Apartment companies capitalize on the Internet and other high-tech tools to attract residents, maintain properties and cut costs.
Talk to professionals in the apartment industry, and they will probably tell you that the apartment business runs on relationships — face-to-face interaction. These days, however, apartment owners also are finding time for technology. Once left behind in the high-tech dust, the industry is taking advantage of the Internet and computer software to manage, market and maintain apartment communities.
“The apartment business is a paperwork-intensive and transaction-based industry,” said Steve Winn, chairman of Carrolton, Texas-based RealPage, a leading provider of software, products and services to the multifamily industry. “The goal of our new Web-based suite of applications, OneSite, is to automate workflow processes typically faced by property managers, and reduce or eliminate the amount of costly paperwork and redundant data entry generated in the leasing process.”
OneSite features nine distinct product centers, with each module dedicated to specific business procedures. All of these applications are Web-based programs requiring only a browser and Internet connection to access the software.
OneSite uses a centralized database and a data-management engine to streamline and manage all of the information integral to the operation of the property. The company also is developing OneSite Learning to train, test and certify users.
Inefficiencies in portfolio management add to apartment firms' direct operating costs. To cut those expenses, Alexandria, Va.-based Realeum recently unveiled a new Web-based property management and asset optimization system.
“There is tremendous manpower and paper wasted during a simple leasing process,” said George Fandos, chief customer officer of Realeum. “On average, from beginning to end, the leasing process consists of four to eight forms.”
Fandos explained that with average lease turnover rates of up to 65%, lease transaction costs, including transactional vacancy, exceed $12 billion on an annual basis.
“Adding to these staggering costs is the high turnover in the industry among property managers,” Fandos said. He added that each time a new property manager is hired, the employee must be trained on a new system.
“The problem is that there are no uniform standard leasing and property management tools,” he said. “We're a Web-based transactional management system designed to offer an all-in-one, integrated solution and business-intelligence tool that is easy to use and less costly to deploy than traditional networks and software.”
Realeum was founded by a consortium of apartment owners: Alexandria, Va.-based AvalonBay; Richmond, Va.-based United Dominion Realty; and Atlanta-based Post Properties.
Realeum Foundation, which is the core product of the group, is designed to simplify leasing and resident relationship functions, special-service management, billing procedures and accounts receivable.
“We're presently in the pilot phase with AvalonBay communities,” Fandos said. “We plan to roll out our flagship product, Foundation, to the portfolios of AvalonBay, United Dominion and Post [this month].”
Mutlifamily properties also are transaction-intensive. The 36 million U.S. renter households account for more than $300 billion in annual rent payments, with more than 15 million lease transactions each year.
The number and diversity of transactions involved explain why so many of the leading multifamily property management applications are built around core accounting programs. Software developers such as RealPage; Santa Barbara, Calif.-based Yardi Systems; Houston-based AMSI; Cleveland-based MRI; and Beaverton, Ore.-based Timberline began as rent-roll accounting packages and have evolved into suites of property management applications that automate many of the properties' key functions and workflow processes.
Some of these developers, such as RealPage and newcomer Realeum, have evolved beyond the accounting core to become more task and workflow-oriented. The newer applications for property management contain more tools for analysis, forecasting, managing and reporting. Providing executive information systems that can extract key data and present them in formats that are easily read and understood has become an essential component in property management software.
Advantages to Web-based applications such as OneSite, Realeum Foundation and Yardi Voyager include ease of use, lower cost of deployment, reduced training costs, greater accessibility from remote locations and scalability — the ability to grow with the changing needs of property owners and managers.
Internet marketing
Property management isn't the only sector of the apartment industry benefiting from the Internet. Apartment companies are using the Internet to market properties. Company sites, as well as Internet listing services such as Rent.Net and Rent Grow, have exploded in the past five years. However, many companies are failing to capitalize on the leads generated by Internet listings.
A number of companies do not have the software or infrastructure to track, capture and manage their e-mail and responses to online listings. In many cases, property managers on site fail to review e-mail or respond in a timely manner. As a remedy, both Realeum and RealPage have built-in call center, marketing and reminder components to their software, which capture leads and guide property professionals to act on them quickly.
One Internet listing, service, Santa Monica, Calif.-based Viva, employs a reverse listing system. Viva allows renters to put their pertinent data online and receive offers from properties. The system then facilitates a digital dialogue between renters and owners, enabling both parties to interact and negotiate lease transactions online. It simplifies the search process for renters while providing owners with direct, one-to-one access to “ready” renters matched to properties based on detailed housing needs and preferences.
