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What's new in property management technology
November 29, 2021
The real estate industry is experiencing an explosion of new technology. But many property management companies and rental owners have been slow to adapt. With so many options out there, it's hard to decide what's a gimmick and what's a game-changer. Backed by decades of scattered-site SFR management experience and led by veterans from the most innovative tech companies in the world, Picket's wholly-owned property management subsidiary, Elara (powered by DS Manage) is quickly becoming the premier technology-first property management solution. Whether you work with us or with a traditional property manager, we put together a proptech primer designed to help you navigate the maze of new options (with a focus on the single-family sector we know best).
Smart Home is the most logical starting place more most property management evaluations. Smart home solutions can:
Benefit the resident experience, which can result in increased rents
Benefit the owners of the property by either reducing maintenance or management expense, or by increasing the useful life of specific components such as HVAC, roof, etc.
Or benefit both owners and tenants
Most smart home products fall on a value spectrum that differs across price point and market. The first step in an evaluation is to develop your own value matrix. We break our value spectrum between CX (Customer Experience Value) and AM (Asset Management Value), but you can choose whatever labels you want. In our example, we are assuming for simplicity that Owners and Managers are aligned. In reality, this is almost never the case and the value matrix will likely look different if you have property manager on the X-axis instead of owner.
We can immediately narrow in on the top right quadrant of your value spectrum to find the most promising areas of smart home investment. There we'll see the smart home investments that have the best chance of increasing revenue while decreasing expenses. While the above diagram is for demonstration purposes, typically we see top right quadrant commonalities across every analysis:
Smart Locks & Keyless Entry
In our experience, these three product categories are consistently among the top three value creators and deserve serious investment consideration at any scale.
What solutions should you consider?
There are many great choices for hardware, but the real operational value comes from the management system used to connect, monitor, and control the devices. While we've seen a proliferation of platforms that offer decent smart home consumer experiences, most lack high-quality functionality for property managers and owners. On the flip side, the solutions that do offer quality feature sets for property managers and owners have historically been weaker on consumer experience. Ideally you want to choose a solution that places equal importance on both manager and resident experiences.
While the space is evolving quickly, we believe there are three primary leaders you should evaluate, all of which support multiple device types and self-showings.
Rently offers the best combination of price and functionality for an all-in-one platform, and the company's enterprise software creates a connected consumer journey across physical and digital environments, providing residents with a seamless experience and giving owners the ability to efficiently and safely manage properties remotely. That said, any of these three solutions should be viable for the vast majority of rental owners and it will really come down to personal preference and price point.
While keeping track of a property manually works for a while, you can save time and money by switching to a property management system or finding a property management company that already uses one. Generally speaking, the solutions you should evaluate are highly dependent on the scale and sophistication of your property management needs. Do you need accrual or cash accounting? Do you need institutional accounting controls? Do you need API access? Do you need to support multiple owners? Complex entity structures? Entity to entity cash flows? Mortgage securitization?
No matter what your needs are, when you evaluate platforms, look for a proportional balance of engineering and operational resources on the internal team. (As a reference point, almost half of Picket employees are engineers and data scientists supporting our property management and brokerage services teams.) We have included technology on the two ends of the scale spectrum below:
For institutional managers especially, legacy options have not kept pace with the technological advances available in the industry, which is why Picket created its own proprietary system, DS Manage, to serve its institutional clients and Elara Property Management team. Whether you include our tooling in your evaluation or not, it's critical to account for your growth plans in your decision and map out how the functionality of each system can scale with you, or risk incurring significant switching costs at some point in the future.
Additional Technologies & Services
Once you choose a property management system, you will likely want to supplement it with a number of third party solutions that have developed deep thematic expertise. A few examples are below:
Warren Buffet famously declared in 2012, "I would load up on single-family homes if I had a way of buying a couple hundred thousand of them and a way of managing them." The complications of buying and managing scattered-site rental properties at multi-market scale deterred investors from maximizing the opportunity in this remarkable asset class, but times and technology have changed, and smarter modeling, better data, and more efficient operations are changing the game for investors and residents alike.