Madera Residential experienced all of the usual pain points of owning and operating properties. In response, it has invested $18 million to date from the operating partnership to develop their own technology stack called Quext: Property management system, telecom, digital human customer care, portal, smart home and property websites.
It took the unusual path of doubling down their entrepreneurial instincts and betting their profits that they could use their knowledge as owners to create tech that works for the properties.
In essence, Madera Residential disrupted the industry from the inside. Steve Lefkovits of Joshua Tree Media spoke with Dave Marcinkowski, a partner at Madera, on his company’s exciting adventure into property management IT during the Multifamily Technology and Entrepreneurship Conference (MTEC).
Marcinkowski spoke of the apartment industry’s penchant for service-provider tribalism and how small- to medium-sized owner/managers who rely on larger tech players are stuck defining themselves based on what those larger tech companies allow them to do.
“It’s nothing personal, but many multifamily company leaders are retiring, and too many have gotten through it all with a ‘this-is-how-we’ve-always-done-it’ mentality. They missed some opportunities when doors opened to do things that they could have never imagined. Moore’s Law says technology’s capabilities double every two years. In the apartment industry, it seems more like [technology breakthroughs] were doubling every decade.”
“Our industry’s tribalism happens when there are a few large companies, and they go after the smaller tech firms that are quickly creating products and solutions mostly in the hope that their companies will be bought out by the larger ones. When that happens, that’s where great ideas end up going for naught.”
Quext Connect Helps Residents ‘Level-Up’
Madera Residential first set out on its own by developing a customer management platform called Quext PM. From that – and conversations it was having with Spectrum Communications – it hired a leadership team from the telecom industry to build a bulk broadband and video service.
“For us, this was a better approach than having a bunch of apartment guys to design solutions for non-apartment-related issues – such as broadband access,” Marcinkowski says.
Quext Connect is a platform that is part of a growing apartment industry trend toward using a bulk services platform for Wi-Fi connection.
“When residents move in, the Wi-Fi is all ready to go,” Marcinkowski says. “Residents don’t need to schedule the cable guy to come and install it. There’s no set-top box or forms to fill out.”
Quext Connect is a platform that is part of a growing apartment industry trend toward using a bulk services platform for a managed Wi-Fi connection.
“When residents move in, the Wi-Fi is all ready to go,” Marcinkowski says. “Residents don’t need to schedule the cable guy to come and install it. There’s no set-top box or forms to fill out.”
It facilitated Quext Connect at 26 of Madera’s properties over an 18-month period with every unit receiving 300 MB of symmetrical broadband and over 125 HD channels for $89 per month, which is less than half of what the residents would pay for retail broadband that would provide worse coverage, Marcinkowski says.
Most attractive about the price point for Madera Residential is that there’s a $25 per unit per month profit margin for owners. For its 26 apartment communities (roughly 7,200 units), that’s more than $200,000 per month in non-rent revenue. This is also over $50 million in added value to those properties when using a very conservative cap rate, Marcinkowski says. Madera has now sold properties with Quext Connect and captured that value from its bulk internet services investment. The product has been so successful, that Marcinkowski says some of Madera’s buyers come back to him and ask how they could install a similar system across their entire portfolio.
“Our goal is to be able to ‘level up’ services for the community and the resident experience,” Marcinkowski says. “When we introduced Quext, we were anxious. We asked ourselves a lot of ‘what if’ questions such as, ‘Will the residents even want it? What if they want to install a Dish on their balcony?’” Well, it’s worked out fine. “Residents’ emphasis is on convenience,” he says. “They don’t want to have to pay another bill (the charge is part of their rent), fill out another application or take time off work to let an installer into their home.”
LoRaWAN Leads Quext IoT
Quext has turned its focus on smart home locks and doors. “We looked at IoT in our industry and wanted to create something that was a lot less expensive, easy to install and didn’t rely on a Wi-Fi or cellular network,” he says. “We went with LoRa, or LoRaWAN technology, which can execute small commands such as unlocking a door or changing the temperature of a thermostat from up to 10 kilometers away.
“We created a LoRa Hub Thermostat specifically for the multifamily industry. LoRa is nearly impossible to hack. Our system runs on Amazon Web Services’ (AWS) platform and was one of four companies featured at the new AWS LoRa Product launch at Re-Invent in 2020. The capital costs required from solutions provided today are in the $800 to $1,200 per unit. The monthly subscription costs vary from $6 to $12 or more per unit per month. Our solution can be installed for $400 of capital costs per unit (which we can finance for someone) and a subscription price starting at $3.75 per unit per month.
Madera Residential is installing this smart-home feature at four of its apartment communities in Benbrook, Texas, and will be using one LoRa gateway at one of the leasing offices to control IoT devices in over 1,000 apartment units.
Marcinkowski says Quext wants to be the collaborative ecosystem for all things tech in the multifamily industry.
“Owners and managers should have a choice of what products and services they want to use at their properties. Our industry is too tribal! The right to choose your service providers is something we want to give back to the industry.
“We also want to bring an operational mindset to the tech space in our industry. Quext is built by operators for operators. We get to put our products on our 15,000 apartment units and prove they work before taking anything to the market. Who else in our industry can say that?”
Lefkovits mentioned that what is refreshing about today’s younger technologists is that they are more interested in improving the consumer experience than simply improving the asset, something that pleases Marcinkowski.
He sees the transition to younger technology leadership benefitting the apartment industry and its residents as forward-thinking operators break out of their shells.
Meanwhile, Madera Residential and Quext continues to explore other innovation, such as its apartment leasing virtual digital human Mia, who communicates with prospective residents from its websites.
“You speak with her through a camera and mic, just like you would with a real person,” he says. “You can go through the entire rental process. You can ask questions about floor plans and rents and she has the answers.
“It seems more human-like because she can adjust her expression and the conversation as it goes. She can even have an “elegant fail,” and will hand the conversation off to a person who can provide better information if that is necessary.”
The company is also working on a digital bank for resident and supplier partner payments and a business intelligence tool.
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