In today’s Syndication School episode, Theo Hicks, shares about ways to use technology to improve your multifamily investments. This is based on a great blog post that one of our contributors Veena Jetti. She wrote a really good blog post on how we can use technology to improve the experience of our residents at our multifamily investments and improve the amount of money we can generate and turn them into money we can distribute to investors.
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TRANSCRIPTION
Theo Hicks: Hello, Best Ever listeners, and welcome back to another episode of the Syndication School series, a free resource focused on the how-to’s of apartment syndication. As always, I’m your host, Theo Hicks, and today we’re going to be talking about ways to use technology to improve your multi-family investments. This is based off of a great blog post that one of our contributors, Veena Jetti posted [unintelligible [00:04:09].24] episode won’t air for a couple of months, but she wrote a really good blog post on how we can use technology to improve the experience of our residents at our multifamily investments, and in turn, improve the amount of money we can generate, and in turn, the amount of money we can distribute to our investors.
Obviously, the concept of the smart house isn’t new. I remember way back in the day that Disney Channel movie, I think it was called Smart House. They had that smart house where they’d press a couple of buttons and it made them a smoothie. We’re not there yet, but we are seeing, on the single-family homes side, a lot of smart houses, and then since there’s been a pretty big increase in the number of households renting. This is moving to multifamily as well.
So a couple of interesting statistics to start off – there’s a report in Statistica that says that more than 33% of homes in the US have at least one form of smart home technology. This number is projected to grow to more than 50% by the end of 2023, so nearly double.
When we look at the revenue generated, the revenue generated from smart home technology was 27.24 billion in 2019 and is projected to go up to 44.79 billion by the end of 2023. So a big industry. As I mentioned, traditionally you’d see this for wealthy homeowners of single-family homes, but now we’re moving more towards seeing smart technology in multifamily. This trend is only being accelerated with the pandemic. Other statistics that are interesting –to kind of, again, bring the point home that this is a trend that’s not going away– is that there is a study that shows that more than 86% of millennials who –from my understanding, they are the largest population group at the moment– wants smart apartments that are well equipped with high-tech gadgets. Even the boomers, the baby boomer generation also like smart apartments or smart homes, with 65% of baby boomers wanting smart apartments.
Now that we kind of set the stage as to why it is that people want these smart home/smart apartment technologies, as well as showing that this is a trend that’s not going away, we have a couple of ways you can utilize technology in your multifamily apartment. So we’re going to go over four ways today.
The first would be VR and AR, which are augmented reality and virtual reality. I interviewed someone who is a VP at apartments.com, and one of the most important things that he said we need to do with our listings is basically making the listing on apartments.com so that someone can rent the home without actually having to go to that home. That would be this VR/AR type experience, where the resident can learn everything they need to know about the specific unit they’re going to rent without having to leave their home. This is a trend that was occurring before the pandemic and is even more relevant today with the pandemic.
This means making sure you have those 3D tours available for your apartment listings. What this VP at apartments.com said, and I kind of already mentioned, is that you don’t just want a generic 3D rendering or VR/AR experience for any random unit, you want to make it as customizable as possible. So you want this to be the actual unit they’re going to rent, or at least the same type of unit that they are going to rent. The more customizable, the better.
From an AR perspective, it looks like there is some technology where you can go to, say, an apartment model unit, or maybe you’re touring the amenities or something, you can hold your phone up to certain areas and it will give you information on that amenity or how much it costs to rent a carport, to rent a storage locker. So when you’re walking around the apartment community, you can kind of hold your phone around, like that Pokemon Go game, and see information and prices of various aspects of the community. I’m sure there are companies out there that specialize in this, and it’s understanding that these are the types of things that residents want to see, and it being very competitive right now, this is a great way for your property to stand out against all the others.
The second use of technology would be AI, artificial intelligence. Obviously, this starts with Google Home and Alexa features, those being you offering those in your apartments. But it can get even more sophisticated than this. One example would be using AI for identity verification. Think of it like an airport; at the airport, rather than having to slowly go through the entire line, and give your driver’s license, and they look at your face, using AI and facial recognition to scan that person’s face to increase that process.
The same thing can be used is being used at apartments now, with facial recognition used to verify guests. So rather than waiting in line at the gate, giving over your ID, typing a code, you can just scan the face – boom, you’re ready to go. Same with the service person, not having to wait at the gate; they can go straight in. Same with coming in and out of the building depending on the type of apartment complex. That’s just one example of how AI is being used in apartments, is that identity verification to make going in and out of properties more efficient.
