There’s a two-bedroom apartment available in St. Cloud, Minn. Its fresh paint and standard appliances aren’t high-tech. Still, its $644 asking rent has been set with help from racks of computer servers in Alpharetta, Ga., using the Rainmaker Group’s LRO revenue management system. Flash to Santa Barbara, Calif., where servers host the Yardi Voyager property management software that the community—Wyndemere Apartments—runs on. Zoom to Provo, Utah, where machines chug away at Property Solutions, hosting Wyndemere’s ResidentPortal website. That’s the application that the two-bedroom unit’s future residents will be able to use to pay rent online, submit maintenance requests, or find out about events in their community.
At any time of the day or night, prospective residents can visit Wyndemere’s website and fill out an application. Once they do, Property Solutions kicks the data to Chicago-based Screening Reports to perform a background check. The prospect’s contact information will simultaneously flow back into Yardi, to be followed up on by one of Wyndemere’s leasing professionals to fill that empty unit in St. Cloud.
A New Normal
Wyndemere’s far-flung electronic leasing circuitry is no longer rare in a multifamily industry that has thrust itself assertively out of its defensive stance and is looking to employ its technological and human capital to drive measurable value, capture real efficiencies, and price properties disproportionately against those gains. With the advent of cloud computing, property managers today routinely access software and data stored on widely dispersed computers while simultaneously transmitting information about their properties and residents to be analyzed by other systems that, in turn, help property managers make decisions on a daily, even hourly, basis.
Even as the multifamily software duopoly of Yardi Systems and Carrollton, Texas–based RealPage is alive and thriving among apartment operators, the distributed-computing model means that a raft of smaller, start-up technology companies can offer bite-sized—and, often, tailored—solutions that plug into the back end of a community’s core property management software to give property managers an increasing array of options with which to run their portfolios. Those firms include more entrenched movers like the Rainmaker Group, whose LRO revenue management software has seen widespread adoption throughout the industry in recent years, to the second comings of once-and-future movers such as Cleveland-based MRI, with its recent acquisition of real-time availability tracker VaultWare, as well as newer names, such as Goleta, Calif.–based AppFolio, which offers an alternate, core property management solution to give operators more than just an either–or choice.
The Sum of Its Parts
This bifurcation of multifamily technology, even as Yardi integrates with solutions across the apartment firmament and RealPage continues to consolidate solutions under its umbrella, is increasingly allowing operators to run their properties with made-to-order solutions, often at reduced costs, to get exactly what they want from their software—nearly constantly leased apartments that are commanding higher rents.
“It’s a great system,” says Becky Yonts, vice president of Minneapolis-based Timberland Partners, which manages 7,000 apartments from Nebraska to Texas, including those at Wyndemere, of her company’s diffuse, yet well-integrated, solutions stack. “It’s exciting to have so many different products [finally] integrate with one another.”
It hasn’t always been that way. You don’t have to travel too far back in time to be reminded of the headaches that plagued the apartment sector when it came to technology. Too often, operators running one property management system would hit vexing snags in trying to make it talk to another solution, such as a resident screening system or online payments product. Others sometimes felt caught up in competitive skirmishes between software vendors that couldn’t—or wouldn’t—make their systems play well together.
Indeed, the Multifamily Information and Transactions Standards (MITS) initiative, spearheaded by the National Multi Housing Council (NMHC) in the early and mid-2000s, helped lead to broader integration of products throughout the industry. Now, making sure a specific solution integrates with others is often a key criterion for new products. And just as Yardi and RealPage have helped set those standards, they have spurred a universe of ancillary systems that feed off of them.
Let’s All Get Along
“We believe in open architecture,” says RealPage president Dirk Wakeham, pointing to leading software solutions that compete with its own products, including the LRO system, which sells against RealPage’s YieldStar revenue management software. “We have thousands of integration partners.” For the multifamily industry, those words signal a future that will continue to integrate an ever widening array of applications.
