10 Ways Tech Changes Multifamily Profits
How Multifamily Investors are Leveraging Technology to Boost Profits
May 14, 2020
As a multifamily investor, you’re always on the lookout for ways to decrease your spending and increase your profits. Cash flow is the foundation of your investments, and there are a number of aspects to your property operations that affect your bottom line. From leasing to maintenance, you’re forced to rely on employees to ensure that tasks are completed and your cash flow remains in the green. If you’re not happy with the cost of these services, you might be interested in implementing technology into your business to cut costs. If you’re not sure what tech would benefit your business the most, you’ve come to the right place. Here are 10 ways tech changes multifamily profits:
When considering a property purchase, sale, or simply to keep yourself informed about the profitability of your property, you want all the information you can get (typically in numbers.) Property details, neighborhood demographics, transaction history, and sales comparables are important assets to your profitability, and there are a number of tech-based services, like Quantarium, that provide details you need on your property to ensure that all your decisions are well-informed.
Rent collection is at the very core of your multifamily business, and making sure that payments are made, ensuring late fees are applied when necessary, and documentation based on payment method is a lot of work-- especially for properties with hundreds of units. It’s likely that you have an employee dedicated to this task, but with a large number of units, and the potential for late payments, there’s always the possibility that human error could skew your profits. Instead, a tech-based solution could save you money and decrease any confusion caused by human error. For this reason, a number of multifamily investors choose to utilize automatic rent collection through services like Cozy. These services provide automatic rent collection and automatically apply late fees as needed. A tool like this could make a huge difference in your business, but make sure to research or participate in a demonstration of the software to ensure that it is capable of handling your property’s needs.
Many multifamily businesses are adopting a new way to encourage tenants to move into their properties. They’re doing this by dropping the security deposit in exchange for a move-in fee instead. Move-in fees can vary, but in most cases, investors set them between $300-500. This method negates the awkwardness surrounding returning the security deposit and is revenue investors get to keep and use to turn over the property if the tenants move out. However, as the security deposit provides tenants with a sort of safety net should the apartment become damaged, some tenants may be unwilling to make the change. For this, tech-based companies like SureDeposit provide a form of renters insurance that ensures that residents will be able to cover any potential damages. A service like this not only protects your property but protects your residents as well, which helps to lower move-in costs and fill vacancies.
4. 24/7 Leasing
Tools like keycards have been used in multifamily properties for quite some time, and the standard deadbolt has been around for ages. As technology increases its presence in our lives, multifamily residents expect investors to use these tools to their advantage. The trouble with standard keys and keycards is the necessity for someone to provide them. This means you need an employee available at your property in order for prospective residents to tour your apartments. While you’re not likely to rent to many vampires expecting to tour in the middle of the night, work schedules and other responsibilities can hinder some potential residents from being able to tour during the regular 9-to-5 hours. To solve this problem, companies like Kwikset have created smart locks that can be accessed digitally. With doors that can be unlocked at the push of a button, you no longer need someone on-site for your prospect to tour your property. This saves you money and provides a wide range of times in which your prospects can view your property. In addition, should an issue, like a medical emergency, arise, you can easily allow entrance to the unit without worrying about damage to your door.
From experience, we know the last word you want to hear when discussing property wellness: mold. Aside from the various health concerns associated with mold, the presence of mold somewhere in your property is usually an indicator of something worse: water damage. In some cases, determining the source of the leak is simple, and in others, you’re left ripping up the walls of multiple units. When you factor in all the costs of repairing the drywall, wood, electrical wiring, and anything else that received damage, your cash flow takes a huge hit. For this reason, companies like SmartThings developed moisture sensors that detect potential leaks and moisture before they become very expensive problems.
Until we develop humanoid robots, maintenance will remain in the hands of humans. So, how would tech apply to maintenance-related issues? Combining tech with maintenance provides quick response time and clarity. Photos shared with maintenance techs help the techs to understand the issue at hand, allowing them to address those issues quickly, saving time and money. In addition, technology provides a great way to categorize and manage maintenance needs through prioritization, and allows for owners and managers to take a look at current maintenance-based jobs being performed and how much time the jobs are estimated to take. If an owner or manager if off-site, pairing technology with maintenance also allows the owner to view the current progress of the maintenance technicians, which gives an off-site owner or manager the opportunity to to discuss issues they see with the repair without having to make a special trip to the property.
You need your financial numbers to be in-check for a variety of reasons, most importantly, to know if your property is under-performing, breaking even, or profiting. To have a clear picture of your investment, you need thorough documentation of records on payroll, repair costs, and much more. You could handle these issues by hiring an accountant but that would decrease your revenue. You could do the documentation yourself but that would mean hours in front of your computer, punching numbers. Instead, tech can help you with your accounting needs. Software like Tally.ERP.9 automates your accounting needs, effectively handling your revenue stream without requiring you at your computer desk constantly.
With so much technology right at the fingertips of your residents, why don’t you allow your residents to communicate around the clock? Several businesses offer live-communication with customers 24/7, and you should be able to give your residents that same experience without any hassle. This could be achieved in a number of ways, by providing an instant messaging feature on your website, or by creating a 24/7 call line. Either way, with the advancements made in tech today, there’s no reason for your residents’ needs to go unheard at any time of the day.
The majority of property management companies charge a percentage of your revenue to manage your properties. While this may cost you less in your under-performing quarters, it can also increase in well-performing quarters. This leaves you unable to completely predict what your overall cash flow will be, which is frustrating. There are property management software like AppFolio that provide several property management services such as leasing, resident communication, etc., but unfortunately, this will not eliminate your need to have on-site staff.
All of the individual tech options mentioned above play a role in helping you to cut costs and predict your cash flow, but overall, the best choice would be a company that provides a combination of these services for a standardized cost. That’s why we built Simplifyy. With Simplifyy, you’re getting every one of the features above and more. Simplifyy provides automated, holistic marketing strategies to fill vacancies, provides 24/7 leasing options through the use of smart locks, automates your accounting needs, automatically handles rent collection, replaces security deposits with lease protection, monitors the wellness of your property with smart sensors, and provides 24-hour maintenance and call/text services for your residents.
All of these services combined into one system means you’re not stuck paying for a million different products, and you’re not stuck constantly updating your systems. It streamlines every aspect of your multifamily business through the use of technology, cutting your costs by eliminating the need for property management companies and excessive employees, and providing you with the assurance that your bottom line will increase by offering a money-back guarantee.