From virtual touring and leasing options ushered in by COVID to the former cutting-edge smart-home technology that’s now become a standard across many communities, technological advancements have always transformed the multifamily housing industry. However, many would suggest that we’re now experiencing a new tidal wave of change, particularly in the realm of proptech.
As we look ahead to the rest of 2024, a few trends demonstrate great promise for multifamily—from combating fraudulent rental applications to reshaping business operations through centralization, the integration of artificial intelligence (AI) and now the optimization of operations through predictive analytics. Here are four new advancements and the potential impact they hold for the future.
Fraud Prevention: Today’s Advancements in Combating Leasing Red Flags
According to a recent survey from the National Multifamily Housing Council and the National Apartment Association, more than 70% of major apartment landlords say they have seen an increase in fraudulent rental applications over the past 12 months. With the escalation of fraud in multifamily, fraud prevention software providers are required to offer an enhanced level of services and offerings to combat the growing threat and inevitable resource and time suck on the on-site teams. Providers offer various tools that analyze metadata in pay stubs to verify validity, scrutinize bank account information, and use ID and Social Security number (SSN) verification tools.
Unfortunately, anyone with an internet connection can now find fraudulent packages that guarantee approval with a quick search on a browser or social media platform. But proptech companies are working to stay ahead of the curve with new advancements occurring at a rapid pace. It will be fascinating to see how far they will evolve by 2025.
At Fogelman, we are piloting four unique solutions including SSN verification, pay stub screening, direct-to-bank connections, and identity validation. We have landed on a combination that has yielded tangible results, preventing fraudulent applications for 12% of all applicants, which does not include the intangible results found from both deterring fraud on the front end and applicants abandoning the process when more information is requested. Even more important, by outsourcing the process, we have saved approximately 40 hours a month per community that would have otherwise been spent by the on-site teams obtaining and verifying income documents. For multifamily property managers, days equal dollars, and, in this particular case, the time adds up to hundreds of thousands of dollars saved annually across the portfolio.
Reshaping Multifamily Business Operations Through Centralized Solutions
In today’s multifamily landscape, centralization has become a predominant topic of discussion. Whether the focus is on consolidating leasing, administrative tasks, maintenance, accounts payable, or other functions, tech companies are at the forefront, offering myriad solutions to increase efficiencies and streamline operations on the back and front end. The new customer-centric software tools and innovative approaches to traditional on-site administrative functions are reshaping the way business is conducted and continuously revolutionizing our workflow processes.
For example, at Fogelman, we’re first piloting the centralization of administration functions for a couple of reasons. One, administration is rote work that happens over and over again so it’s easier to centralize and standardize. And two, team members are still looking for workplace flexibility and remote work. With centralizing administration, we can sustain a remote role, which may ensure a longer tenure in this transitional market, and this “simple” change in structure can benefit many. And when you have turnover—and in our industry, there’s still quite a bit of turnover—it’s easier to move that off-site and not have to retrain on those functions. Furthermore, centralization tools such as AI chat-based products can handle some of our on-site teams' daily communication, which frees them up to focus on resident satisfaction, rental growth, and operational efficiencies.
While centralization enables property managers to achieve greater efficiency with fewer resources, it also allows team members to further specialize in their respective roles, ultimately creating new and nontraditional career opportunities in multifamily. Rather than following a linear progression from leasing associate to assistant manager to manager, today's landscape of centralization allows for new roles such as specialized accounts manager, centralized preventative maintenance manager, or even resident experience associate. Rather than becoming a “jack or jill of all trades,” in multifamily, team members can further their growth and mobility within more experience-centric roles and career paths, akin to what we’re seeing in the hospitality industry.
Tech companies are also stepping up to provide more customer-focused solutions that guide prospects seamlessly through the leasing process in a holistic manner. Today’s solutions are tailored to address the needs of the customer rather than promoting individual properties. For instance, proptech tools offer intuitive dashboards and user-friendly interfaces that allow prospects to navigate effortlessly across various properties while tailoring searches and criteria to meet their specific needs. In centralized administrative functions, automation and AI technologies are increasingly used for tasks such as renewals, communication, and collections. From a leasing perspective, advanced customer relationship management (CRM) tools provide deeper insights into customer journeys and allow us to market better, faster, and stronger with a more targeted approach.
While the introduction of self-guided and virtual tour technologies marked a significant shift in leasing practices in recent years, the industry is anticipating how these tools will further enhance and transform the prospect experience moving forward. With the addition of centralization into on-site functions, self-guided and virtual tours will play an even larger role in creating efficiencies for site teams while still meeting the needs of the prospect. These low-touch tours will be critical for the initial discovery process, allowing teams to have more time to devote to the later interest phase, where more specific questions arise and prospects try to determine lifestyle fit.
Proptech companies can enhance their overall user and customer experience by bridging the gap between these two phases to create a seamless experience on both sides. Centralization and technological advancements are shaping a new era in the multifamily sector, where customer-centricity and operational efficiency take center stage.
Evolving Opportunities and Responsible Integration of AI in Multifamily Proptech
The integration of AI is an exciting development in proptech. While chatbots and virtual leasing assistants have been around for a while, they are becoming more sophisticated by supplementing the daily tasks of on-site teams and learning customer patterns to deliver more accurate responses. They are also more prevalent throughout the entire customer journey rather than remaining solely in the prospect discovery phase. Additionally, generative AI is now built into industry-specific software to perform various tasks such as creating social media posts, summarizing resumes, and providing on-demand training scenarios. The impact of these developments is significant, and it will be interesting to see how they continue to create new opportunities in the coming months and years ahead.
However, the responsible integration of AI with human interaction is truly a global concern now and not limited to the industry. The key to achieving this balance lies in education. AI can help us achieve about 60% of our goals, provided we know how to prompt it and review its output. As users of AI, we will be responsible for educating ourselves on how to tailor our prompts to optimize responses and use what is generated to inform our deliverables, without completely relying on machine learning.
New AI applications are also emerging, such as delinquency nudges, post-resident collection efforts, invoice coding, responding to reviews, creating social and blog posts, and more. By the end of 2024, we can expect to see generative AI playing a significant role in how business is conducted in the industry. However, it will also be critical for AI and human interaction to integrate responsibly, with human expertise guiding and regulating AI operations.
Predictive Analytics: Optimizing Operations and Decision-Making Through Data Analysis and Trend Identification
The potential of predictive analytics as a stand-alone component of AI is remarkable. AI can analyze datasets and identify trends, enabling data to be transformed into action. The opportunities to optimize operations and make informed decisions are endless—from predicting renter demand to identifying maintenance trends based on seasonality or weather trends and renewal possibilities based on resident digital footprints. With predictive analytics, investors and operators can adjust to changing conditions in real time, make more informed decisions, and transform insights into tangible plans of action, which allows operators to move faster for significant time and resource savings.