“RealPage and Yardi are kind of the Coke and Pepsi of property management,” says David Cardwell, vice president of capital markets and technology for the NMHC, who notes that integration has long been crucial in the industry. He points to Yardi’s ability to integrate with tenant screening systems from 10 different software firms as long as a decade ago.
That focus on integration has allowed other best-of-breed solutions to plug into property management systems, sometimes with a dramatic effect on the bottom line. Just ask Bryan Pierce, revenue manager for Vancouver, Wash.–based Holland Residential, who uses the LRO system to set rents for his 20,000-unit portfolio while core functions are handled by his Yardi property management software.
“Nightly there is a data feed between the two,” says Pierce, noting that LRO needs to draw on information such as the number of leases expiring and current occupancy rates to help set price points. The result has been higher rents. “We are making significantly more revenue,” says Pierce. That’s true even though Holland Residential now has more vacant apartments. Since Holland began its revenue management program in 2010, the occupancy rate for the firm’s portfolio has fallen from around 95 percent to 94 percent, a decrease representing more than 100 empty units. But by allowing LRO to analyze information fed to it from Yardi and set rents based on a wide range of parameters, rents grew by about 5 percent last year across Holland’s portfolio, which more than made up for the increased vacancy.
That extra revenue, in turn, could add up to millions as Holland considers selling properties this year. Since asset value is based largely on a property’s capitalization rate, which is derived from net operating income, a small bump in rent can mean big money at disposition. For example, at a 5 percent cap rate, an extra $50,000 in annual revenue would add $1 million to a property’s sale price.
“We’ve been really happy with the results,” Pierce says.
Buy It to Build It
For clients of RealPage, the company’s strategy of acquiring best-of-breed point solutions, and then integrating them with its core OneSite property management solution, means that specific systems customized for specialized market segments now have the backing of RealPage’s industrywide stack. The company’s consistent appetite for acquisitions—often of smaller, innovative companies that have developed best-of-breed solutions—has produced tailored solutions for everything from military to senior housing, and conventional to affordable programs.
For example, Houston-based Creative Property Management uses OneSite Leasing & Rents Affordable HUD as its affordable housing compliance software. Creative’s portfolio of about 5,200 apartments in the suburbs of Houston is roughly split between market-rate units and government-subsidized affordable housing. To keep the funding flowing to these affordable housing units, it’s very important for Creative to keep up with the labyrinthine rules governing compliance. So it’s critical that the affordable housing compliance functions and the core property management functions work smoothly.
“They do link together,” says Maria Garcia, account manager for Creative. She notes that the products even handle updates without losing information and steadily exchange data on financials, rent rolls, and delinquencies. “Updates have never been a problem—they’re on top of it,” she says.
One of Many
Having various options among several vendors can also mean saving on the software itself, since each wants to remain competitive. In interviews, managers said it is easier to negotiate when they have multiple vendors competing over their business—for example, multiple service providers that help residents pay their bills online.
Of course, being able to pick and choose your software solutions to tailor them to your business—and have them actually work—has always been the holy grail of IT integration. Even though distributed computing now makes that possibility more realistic, companies still need to be aware of the unique challenges that come with it.
Having that degree of customization puts responsibility back on the user. “Each user’s instance of that software is different than every other,” says Greg Lozinak, executive vice president and chief operating officer for Chicago-based Waterton Residential, which manages 17,000 apartments nationally.
Waterton augments its core Yardi property management system with several point solutions, including Conservice Utility Management & Billing, ResidentPortal from Property Solutions, and LexisNexis for resident verification. “You as the user have to test upgrades for your particular platform,” says Lozinak.
At Creative, Garcia says there’s a price to pay for running its tenant screening system, created by CoreLogic SafeRent, based in Rockville, Md., alongside its OneSite property management software from RealPage. Because the two systems aren’t tightly integrated, when it’s time to run a credit check on a prospective resident, the managers at Creative have to re-enter the information by hand. “We just retype,” says Garcia.
