It should be easier than ever to run your client's property, given the deluge of Web-based property management software that's come to market in recent years. The problem is, somebody's still got to pay for it, and owners aren't always eager to open their corporate wallets. While a number of executives have recognized the value of Web-based solutions' efficiency and productivity gains, others are hesitant to invest in expensive technology that makes your job easier. After all, they're paying you to do something, right?
Of course they are. But with software firms offering sophisticated multifamily management and accounting packages, and a multitude of niche vendors hawking everything from rent collection tools to applications that help save money while watering the lawn, Web-based software is quickly becoming a necessity to manage properties today.
Unfortunately, in the cost-conscious world of fee-based management, where implementing these solutions can cost anywhere from $1,000 to $5,000 annually per property, owners don't always see it that way. "In some cases, owners look at the software costs and interpret that as part of the management company's overhead," says Brian Galla, director of technology at Dallas-based Lincoln Property Co., which manages more than 100,000 apartments nationwide. "The question that always gets asked is, 'What's the management company getting its fee for?'"
Lost in that question are the savings that an owner can realize at a property smartly managed through technology, along with a subsequent increase in operating income. Showing owners exactly that, though, is one of the biggest hurdles that fee managers face. "There's not a single chief technology officer out there who isn't spending a good bit of their time trying to quantify and evaluate these systems," says David Cardwell, vice president of capital markets and technology at the National Multi Housing Council in Washington, D.C. It's a challenge fee-based managers will need to overcome if they want to remain competitive–and employed–in the dynamic world of multifamily management. The good news is that there are strategies and tactics you can use to persuade reluctant clients to commit to that technology investment.
Show Them the Money
Managers and vendors who have successfully made the high-tech pitch say the key is to present it from the owner's perspective. Instead of focusing on the fact that Web-based solutions will make your job easier (few clients fret that you're working too hard for their money, unfortunately), stress the benefits they'll get from the investment. In other words, you've got to speak their language.
"It's the difference between showing the value that's being created versus the cost that's being incurred," says Ryan Gilbert, chief executive of Oakland, Calif.-based PropertyBridge, which offers Web-based payment and collection solutions for multifamily operators. "You have to focus on presenting it in terms of ROI."
Of course, some solutions are easier to justify on a per-dollar basis than others. "Utility submetering is a no-brainer," says Cardwell. "You can do the math and show the savings on a monthly basis. But when you get down to more subtle applications, such as automated payments or leasing programs, it's much harder to quantify."
Gilbert's sales team, for example, often makes joint sales calls with fee-based clients to show owners how PropertyBridge's payment software cuts costs. "We focus on the numbers more than anything else," Gilbert says. "If you can show them that it takes 20 minutes and costs $5 to $7 for their community manager to process a rent payment manually, versus seconds and pennies in an automated environment, they come to the realization that time is money."
At BH Management Services, which manages more than 30,000 apartments, D. Thomas Figert says many owners are starting to buy into Web-based technology because of those scenarios. "If you can get an investor to conceptualize the idea that you're providing more time for your leasing agents to rent apartments instead of sitting at a computer keyboard, it's not difficult for them to embrace," says Figert, who is director of information technology at the Dallas-based firm.
Executives at Atlanta-based Lane Co., which has upwards of 26,000 apartments under management, have developed module-specific worksheets, in Microsoft Excel format, to show owners each application's benefits. "We've taken every little piece and developed its value-add story," says Dan Haefner, Lane's chief information officer. "We look at tangible and intangible savings, plus any additional revenue, and then apply a cap rate to it."
For instance, Haefner points to online leasing solutions, which are particularly difficult to quantify, since it's hard to prove that a renter who signed up online wouldn't have come to the leasing office anyway. "But if I can get one more lease from using that product that I wouldn't have gotten otherwise, it's worth it," Haefner says. To prove it, he talks in a parlance investors understand: the impact on a property's underlying asset value. Using a theoretical rent of $500 per month, or $6,000 per year, he applies a 50 percent expense load to show how one extra lease from the online channel produces an additional $3,000 in revenue per year.
From there, he works out the cap rate. "We'll use an ultraconservative cap rate of 10 percent, and do the math. That's an additional $30,000 in value at the property, coming from the one lease you wouldn't have gotten if you hadn't used this software," Haefner says. "Compare that to the $2,000 to $4,000 in software investment you're making on an annual basis, and you've got a compelling argument."
Beyond showing owners how Web-based solutions can help garner an increase in the numbers, you can simply show them the numbers themselves. One of the major advantages of Web-based software is its ability to produce reports on everything from up-to-the-minute income statements to analysis of lease-up and denial rates. For owners who spend more time looking at spreadsheets than garden-style walk-ups, that type of extensive reporting can be a huge selling point.
"One of the biggest issues clients have is getting access to their information," says Tim Cook, chief operating officer, Southeast division, for Charleston, S.C.-based Greystar Real Estate Partners, which has 56,000 apartments under management. "They want to be able to get it at 8 o'clock at night or on the weekend, without going through us. These tools give them that access, so it really helps sell the cost of Internet-based technology."
In fact, as technology adoption becomes more widespread in mainstream society, that kind of on-demand access may soon turn into an expectation. If it does, your big sell could turn into a must-provide. "A lot of owners have adopted things like online banking and bill payment in their personal lives," Cook says. "They're starting to have the same expectations of their property management firms."
–Joe Bousquin is a freelance writer in Newcastle, Calif.