COVER STORY, APRIL 2004

TIPS ON TECHNOLOGY
Multifamily companies use new technology to increase their bottom lines.
Jaime Lackey

Multifamily real estate investment trusts (REITs) and other privately owned apartment firms continually invest in more technology to remain competitive. They invest in technology such as property and financial management software, Web-based marketing, programs to facilitate online rent payments, and advanced digital and broadband services for residents, according to Larry Kessler, CEO of Multihousing.com, a technology education and information resource for the multifamily housing industry.

Multihousing.com and the National Multi Housing Council (NMHC) are collaborating their efforts to educate apartment owners and managers about all branches of technology that affect the multifamily industry. NMHC is a trade association that advocates on behalf of the apartment industry. Multihousing.com is an organization that assists apartment operators in understanding and implementing technologies into their business operations and properties.

“Owners and developers need to seriously evaluate their current telephone, cable television and Internet services and the infrastructure delivering these services. In terms of technology, both the services and the wiring over which they travel impact properties in terms of residents’ lifestyles, turnover, rent rates and market-level competitiveness,” says Kessler.

He explains that certain technologies — security systems and wiring infrastructure for digital cable and broadband Internet — affect the value and leasability of properties. “Digital cable and high-speed Internet access, once considered amenities, are now essential utilities,” he says.

“Companies are also interested in activities that help them manage Internet and telephone inquiries,” according to David Cardwell, NMHC’s vice president of finance and technology.

The recent increased interest in automated systems and call center solutions is driven by expanded use of Internet marketing, and contact center systems are improving to facilitate better marketing and tracking of leads. Cardwell explains, “The new contact center systems have to be more sophisticated than just taking messages. If you are interested in an apartment, the contact center will take that [phone or e-mail] inquiry and triage it. The center will find the right apartments and make sure the apartment lease agent knows [of your interest], it will track when the leasing agent has responded to you, and it may provide an automated response to you with information about the property, even including a lease application.”

Increasingly, apartment companies are also looking at automating the rent payment process. “The pioneers were using credit cards and this served an amenity to residents and it ensured owners got their payments,” Cardwell notes. “Now, the new federal regulations on handling check processing allow a lot of apartment owners to look at automated check handling as well as credit cards and other billing mechanisms that can enhance their collection loss profiles and provide better service for residents.”

In addition to improving operations and resident services, technology provides means to increase the bottom line. Some multifamily properties employ utility sub-metering technology, which monitors residents’ water and electricity usage. Residents are then billed for their utility usage separate from their rent, which results in a significant enhancement to many properties’ bottom lines. And technology provides further opportunity to increase properties’ bottom lines through ancillary income. Kessler explains that owners and developers can negotiate contracts with cable companies, telephone companies and Internet companies whereby these companies share a percentage of revenue with the property owner or developer in exchange for an exclusive contract to serve the property and/or marketing rights at the property.

Online marketing is another growing use of technology in the apartment industry. “Most companies operate their own Web sites and most companies market their properties on national Internet sites like rent.com, apartments.com, apartmentguide.com, rentnet.com and forrent.com,” according to Cardwell. “In addition, there are local Web sites. Even if you only have one or two properties in a market, you don’t want to not have some sort of Internet outreach because you are losing potential customers. Regardless of the size of the company, almost everyone is marketing, either through their own Web sites or through an Internet portal.”

“The end-game of all this investment for apartment owners and developers is to increase the efficiency of property and corporate office operations, to enhance the bottom line numbers and improve resident retention,” Kessler says. “In short, it’s about increasing the return on investment and the value of the property.”

STANDARDS IN TECHNOLOGY The National Multi Housing Council (NMHC) is the supporting organization for a data standards initiative called the Multifamily Information and Transactions Standards (MITS) project. “The initiative was created to support the integration and synergy needed among the software application providers that serve our industry,” explains David Cardwell of NMHC. “There is a huge movement from old desktop technology to Web-enable and server-based technology. All of the basic applications — dealing with managers’ rent rolls, responding to both prospective residents and existing residents, managing maintenance issues, new resident screening and payment processing — are being redesigned.” The MITS project addresses integration issues with the redesign processes. Cardwell explains that several companies provide resident screening services. Several other companies process payments through checks and credit cards. Still other companies handle maintenance processing. The programs from different companies don’t always communicate well with each other. Also complicating the transfer of data and integration of data management is the trend toward using call centers and increased interface with Internet listing companies. The goal of the MITS project, according to Cardwell, is to have all of these processes standardized so they can be easily integrated with one another and with owners’ operating systems, including accounting and management systems. “We are trying to help owners more effectively engage in transactions — screening residents, taking in application data and converting that data to leases, or transmitting data to the Internet for marketing purposes,” Cardwell says. “The purpose is to provide a wider range of services at less cost and improved efficiency for owners. People talk about best of breed all the time and that is a great thing to talk about, but you want integration not to be a burden or a barrier.” The MITS project involves a network of owners and software companies. The participants are developing a data dictionary, which they convert to extensible mark-up language (XML), a software protocol used for defining elements in cyberspace. Almost all software platforms operate using XML. For example, MITS participants have developed a data dictionary for application and lease processing and converted that to XML for the use of software programmers. “I like to tell people that [XML] is the technology architecture that supports the data dictionary,” says Cardwell. Having a standard data dictionary and XML means that the programs are operating on the same foundation, making data transfer easier. For more information, please visit www.mitsproject.com. — Jaime Lackey

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