conference is a huge event with over 11,000 attendees, 1,400 exhibitors and 80 educational sessions. While it is an excellent forum for gathering information on a variety of topics, it would take an army of attendees to take it all in. Consequently, Multihousing Pro elected to focus on the future of apartment tech.
10 innovations in 10 years
An early session sought to identify 10 technologies which may have the greatest impact on the operation of multifamily housing in the coming 10 years. The technologies are:
Augmented and virtual reality. Virtual reality in particular is expected to impact operations by enabling virtual self-guided tours of the property. It is expected to increase the trend of residents signing leases for properties that they have never actually visited.
Autonomous vehicles. Not only should operators consider having pick up and drop off points for automated vehicles, but they may also be able to reduce their parking area since a lot optimized for autonomous vehicles can park cars more densely than can a lot designed for human drivers. Autonomous flying vehicles are also coming.
Delivery via drone or robot. This is being done in hotels today. Drone delivery of food will soon be available in Dallas and San Diego.
Battery power – both for cars and for local energy storage. Batteries can be used along with solar panels to provide power to your building when the sun is not shining. The popularity of electric cars will drive demand for charging stations at multifamily properties. Electric scooters and electric-motor-assisted bicycles will also require charging outlets to be available. Providing charging options should be a chargeable amenity and therefore a source of ancillary revenue for the property.
New money – cryptocurrencies. These may provide alternative rent payment systems.
Artificial Intelligence. AI is seen as an enabler of other technologies such as chatbots, smart building management and facial recognition. Chatbots are already in wide use. At one property, a chatbot was rated the number one customer service rep by users. Facial recognition is also being implemented both to identify customers and to do criminal background checks. Facial recognition systems also can track an individual as he walks around a property.
Gig economy – residents can be both users and providers. Gig workers may not have traditional income documentation. People working from home may want a den or office available.
Social media as customer service. Consumers expect instant response when they post to social media. Operators need to respond to all comments and know when to take their interaction with a resident off of the public forum.
Smart home technology. Communities are being built with connected devices to provide real time remote monitoring. The data collected provides the basis for implementing predictive maintenance. Voice assistants will increasingly be used by residents to interact with the property, as by reserving facilities or scheduling rent payments.
Automation. The presenter played a tape of a Google Assistant calling a salon to schedule a hair cut appointment. It is likely that the woman who answered the phone had no idea that she was speaking with a computer. Listening to it was both wonderful and creepy at the same time. In any case, bots are expected to automate more functions as time goes on. By 2029, 25 to 35 percent of leasing transactions are expected to be done without a leasing agent, and a quarter of maintenance requests are expected to be called in by machines.
Futurecasting apartment tech
A later session took a look at apartment tech that may be implemented in the next few years. While the shorter time horizon pared the list of technologies somewhat, it should come as no surprise that many of the same technologies were discussed. Technologies that were highlighted in this session were artificial intelligence/business intelligence (AI/BI), chatbots and smart home features.
AI/BI is expected to impact all areas of the multifamily housing business from influencing what projects get built with which features, to improving operational efficiencies, to enabling predictive maintenance.
Chatbots are expected to off-load some of the more tedious functions from apartment staff. These include providing routine information to potential residents who call into the site, to taking maintenance requests from current residents. Chatbots are expected to free up staff to focus on providing the best possible experience to residents.
Smart home technologies, including smart locks, lights and thermostats, will increasingly be considered features that residents expect you to provide. Multifamily operators will have to develop policies regarding residents bringing their own devices onto the property. Keeping responsibility for integrating these devices with residents is key.
To support all of this new apartment tech, good internet connections are required. Focusing on your communications infrastructure is one of the best things that you can do to future-proof your property.
With great power comes great responsibility
A concern raised in this session involved the privacy issues raised by smart apartment tech. Specifically, the California Consumer Protection Act (CCPA) was brought up both for its requirements on data protection and also for its requirements that businesses holding data on a consumer be able to purge that data from their system if requested to do so by the consumer. Similar requirements are expected to soon be put in place across the country.
If you missed the conference, the NAA sells a product called Rewind, which includes videos of most of the education sessions. It is available here.
A primary focus of the 2018 NMHC Spring Board of Directors Meeting was the impact emerging technologies like automation, artificial intelligence and decentralized ledger systems (blockchain) will have on the multifamily industry over the coming years.
