Real estate is one of the biggest asset classes in the United States, and its importance to the overall economy and the well-being of Americans is hard to overstate. So, it’s surprising that parts of the dynamic and demanding commercial real estate industry have been slow to adapt to the digital transformation that has swept through and reshaped so many other sectors, changing how companies interact with their clients, and the kind of experience clients expect.
That’s especially true in the multifamily market, where a majority of the nation’s estimated 12 million property owners and operators, many of whom are small family-held businesses, are still operating using manual tools and processes such as Excel and QuickBooks.
While three-quarters of the nation’s mortgage payments have been digitized, digital payments account for less than one-quarter of the nearly $500 billion in rent collected annually by property owners. For smaller multifamily property owners, the processes used to run their businesses, from rent collection and vendor payments to banking and accounting, have historically been fragmented, labor-intensive, hard to use, and anything but efficient. The pandemic and resultant lockdowns, work-from-home shift, and other dislocations exposed the need for more effective proptech solutions and further accelerated the need for digital tools and services.
Driving this realization for many property owners are the pain points that need to be addressed to stay competitive, ensuring the sustainable long-term health of their businesses. These include the need for enhanced operational efficiency, effective succession planning, and a greater focus on the resident experience. Adopting a digital-first mindset provides a real opportunity to solve some of these pain points.
Streamlining Processes and Enhancing Efficiency
The patchwork of systems and tools that most property owners use to manage their operations and aggregate meaningful market data rely heavily on time-consuming processes, creating significant inefficiencies for both the property owner and their residents. The right proptech solutions can automate, simplify, and reduce the time and effort needed to perform key tasks, such as rent payment processing or resident screening while providing more robust data that can further enhance efficiency.
By leveraging technology, property owners can more effectively manage day-to-day operations and gain greater real-time insight into the state of the business. In turn, they are better equipped to focus on the strategic decisions and creative steps needed to grow and scale their business, enhance their customer satisfaction, and maximize profitability.
Succession Planning and Facilitating a Seamless Transition
According to consultants Ernst & Young, around 65% of family business owners are looking to transition out of their roles over the next five years. However, most do not have a formal succession plan in place. That means, for many multifamily property owners still operating with analog processes and systems, they will need to craft a plan to bring a younger, tech-savvy generation into decision-making roles.
As we see this shift to the next generation, they will expect to manage their business from a simple and easy-to-use digital platform. This not only necessitates incorporating proptech management tools to facilitate a smooth transition but is also likely to accelerate digital transformation across the commercial real estate sector.
Shifting The Focus to The Resident
Requirements and expectations of residents seeking leasing opportunities continue to evolve. The resident experience now includes not only traditional considerations like unit size and quality, amenities, and local neighborhood, but how residents interact with the property owners through online platforms.
Residents increasingly expect a seamless and virtual financial relationship with their property owner, including online rent payment options, autopay, and reliable and timely notifications and reminders, all while being reassured that their personal information is safe and secure. The quality of a resident’s experience can be a factor in their decision on whether they move in, stay, or seek out better options. Digital technology provides a way for owners to gain a deeper understanding of what kind of experience residents want while seamlessly connecting all parties involved and generating real-time data to continuously improve the experience.
Whether it’s the push from the need for greater efficiency or the pull of generational change and evolving resident expectations, digitization of the industry is happening. For many multifamily property owners, the question is less about whether they need to introduce or expand their use of technology, but rather which proptech solution is the right one for them to best run their business?