Viva recently received an infusion of capital when seven of the apartment industry's largest companies — AvalonBay, Post Properties, United Dominion Realty, Denver-based Archstone Communities, Houston-based Camden Property Trust, Chicago-based Equity Residential Properties Trust and Atlanta-based Gables Residential — invested $17.3 million in equity in Viva.
The consortium's investment will enable Viva to increase the number of registered rental units from approximately 800,000 to more than 1.2 million. “When major apartment companies aggressively participate in the Viva exchange, our renter customers are the ultimate beneficiaries,” said Scott Ingraham, chairman and CEO of Viva. “This transaction represents a major step for the apartment industry because the nation's largest aggregate supplier of apartments has now established a formal marketing channel with the nation's first online leasing exchange.”
Now serving 15 major metropolitan markets in Arizona, Nevada, Texas, Florida and Georgia, Viva has set plans in motion to expand nationally this year.
“The consortium represents more than 530,000 apartment units and in excess of 60% of the apartment REIT industry's total equity market capitalization,” said Douglas Crocker II, Equity Residential's president and CEO. “By joining together, we're able to make significant investments in innovative companies like Viva, companies we believe will revolutionize the apartment industry.”
Essentially, Viva provides a unique pay-for-performance marketing channel that allows owners and managers to register their properties, receive requests from matching renters and make customized offers to renters at no cost to the potential tenants.
In-house technology
Palo Alto, Calif.-based Marcus & Millichap developed Mnet, its own Web-based information system, to share listings and key data with its 250 multifamily investment agents located in 34 regional offices throughout the nation.
“Mnet is our own national, Web-based information tool developed in-house for the use of our brokerage staff,” said Rick Peltz, director of information services for Marcus & Millichap. “Once a broker enters a listing and it is approved, that information is shared over our Intranet. Listing proposals that have been approved are e-mailed to all 600 agents nationwide.”
About three years ago, the company moved from a client-server version of the application to a Web-based one to share listings instantly. Peltz said the Web-based system is easier for brokers to learn.
“The Web-based system is more efficient, reduces the amount of time it takes to enter data and reduces entry of redundant data,” Peltz said. “It used to take several days to enter and update a database, and now it takes hours. Because the system is tied to a browser, the database can be accessed from multiple platforms whether it be Mac, Sun, Unix or IBM. All you need is a browser.”
The system is carefully protected with firewalls and security measures, ensuring that only authorized users access it. Peltz said the next move will be to provide the listing information directly to smart phones, personal data assistants (PDAs) and similar devices. This move will allow brokers to access listings, calendar functions, contacts, appointments and other information via Internet-enabled phones, eliminating the need for a notebook or Palm device.
“We even provide our agents with their own Web sites to promote their market specialties,” Peltz said.
Marcus & Millichap's National Multi Housing Group's sales have exceeded $10 billion over the past five years. The company uses cutting-edge technology to train employees and provide them with advanced tools for research, information gathering, communication and marketing.
Specialized tools
In addition to the array of property and asset-management tools available to apartment firms, there are a number of highly specialized applications designed to improve and increase productivity.
Tenant screening is one function that has evolved due to technological advances. High resident turnover, liability resulting from Fair Housing violations, tenant fraud and bankruptcy fraud have had a critical impact on the bottom line of apartment firms.
Previously used as a credit-reporting tool, tenant screening has now become a risk-assessment and risk-management application. Due to advances in the automation of tenant-screening tasks, improved communications capabilities and more accurate databases, new tenant screening software has altered the way property managers screen and evaluate prospective residents. A task that once took several days and sometimes weeks, now can be completed online in 30 seconds.
In a little more than two years, Denver-based SafeRent has emerged as a leader in tenant-screening services. It is used by more than half of the National Multi Housing Council Top 50 property management companies and 70% of the NMHC Top 10 companies.
SafeRent uses sophisticated statistical scoring models designed to improve the accuracy of its screening recommendations. “We offer a statistical credit-scoring model based on actual renter histories,” said Linda Bush, CEO of SafeRent. “Through the use of statistics, we produce screening recommendations that are 16% to 20% more accurate than traditional methods that rely on subjective human interpretation.”
In March, SafeRent unveiled the latest enhancements to its online applicant-screening and criminal-search services that include more features and a new interface designed to be even easier to use and more intuitive.
“Our enhanced services give unprecedented insight into valuable performance indicators such as occupancy, bad debt levels and closing ratios,” Bush said. “Property owners and managers may contribute data, so they can better manage their risks and increased net operating income.”
