Property Technology Is Not Going Away
Give Your Residents the Amenity They Are Asking For
By Marshall Friday
Multifamily investors across the country are asking the same questions regarding how to gain and retain residents. The coronavirus pandemic, for all of its struggles, actually brought about rapid changes regarding technology adoption in the multifamily space. A sector that is usually a laggard with change was ready for a makeover. Enter property technology, or as it is more commonly referred to, “proptech.”
Proptech means different things to different people, but essentially, it is the usage of technology and software to assist in today’s real estate needs. For many, the shift to self-guided tours was self-evident. There was a growing need, out of safety and concern, to allow prospective residents to tour a property with limited interaction with leasing professionals.
The simplest way to do this was to repurpose smart home technology that had already begun to take root in the apartment industry. Smart locks became ubiquitous with self-guided tours and the ability to control lighting and thermostats alongside the lock was almost a no-brainer.
Before the need was present, several operators had already begun playing in the space. These trendsetters were looking for a way to differentiate themselves from the other properties in their footprints. Early adopters like BH Management and HHHunt made strides toward full smart home integration into their portfolios. Opposite to what one might think, these solutions were not just being implemented in new construction of A class properties. The solution worked very well in retrofit situations for B and even C class properties.
Adoption among residents was universal, and several comments from these management companies after implementation indicated that residents really enjoyed their new “fancy” apartment amenities.
Implementing Property Technology
Let’s take a step back and look at what implementation looks like. When you take the leap into smart home technology, several questions arise:
> “How are we supposed to install this when our occupancy is above 95% without disrupting residents?”
> “How will my staff adjust to the changes?”
> “What happens if my staff is not ‘tech savvy’ and does not understand how to use the new bells and whistles?”
> “Can I afford this, and more importantly, can I make money with this?”
Most proptech companies thought about these questions; the retrofit model is actually simpler than one might think. In an average garden style community, a well-oiled installation team should be able to knock out 50-60 units a day. A 300-unit property can go smart within a week. Let’s look at each of the questions above and take a deeper dive.
Installing smart home technology without resident disruption is a key focus for all suppliers in the space. It is important to go over the installation timeframe and expectations with the on-site staff throughout the weeks leading up to the implementation. When the onsite staff is trained, they can then begin handing out “flag letters” to residents informing them that a change is coming.
Having a partner who can help answer some of the early questions is crucial. Several residents will wonder, “how will I get into my unit if you are getting rid of keys?” With today’s smart lock technology, there are numerous ways to get into your unit. You can utilize a pin pad on the smart lock itself or tap a button on your phone to unlock the door. And with smart thermostats, no more getting up in the middle of the night to change the temperature; just say, “Alexa, drop the thermostat to 70 degrees.”
Once the residents use the technology, there are usually no further questions. It is exactly what they have been waiting for!
When it comes to staff, there will be several long-time employees who have developed a routine with how they handle issues.
Take maintenance, for example. Maintenance staff today receives a notification from a PMS software (like Yardi Voyager or RealPage OneSite) that an AC unit is malfunctioning. They head to the office and check out a key for the unit that called in the request. After they get to the unit, they adjust the thermostat to see what happens to the unit. They head down the stairs and to the back of the building to see what is happening with the AC. When something does (or does not) happen, they head back upstairs and adjust the thermostat again. This process repeats until they have uncovered the root cause.
With smart home technology, the maintenance tech will still get the service call pushed from the PMS, but now they get a second push notification from the smart home system. They head straight to the unit (no key needed) and use the temporary code to unlock the door. They can then check the thermostat to see if the issue is there. When they head down to the AC unit itself, they can adjust the thermostat up and down from their phone and service the unit without having to traipse up and down the stairs. When they are done, they do not need to go back to the clubhouse to check-in the key.
What could your staff do with that time savings? How much more efficient would they be?
Implementation Cost and Benefits
Lastly, several operators wonder about the cost of implementation. While there are upfront costs (most providers charge $500-$1200 depending on the level of automation desired), these costs can be allocated to a CapEx budget. There are also software fees with most smart home providers, ranging from $5-$15 per month per unit. Early adopters of smart home technology are universally charging this back to the residents, at a premium! While they are paying $10 to their provider, they are charging the residents (either as a part of rent or as a technology amenity fee) between $45-$55 on average. This is not unexpected either.
NMHC’s recent survey reported that not only are residents asking for smart home technology (between 65-80% of respondents are looking for it), but they also expect it to cost somewhere between $30-$60 a month. Why not give them the amenity they are asking for?
At the end of the day, proptech is not going away. There are roughly 1.5-2 million “smart apartments” out there already, and the adoption curve is gaining momentum. We are nearing the point where operators will need to adopt property technology to keep up with their competition. This amenity is not like the weight room or swimming pool where 10% of the residents use it. This technology is being used by 100% of the residents more than 10 times a day!
The only question that remains should be, “Why wouldn’t I implement this now?”
