Dave Marcinkowski is the founder / partner of Madera Residential and Quext, focuses on creating smarter, healthier residential communities.
There is a problem in the multi-family business. I’m not the first to point this out, but I’ll join the chorus of people talking about it. This problem is the behavior of the cliques.
If it came down to everyone getting together to drive the industry forward, that would be one thing. but that is not the point. Instead, it focuses on companies that either voluntarily or by default tie their organization to a specific third party vendor and only use that particular vendor or its affiliates. This is causing the industry to stagnate without any innovation boost. That’s a problem. Once an organization joins a clique, that group essentially determines how that organization is run.
While sticking with a clique may seem like the best – or in many cases, the only – decision, it can affect your business and your ability to run your real estate effectively and ultimately your ability to innovate. Here’s why.
The data problem
There are several causes for the problem, but it is with the data and access to it. One problem is that most of the data in the multi-family industry is stored with a handful of prominent providers and these providers control the distribution of the data.
First, these providers make access to this data unaffordable. For example, if an innovative startup has an idea that needs to be integrated, it will have to pay each vendor a large annual fee – in some cases $ 25,000 or more – annually to enable integration into its database. For smaller companies, which often come from some of the most advanced innovations in the industry, these numbers often mean the companies can’t partner with more than one of the big vendors. This is by default joining a clique.
In addition, despite the high costs, providers only offer limited access to their data sets. For example, they can share basic information such as the resident’s name or address, but not more meaningful information about the resident such as rental length, rental price and other fees, creditworthiness or payment history. This is information that could help improve a new offering’s products, but by withholding this information, the big vendors stifle innovation.
Innovation or extinction?
So how can we reduce the influence of these cliques? By changing a few mindsets. First, we need to focus on creating real integrations between our management technologies. And that can mean forming an open collective that not only revolutionizes space, but also promotes integration.
More prominent companies need to realize that they need to work inexpensively and partner with everyone else in the industry, or the customer will end up suffering. And when the customer suffers, all of these existing cliques run the risk of dying out. At some point someone comes along who doesn’t fear innovation, but embraces it. This group will work with other companies to develop products that give customers the solutions they want. These synergies will provide the technology – and data – needed to make better management decisions to optimize our property performance.
Here lies the danger for the big fraternities or cliques of today. You have to accept this new way of thinking and reinvent yourself completely, or I would argue that you are risking being a dinosaur.
Can you trust your group to innovate?
Moore’s Law essentially says that technology doubles every two years. I would argue that in the multi-family industry it is more likely every decades. And I would also argue that this is due to the few massive platforms that dominate our industry. Let me ask you a question: do you trust your vendor to tackle VR / AR, IoT, blockchain, cryptocurrency, remote work and the list of new technologies that is getting longer and longer? All other industries seem to be at the forefront of these new evolving technologies, while we just wish our residents could request, rent, and fully aboard an apartment from their computer.
The resident is always right
Another crucial mindset change that we must adopt is to make resident satisfaction the # 1 priority. Residents demand that interactions be easy and convenient. Properties often conduct on-site surveys to find out what their residents and potential residents want. Again and again we hear the call for an all-in-one leasing solution. Residents want the opportunity to view their future home, complete the application process, and gain access to their home from an online location.
So if we keep hearing this, why isn’t anyone offering it?
Some companies claim to have a solution that meets this need, but what they really have is a minimally viable product that isn’t really viable. And the reason it’s impractical is because cliques don’t play well with all of the different vendors and products that go into the leasing process. Operators know that renting an apartment goes far beyond data collection, approval processes and electronic signatures. Wouldn’t it be nice if a resident could get in completely and gain access to his apartment via an intelligent lock without ever going into the office? Why don’t we have a marketplace for residents to choose their supplier, moving company, banking and financial services solution, furniture, etc.? This marketplace would give residents what they want and need while creating a source of income for the property owner.
The multi-family industry cannot move forward unless we change the way we think and break free from cliques. We cannot continue down the path of restrictive access to data and ignore the basic needs of residents. Anyone is capable of becoming a dinosaur, but we can foster an environment of true innovation with a few simple changes. For example, let’s say we focus on collaboration, low cost integration, and developing products that keep pace with new technology and based on what our residents want. If we did that, we would create a stable industry that enables any business, large or small, to thrive.
Advance Guide Real Estate Council is an invitation-only community for real estate executives. Am i qualified?