One SafeRent client that manages Class-B and Class-C properties was paying a company $11 per applicant to conduct rental-verification calls. The multifamily owner discovered that 50% of the time, prospective tenants' former properties failed to respond and that the calls were responsible for only 1% of declined applications. The owner has switched to SafeRent's services as a more accurate and cost-effective method to screen applicants for the 30,000 units under management.
Enhanced reporting features provide executive management a more thorough view into renter profiles that help gauge the success of a property or an entire company. Monitoring move-in and move-out statistics and comparing front-end with back-end lease outcomes improves the accuracy of the credit-scoring model and reduces risks.
The new version of SafeRent's applicant screening service includes management reports, transaction reports, eviction data, lease outcomes and average-stay data. It also offers applicant demographic reports that display applicant income distribution, income-to-rent ratios, applicant ages and locations of previous residences. A “Retrieve Transaction” feature enables SafeRent customers to recall and modify previously run transactions so they can save time and avoid redundant tasks.
The SafeRent applicant screening service, which is being integrated with Realeum, AMSI and other systems, can be used as a stand-alone service or integrated with third-party software.
RealPage, Yardi and others offer their own applicant screening modules. This is all proof that the industry is moving toward greater use of online screening applications due to their speed, accuracy and access to well-developed credit, criminal and legal databases that enable property managers to make better decisions on prospective residents.
High-tech maintenance
Maintenance and facilities-management programs also are receiving a boost from technology. These new solutions automate facilities management functions, and enable inspections and services to be delivered to mobile communications devices.
RealPage recently acquired Channel Tech, a major supplier of mobile-computing solutions to the multifamily and construction industries. Channel Tech specializes in developing software applications for PDAs, Pocket PCs, wireless pagers and cell phones. These applications enable inspections and work orders to be processed quickly and accurately.
“The Internet is a proven strategy for retaining residents and infusing the bottom line with an attractive revenue source.”
Dave Stehlin OnePath Networks
“Channel Tech's technology will be an integral part of the OneSite Facilities product center,” said Winn of RealPage. “With it, we will be able to offer our customers faster, more complete and more accurate inspections during the make-ready process.” It also will help the company track inventory, submit orders to suppliers and reduce work-order paperwork, he said.
Redwood City, Calif.-based Corrigo offers innovative products serving the maintenance and customer service arena through its Web, wireless and telephony applications that connect residents, maintenance technicians, vendors and property managers. Corrigo offers ResidentDirect and TenantDirect to meet maintenance and customer-service needs. Corrigo's solutions have been adopted by San Francisco-based BRE Properties, which is implementing the programs throughout its portfolio.
According to Lee Carlson, COO of BRE Properties, Corrigo's systems help maintenance crews respond quickly to service requests and reduce the paperwork involved in the process.
Technology as an amenity
With the explosive growth of the Internet and the increase in telecommuters and self-employed workers, apartment properties have seen high-speed Internet access move up to the top of the list as the most desired amenity sought by tenants.
At BRE Properties, the rollout of high-speed Internet access was so successful that the company spun off a separate division under the brand name VelocityHSI.
The market for high-speed Internet services is highly competitive, with companies such as CAIS Internet, BroadbandNow, and regional and national phone companies all vying to serve the multifamily market.
Apartment companies are installing high-speed Internet lines into new buildings, while existing properties are either putting in new wiring or using technologies such as DSL or Tut Systems, which enable standard copper phone cables to carry the frequencies necessary for high-speed access.
Princeton, N.J.-based OnePath Networks has developed a product called iPath, a converged broadband access platform that can deliver data, video and voice services over a single coax or fiber connection. With iPath, users do not need a cable or DSL modem to access the Internet, and access speed is faster than many other methods.
“The iPath access platform delivers 10 megabit-per-second data, digital broadcast satellite video, and digital and analog cable TV to apartment residents over a single cable,” said Dave Stehlin, CEO of OnePath.
OnePath works directly with property owners or through service providers such as Verizon, BroadBandNow or SBC. The advantage to this technology is that it eliminates the need to rewire existing properties and is flexible enough to handle present and future bandwidth demands.
“Access to high-speed broadband connectivity is in great demand today, and property owners are using the capability to differentiate themselves from the competition and attract new residents,” Stehlin said.
“It is also a proven strategy for retaining residents and infusing the bottom line with an attractive revenue source.”
In nearly every sector of operations and management, apartment professionals are leveraging technology to reduce operating costs, increase efficiency and boost revenues. The Internet and other cutting-edge technology help the multifamily industry analyze property performance, manage risks, attract residents, screen applicants and order supplies. In the future, the list of benefits will no doubt grow longer.
Barry Kipnis is a Warminster, Pa.-based writer.