Number three –this one’s pretty obvious, but I still wanted to mention it– would be the smart spaces in general. So having as much smart technology as possible in the apartment unit and throughout the apartment community. This allows for more cost savings for you, better security for your residents, and then better customer satisfaction, in general; expedite maintenance, turnaround, things like that.
Some examples would be smart lighting, smart thermostat, [unintelligible [00:10:43].12] that you can hook up to your cell phone, Smart Lock, the same thing with a cell phone or fingerprint, various security devices, smart entertainment systems, other automated systems… These are things that don’t require me to actually go and manually do something, but automated on the phone, or in some other form or fashion. Lots of examples of that out there. This is probably the most dominant use of technology at the moment would be smart spaces.
And then the fourth way – this one’s kind of interesting – is utilizing blockchain for your multi-family home. This is something that according to Veena is going to be a pretty big game-changer in multifamily and real estate in the future. So this is the record-keeping technology that is applied to Bitcoin investing. It can be used to tackle really any problems using instant and verifiable transaction recording. Once information is stored on a blockchain or a chain, then it is fully accessible and stored forever. The accessibility is much faster compared to traditional methods. So what does this mean? Well, this will allow you to speed up the leasing process, all the various fees that are required to lease a unit, and also increase the speed at which rent payments are made. As I mentioned, this is going to be a pretty big game-changer moving forward, and maybe something you want to look into now.
So overall, these are just a couple of ways that technology is being used in multifamily homes. There is a lot more technology out there that is being used now, as well as more technology that is going to come in the future. Just make sure you’re staying up to date on the various technologies that are coming out, even if they’re not necessarily directly for multifamily. Maybe this could even be a potential business opportunity in addition to your apartment syndication.
I remember at my first job out of college, in the same building we were in was the office for — it wasn’t DocuSign, but it was one of the other eSign companies. It was just some guy who wrote the code himself, created the company, and sold it for millions of dollars. I can’t remember exactly what he was doing at the time, but that was something that he came up on his own and actually created a business. So once you see these various technologies out there, or can think of a technology and applying it to real estate, it could be very profitable, is my point.
There are a lot of benefits to these technologies, as I mentioned. A few would be that there is improved sustainability, which is not just a function of minimizing the environmental footprint of the building, but it is underlined in the significant reduction of costs. It can be things like lighting, cooling, and heating. Also, you can get real-time data that can provide you and your property management companies with faster insights into what’s going on at your property, which allows you to identify any issues faster and solve those problems faster, reducing waste, improving efficiency, reducing costs. There’s also replacing certain manual aspects of the apartment with automated aspects; you can also reduce costs from having to replace broken light switches and things like that, as well as anything that might go wrong with that appliance that negatively impacts a tenant and legal issues that might arise from that, which is also another way you can save costs.
Finally, and what may be most important, is that these are going to make your residents happy. You’ve got 86% of millennials who want smart gadgets, 65% of baby boomers want smart gadgets, and the generations in between are probably in between those two percentages. Gen Z is probably even higher than 86%. So people want these things, so you’re going to get the benefit of the cost savings, as well as the satisfaction from your residents.
Overall, just keep in mind that you residents want technology, that technology is not going away, and that it can help you reduce costs, ultimately increase your NOI, the value of the property, the cash flow to your investors. So thinking of ways to use technology to improve the experience of your residence is important. It’s going to happen eventually anyway, so why not be one of the first to get ahead of the game to separate yourself from the competition.
For more details on how to use technology to improve your multifamily business, you can check out the blog post Four Ways to Use Technology to Improve Your Multifamily Investments at joefairless.com. If you have any ideas that you’ve seen on the horizon, or if you’re utilizing smart technology at your apartment, I’d love to hear about it. So email me at theo@joefairless.com. I’m always interested in how various technologies are being used to improve really anything, but obviously, we’re in real estate, and so I’m interested in that as well. So theo@joefairless.com.
That will conclude this episode, thanks for tuning in. Make sure you check out some of the other Syndication School episodes, as well as download a lot of the free documents we have available as well. That is at syndicationschool.com. Thank you for listening. Have a Best Ever day and we’ll talk to you tomorrow.
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