Donald Davidoff, President of D2 Demand Solutions moderated a session focusing on AI with Wayblazer’s CEO Noreen Henry and IBM Watson’s Neil Sahota. Davidoff has been exploring the potential roles that AI could play in the apartment sector and noted that he sees a number of opportunities, including in marketing, hiring, service requests, smart home controls, pricing valuations, concierge tour guides, chat bots, call coaching and security.
When considering how to most effectively deploy new technologies, Wayblazer’s Henry recommended that apartment owners and managers “start with specific, concrete areas where it (AI) can have a significant impact. These areas need to those that have good data that you can use to train AI such as maintenance requests and calls. IBM’s Sahota agreed with the “start small” approach, noting that adopters of AI shouldn’t underestimate the need for training. Owners and managers will need to teach machines the basics and for that companies will need the subject matter experts to educate them.
The session concluded with Davidoff asking the ever-present question when it comes to AI automation – what will happen to today’s jobs? Sahota noted that “the jobs of tomorrow are going to require all new skill sets. The goal of AI and robotics is to take more of a role in administrative tasks and free up individuals for critical thinking. AI will upend industries and we, as a society, need to start grappling with the consequences that entails.”
In addition to AI, another session delved into what Blockchain is and why it is relevant to the multifamily industry. The panel was moderated by Stephanie Furhman of Greystar. Industry experts, James Conrad Johnson of Oaken Innovations, Gerald Reihsen III of Reihsen & Associates and Kyle Wood of Perkins Cole were the panel speakers.
The discussion began with defining Blockchain. Blockchain is a digital record keeper that publicly records transactions in a block and links to similar blocks of transactions chronologically – hence creating a chain. The panel noted a recent Forbes article, which explained that industries that use a lot of paper for record keeping would be affected the most initially. Because the multifamily industry is one of these industries (because of leasing, real estate transactions, etc.), it could be greatly impacted.
The panel also discussed various ramifications of implementing this technology – one of them being issues of privacy and security. Reihsen pointed out that the data stored with Blockchain can be encrypted and there are various applications that can be used with it to keep that data private and secure. The panel elaborated on this by explaining that Blockchains are generally permissioned and private. They prioritize identity over anonymity, selective endorsement over proof of work and assets over cryptocurrency.
To close, the panel illustrated a scenario in which Blockchain could be used in the multifamily industry. Blockchain could assist during the leasing process to help to generate a credit score for potential residents. “Although [multifamily] residents may not know it, Blockchain will change user experience,” Johnson explained. They also listed utilities, property acquisition and MLS as other potential multifamily areas that could be affected.
Real estate tech investment has gotten serious. Venture capital invested in the space tripled from 2016 to 2017, buoyed by major investments in co-working giant WeWork and brokerage Compass. Excluding those mega deals, real estate tech firms raised around $7.7 billion last year. This compares to less than $500 million just a few years ago.
During the 2018 NMHC Annual Meeting, a panel discussion brought three real estate tech investors together to discuss where the money was going in commercial real estate and how it might affect the multifamily industry. The discussion, moderated by Randall Jenson, CFO of Berkadia, included participants Clelia Warburg Peters, co-founder and partner at MetaProp; JacobMienert, analyst with Navitas Capital; and John Helm, managing director at RETV Management.
Panelists discussed the growth of investment in the sector. Noting that start-ups had already pillaged most every other tech investment category, RETV’s Helm said investors saw the real estate sector as the “last frontier in venture investing.”
Moreover, despite the significant investment growth, panelist said the market was far from tapped out, noting that in 2016 there was roughly $70 billion in venture capital floating around and yet just $2.5 billion found its way into real estate tech. “We’re still relatively under invested,” said Helm.
“The broader venture capital community has discovered real estate tech,” added Warburg Peters, “But the smartest money is coming from the people sitting at the intersection of new tech and legacy real estate know-how.”
To that end, the group noted a lot of interest in trying to leverage artificial intelligence (AI) and predictive analytics to improve efficiency and transparency in business decision-making. More specifically, the group identified six areas of focus for real estate tech investors and providers.
Leasing. Everyone loves the idea of AI-powered chat bots, around-the-clock digital rental agents that can help start a customer relationship by answering simple questions and providing common information. But beyond that, real estate tech investors are looking more closely at companies that use web-based software to essentially scrape social media outlets for data that can pre-qualify prospects.
