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Technology: Apartment Housing Profit Opportunities

Apartment owner/operators are creating enormous value with and for the tech companies that serve our industry. The current wave of tech entrepreneurs will make billions by serving the apartment housing industry. Our thesis is that apartment owners and operators need to recognize that the insistent knocking by entrepreneurs is a long-term change in business practices and not just annoying “vendors” trying to sell you on something new.

Ten years ago, the industry laughed or shrugged at the introduction of revenue management software as a pricing tool. Flash forward - in a few weeks, RealPage will close on its $300 million acquisition of LRO, the revenue management tool suite from venture capital-backed Rainmaker Group. Outsiders had the vision that led to building and profiting from this division of this company. Was it an easy missed opportunity for the industry that should have seen the investment potential?

What’s your strategy for you and your company to benefit from the development and growth of new technology that enhances apartment housing? Have you partnered with a tech accelerator like Waterton Residential has with the Chicago-based Elmspring Accelerator? Are you investing directly in companies that somehow find you to approach you? Putting your head in the sand?

New Apartment Tech Venture Investment Funds

In the past six months, at least two different groups have committed to raising venture investment funds of $50-100 million that focus tech companies serving apartment and commercial real estate. Both are funded by larger apartment owner/operators and their key executives. These funds will give owners a way to invest in technology as limited partners in a fun and influence its adoption, without being directly involved with the running of another enterprise.

For apartment housing entrepreneurs, these capital sources may be incredibly attractive because they can represent a self-fulfilling prophecy - their investors have the ability to seed the growth of their products and services at their companies. And the involvement of knowledgeable customers as investors sends a powerful signal to investors that lack domain expertise in apartment housing.

Five Promising Areas of Tech Investment

“Technology” has moved well past its early focus on moving manual processes onto the web. Today’s startups are moving deeper into domains that directly impact core operations such as:

  • Capital raising and property transactions efficiencies
  • Automation of workflow like marketing and customer relations through AI
  • Sharing economy innovations in homes and parking that create a higher, better use and greater income potential for empty offices, apartments and even parking spaces
  • Risk management and financial tech services that bring apartment housing operations into parity with the rest of the consumer experience
  • Construction process improvement - materials science and sourcing experts from Google, Apple, HP, Motorola and Flextronics are working on making great leaps forward in the new construction and rehab process

Today’s vendor call is as likely to be for investment capital as it is to make a sale. Want to learn more? We hope that you’ll join us for the Multifamily Technology and Entrepreneurship Conference April 5-6 at the Mission Bay Conference Center in San Francisco. Multifamilytech.org.