Filling the Gap
Many technology companies are trying to bridge those kinds of digital divides through partnerships. For instance, Costa Mesa, Calif.–based screening provider Experian RentBureau and Goleta, Calif.–based AppFolio, a relative newcomer to the core property management solution space, recently announced a partnership that will provide AppFolio users with rental history data from the Experian RentBureau database. “We are always looking to expand who we partner with,” says Experian RentBureau managing director and vice president Brannan Johnston. “We are always trying to grow our data.”
Yet, even when systems are able to pull off an effective electronic handshake, integration doesn’t always work perfectly. “When we update, certain things break,” says Holland Residential’s Pierce, referring to his Yardi property management software and his other, integrated solutions. But he also notes that Holland has taken the onus upon itself to make sure the system doesn’t stay broken for long. “Since we self-host, we have an [internal] Yardi support division. Internally, we take care of things pretty quickly.” While Yardi, as Cardwell points out, has long focused on integrating with other, third-party solutions, RealPage has effectively been walking the same path, through acquisitions of an ever-expanding list of companies, including more recent purchases such as Propertyware, Lead2Lease, Level One, and Compliance Depot. As part of the RealPage family, users say those solutions now integrate smoothly with RealPage. And despite RealPage’s ongoing differences with its main competitor, the applications also still seem to work well with Yardi.
“The vendors say that we’re going to have autonomy, support, and a lot of latitude,” says Pierce, who depends every day on Lead2Lease and Compliance Depot to integrate with his Yardi property management software.
For Steve Everett, director of marketing for Chanhassen, Minn.–based Thies & Talle Management, a key RealPage acquisition last year signaled the end of an integration headache. Everett uses RealPage’s OneSite property management system to run his portfolio of 5,000 apartments, and he says the system serves his needs well. But the company also depends on Level One, a call center solution that forwards prospects’ calls to a professional leasing agent off site after the third ring.
Until RealPage bought Level One in the summer of 2011, the two systems weren’t closely tied together, and, similar to Garcia’s situation at Creative, Thies & Talle had to manually transfer information between them. “We had binders at the properties filled with Level One guests,” says Everett. He says RealPage offered to bridge the two systems if Thies & Talle would pay an integration fee of 6 cents per apartment, but he didn’t want to take that cost on. “It’s a pretty small amount, but it adds up,” says Everett. As soon as the acquisition went through, though, the information flowed freely.
More With Less
With Web-based systems expanding the universe of multifamily-oriented solutions, other operators are managing to piece together their own, customized packages. For instance, several managers interviewed for this story do without a full-blown resident portal system, instead using a variety of providers, such as eSite Residential, owned by Tampa, Fla.–based AMSI Property Management, to handle online payments, and Irvine, Calif.–based NWP to tackle utility billing and management.
To forward up-to-the-minute rents to online advertisers such as ForRent.com, several managers, including Thies & Talle, rely on VaultWare, now owned by MRI Software. Holland Residential uses a similar service, called EliteRenting.com, for its Craigslist ads. Then, there are less obvious solutions that are starting to pop up. Philadelphia-based Dranoff Properties, which manages approximately 1,000 units, uses BuildingLink, a concierge system that tracks packages, residents, and work orders. “We tried it at our 777 South Broad property and had an amazing response,” says Melissa Wyatt, director of marketing for Dranoff.
It all translates into a continually growing selection of multifamily solutions to fit every size, and flavor, of portfolio. And as the cloud continues to expand throughout computing and engulfs the apartment world, there will likely only be more to come. For Megan Hill, that evolutionary process only signals tighter integration, and greater point offerings, in the future. As director of marketing for Portland, Ore.–based Guardian Management, she uses Level One and Yardi to help manage Guardian’s 10,000-unit portfolio. “They all seem to be playing nice with each other—especially with their add-on features,” says Hill.
Bendix Anderson is a freelance writer based in Brooklyn, N.Y.