Helm said such digital solutions help accelerate the sales cycle by pre-populating pertinent information, reducing the need for manual data entry. Moreover, by automating the process based on a set of universal pre-qualifying guidelines, real estate companies may be able to reduce Fair Housing-related risk. “It’s better because you can put in decision rules and have a safer system,” he said.
Warburg Peters added that investors are also seeing opportunities in short-term rental platforms like Airbnb or Home Away. She noted the emergence companies like Flip, a subletting platform, in creating a more liquidity marketplace for leases. “But that’s the Wild Wild West,” she said. “It’s still unregulated. But a lot of younger people aren’t interested in making even a one-year commitment.”
Investment analysis. Similarly, investors are very interested in companies that are working to harness data in the public domain-everything from geospatial data to consumer data to zoning regs and beyond-to help identify, evaluate and close potential real estate deals faster.
Warburg Peters said that investors’ interest in these solutions “is very focused on retail right now.” Many are looking for solutions that can essentially predict the value of a retail site as well as provide critical insights on everything from identifying the right retail client and optimizing the site for retail down to determining which corner you should be on.
However, she said she was also interested in companies like Envelope, which “focused more on the enormous regulatory burden that is borne particularly in urban environments.” This could include zoning restrictions, subsidized housing requirements, air rights and more. “What used to take months and millions of dollars in lawyer fees can be done in hours or a few days,” she explained.
Construction. For Navitas Capital’s Mienert, the construction space is an area ripe for tech disruption and that’s where his company has focused a lot of its dollars. The company invested in Katerra, a tech company that aims to drive efficiencies through the design, development and construction process to drastically reduce the time it takes to bring apartments to market.
“This is a really unique company that is changing multifamily,” said Mienert.
While there’s been some controversy around how solid the company’s reported $3 billion pipeline is, the panel agreed that there were opportunities to better leverage technology in the construction space. Panelization and pre-fab construction and more efficient supply chain managements are areas in need of tech investments, but panelists also noted how tech advances are fueling growth in arbitrage companies-Why Hotel being an example-that can help stabilize properties faster, reducing financing risk and carrying costs.
Amenitization. Real estate tech investors are also intrigued by companies that use technology to enhance the resident living experience, be it through a network of service providers or crowd sourcing for insights into the most desired amenity packages. Top picks include companies like Hello Alfred that allow residents to digitally outsource household chores. “I also really like tech companies that are focused on bringing activities to unused space in a building,” added Warburg Peters.
Some are making the case that short-term rentals could be considered an amenity, both as on-site hotel space for visiting guests and as income-producing amenity for residents. Helm noted that there are still investor concerns about how these companies can perform over the course of a full real estate cycle.
“The regulatory environment is still very scary,” he added. “There are a number of municipalities like Berlin, where they just kicked Airbnb out of the city.” However, he also noted that many of these companies have already evolved, allowing property owners to set limits and have more control over the process.
Smart homes. Without a doubt, real estate tech investors are seeing huge potential in the smart home space. However, it’s not just about satisfying young millennials need for more consumer technology. Investors also are interested in smart home operating systems that can deliver value to the property owners, be it through additional revenue, cost savings, operational efficiencies or transparency.
For Mienert, “it’s really about finding centralized solutions that are already pre-installed,” he said. That’s why he’s looking at companies like Iotas, which provide a turnkey suite of networked smart home products that provide data and learning to the property owner on the back end. He provided an example of a Class B property in Texas where the company was able to boost rents $45 a month by installing smart thermostats, locks and Alexa in the units. “We were able to get the integration of all the functionalities without having to install anything,” he said.
Brokerage businesses. With no real automated approach to automated valuations, the panelists saw a big opportunity for real estate technology in the businesses operating under brokerage models, with the appraisal, insurance and mortgage industries being obvious starting places. All also saw the emergence of Blockchain technology, which offers a digitized, decentralized public ledger of transactions, as potentially revolutionary in the so-called “PropTech” and “FinTech” spaces.
Several said that they had made investments in online real estate insurance and appraisal companies, as these areas of the finance and transaction market have largely been untouched by tech advancement. “CBRE probably has a couple hundred appraisers and like five tech people,” noted one panelists.
The idea is that technology can help automate some of the more vanilla-flavored transactions, whether they be small or simple executions; the end results would be speedier and more consistent results. “High complexity deals will need human intervention,” explained Warburg Peters, “But those folks still need a strong tech background.”