Don’t Build It, Invest In It: The New Operator Approach to Technology
Not everyone was born to geek. Which is why some multifamily operators, realizing their limitations, turn to third-party software for solutions. But simply paying for the technology from a third-party provider limits an operator’s control of how the technology will work to maximize efficiency and resident satisfaction. Is there a middle-ground between home-based and third-party proptech? The 14th Annual Apartment Innovation and Marketing Conference (AIM 2019), which took place at the Hyatt Regency Huntington Beach on May 5-8, convened a panel of operators and investors who deploy substantial sums of equity in technology platforms. Moderated by Elaine Williams, Owner and President, Elaine Williams Consulting Services, panelists
- Faith Aids, Vice President of Marketing, Laramar Group
- Jerry Davis, President and Chief Operating Officer, UDR
- John Helm, Managing Partner, RETV
- Kurt Ramirez, General Partner, Nine Four Ventures
discussed the decision-making process behind technology funds, as well as their logistics and benefits.
So what’s the answer: Build, buy or invest?
Within the $281 trillion real estate industry (“the largest industry in the world”), Nine Four Ventures’ Ramirez estimates “a bunch of things are changing that make technology a very interesting opportunity.” One shift is the change in tenant attitudes: “An apartment is now an experience.” From the owners’ side, there are more ways to monetize a building than ever before.
“We’re being presented with new partnerships and ventures and that weren’t there fifteen years ago,” said Laramar Group’s Aids. Laramar, which works with Nine Four Ventures, has its own tech fund. Since a lot of the tech that is being implemented affects Laramar’s onsite teams, new company values have been developed to help employees adapt. “Culturally, what we’ve done is realign our values to match innovation.”
“As everybody in this industry knows,” said RETV’s Helm, “We’re really our own category.” The need for RETV grew out of the reality that proptech doesn’t scale as dramatically as “a Silicon Valley wants to see.” Businesses associated with CRE, on the other hand, “need more patient capital.” As RETV’s LP group of 20 owners comprises an inventory of 925,000 rental units, the carrot for proptech developers (besides investment) is having a ready market for their products. Although “we focus on rent tech,” said Helm, the seven product that RETV has funded range from furniture leasing to maintenance. “We have looked at over 600 deals in the last 12 months, so our inbound deal flow is incredible.”
Historically, UDR has split its tech options between custom-build and third-party providers. As one of RETV’s Limited Partners, this multifamily REIT managing 25,000 apartment home in 165 communities has benefited from RETV’s investment in SmartRent. Currently, the company is implementing an off-the-shelf smart home package that links to the SmartRent app. For the future, UDR is building a self-guided app. “If you can put in a system with technology,” said Davis, “you’re going to get a more consistent tour.”
Takeaways from the panel:
- Helm: Can you find tangible benefits from deploying that technology?
- Davis: Monitor everything. Short term gain is often long term pain.
- Ramirez: The more buy-in you can have, internally, the better.
- Aids: Give your site team support over the long term, not just at implementation.
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