September 27, 2021 |
Updated September 28, 2021
Owners and operators of single-family rentals and multifamily housing can use each other’s experiences to combat challenges and take advantage of opportunities.
According to a report by Walker & Dunlop, all eyes have been on single-family rentals (SFR), with rental growth expected to outpace multifamily, office, retail, storage and hospitality growth by 2022. With an increasing number of investors betting on the SFR market, owners and operators of multifamily housing have had their ears to the ground and are beginning to adjust their own operational strategies to stay ahead of the game.
According to Jered Lerum, Director of Business Development at Edison47, the focus should be on identifying what is appealing about SFRs and multifamily, and then creating a resident experience that works within both markets. For instance, owners and operators of both SFRs and multifamily housing can create communities that have the independence of a SFR while also having the support and extra layer of insulation of a traditional, high-end multifamily housing community.
However, despite leading the charge recently, SFRs have also gained deeper insights from legacy multifamily owners and operators who have been successful at fostering thriving communities that attract and retain residents year over year. With the ability to promote a sense of community through shared amenity spaces, door staff, onsite maintenance and more, owners and operators of multifamily housing have many lessons to share with the SFR community, which can’t always boast the same onsite luxuries.
During a time when resident experience management (the curation of personalized and frictionless touchpoints throughout a resident’s tenure) has become critical for owners and operators of properties on either side of the coin, resident touchpoints are going digital to deliver elevated living experiences. The rise in innovative technologies is improving bottom lines, increasing efficiencies and growing net operating income (NOI), proving how much owners and operators of SFRs and multifamily housing can gain from each other.
Here are four key takeaways stemming from the similarities and differences in SFR and multifamily housing property management.
1. Technology can be used to streamline time-consuming and costly aspects of the rental process.
Technology adoption can be instrumental in making the rental process more efficient and streamlined. SFRs are geographically dispersed by nature. When thinking about the various aspects of the rental process, as well as the resident experience once they officially move into a home, property owners and managers need to think about the time and energy it takes to conduct property tours, complete applications, conduct ID verifications, compile maintenance and work orders, onboard residents and more. Even tasks as simple as collecting rent requires time, and time is money.
SFRs don’t have the luxury of having their units co-located, or the simplicity of having maintenance staff onsite ready and able to fulfill requests at a moment’s notice. Technology adoption has been vital in ensuring these processes are completed successfully and in a timely manner when having a property manager onsite isn’t possible. And while much of multifamily housing is contained under one roof, the ratio of residents to staff can often create a bottleneck of available resources to manage things like rent collection and maintenance requests. With today’s renter focused on convenience and accessibility, both multifamily housing and SFRs can lean on technology to heighten the resident experience.
“Automating simple tasks like paying rent, submitting maintenance requests, etc. enables owners and operators of [multifamily rentals] to focus on residents and their living experience,” said Joe Melton, Vice President of Marketing and Management Support Services at The Morgan Group.
2. Resident priorities are shifting.
According to a 2020 survey from Zillow, Millennials account for 43% of single-family home renters and 41% of multifamily housing residents, and are more open to using a mobile app for maintenance requests, lease renewal and communications with property management in general. The National Multifamily Housing Council and Kingsley found that 80% of residents across multifamily housing and SFRs want to be able to interact and do everything through a mobile app – community events, maintenance, paying rent, controlling utilities etc. In addition, Zego’s State of Resident Experience Management Report found that 50% of managers regularly communicate with residents via their home phones, and 98% of management companies offer or plan to offer a digital portal or mobile app for communication with management teams in the next 12 months. Fully native mobile solutions are becoming increasingly important to residents.
“The adoption of online rent payment went lock and step with digital communication,” said Jason Hagen, Chief Operating Officer at Cobblestone Real Estate in a story in Propmodo about single-family rentals. “Before residents didn’t want to provide their email addresses, but now they do so happily. We used to have to print out 500 letters and now we can do almost all of that over text and email.”
Because SFR assets are more dispersed, operators have had to adopt technology faster and as a result, have been providing renters with virtual and digital service offerings that cater directly to their preferences and the overall resident experience. While many multifamily operators have been comfortable up to this point with their traditional ways of handling the rental process, they now need to digitally transform and evolve to remain relevant and competitive. In the age of COVID-19, renters have become accustomed to tech-enabled remote offerings. Considering the tremendous growth SFRs have experienced in the last year, multifamily owners and operators need to continually think about technology adoption as a way to boost retention and increase resident satisfaction.
3. Not all tech stacks are built equal.
While multifamily and SFR operators have been quick to adopt technology, they often run into the pain point of having a wealth of choices. With so many innovative solutions in the market, portfolios can easily feel overwhelmed by the array of options, or simply intimidated with the idea of evolving past what they’ve used for the past decade. But in many instances, this approach leads to operators managing with solutions that either don’t fit their current needs, or never were a perfect fit for their business. Many times, large property management systems are purpose-built for multifamily, so they can often feel like a “square peg” solution for a “round hole” problem to the largest players in SFR.
These challenges create unique opportunities for best-in-breed technology options and more targeted proptech stack solutions. Instead of staying within the full stack, operators who hone in on identifying targeted systems can alleviate the pain points associated with researching and purchasing multiple disparate tech applications. Targeted systems that focus on one particular aspect of the real estate industry and include multiple functionalities provide operators with the efficiency they crave. Their stacks can be simplified without being tied to an all-in-one solution, providing them with the best of both worlds.
4. Untapped opportunities in predicting maintenance and utilities.
Predictive maintenance is a huge opportunity for owners and operators of both SFRs and multifamily housing that has yet to be fully tapped. For instance, being able to collect analytics on HVAC systems is where owners and operators can determine other issues like leak detection. HVAC systems are often big expenses, so the ability to monitor these systems with predictive maintenance enables issues to be treated proactively before they become larger and more costly problems.
This opportunity also lies in utility usage and conservation, especially for SFRs. The nature of SFRs forces owners and operators to think about scaling faster. However, multifamily operators aren’t always thinking about maintenance cost per unit, as all they need are maintenance staff in the building. SFR operators are therefore hyper-aware of expenses, because they often need to tap into dispersed networks, contacts and resources. The ability to have automatic settings can make a world of difference for both SFR owners and operators, whose utility efficiencies vary unit to unit, as well as multifamily owners and operators looking to better track building infrastructure and energy efficiency. A systemized “checklist” is critical as well, as it provides a clear overview of entire portfolios. Implementing technology solutions can enable these checklists to be standardized and managed at a large scale, providing NOI gains to property owners on both the SFR and multifamily sides.
As the needs of consumers continue to fluctuate, SFR and multifamily owners and operators can use each other’s respective experiences to both combat challenges and take advantage of opportunities within their respective spaces. Additionally, as the commercial real estate industry continues to digitally transform, the unique opportunities, challenges and learnings from SFR and multifamily housing’s technology journeys are critical to accelerating their transformations and gaining a competitive edge in the market.
Nick Latz is Chief Revenue Officer at Zego.