The AI Wake-Up Call for Multifamily Real Estate
Artificial intelligence (AI) is more than just a buzzword; it’s a game-changer, a disruptive force transforming industries across the globe. For multifamily real estate, AI presents an opportunity to streamline operations, enhance efficiencies, and deliver superior resident experiences. There are difficulties, though, as with any significant change. The multifamily sector is hesitant to fully embrace AI, primarily due to skepticism and fear of change.
However, those who fail to leverage AI will soon be left behind in an industry that is increasingly driven by technological advancements. The future of property management and multifamily real estate is not just about adopting AI tools—it’s about rethinking traditional roles, improving operational efficiencies, and elevating the entire resident experience.
Why AI Matters for Multifamily Real Estate
AI is revolutionizing industries by automating routine tasks, improving decision-making, and providing actionable insights that drive business outcomes. In multifamily real estate, this shift is even more crucial. The primary goal for property owners is to increase Net Operating Income (NOI). NOI is the foundation of a property’s value—it’s the difference between income and operating expenses, and it directly impacts profitability. Those who focus on optimizing NOI can significantly improve the financial performance of their properties.
AI has the potential to play a significant role in this process. With AI tools, property managers can automate everything from lease processing and maintenance requests to predicting market trends and optimizing rental pricing. Yet, the real value lies in understanding how to use these tools to make informed decisions and take strategic action. While AI cannot completely replace human intelligence, it may undoubtedly improve it. The businesses that are most successful in integrating AI into their operations will be the ones that understand how to use these tools effectively and strategically.
The Skepticism Surrounding AI in Real Estate
Despite the vast potential of AI, there’s still significant skepticism in the multifamily real estate sector. Many professionals in the industry are hesitant to adopt new technologies. Whether due to a lack of understanding, fear of job displacement, or simply a reluctance to change. While AI is undoubtedly transforming many industries, some still view it with suspicion, seeing it as an expensive tool that may not be worth the investment or effort.
However, AI is not about replacing jobs—it’s about making jobs easier and more efficient. It is simplistic to assume that AI will supplant humans. Those who understand how to use AI will be the ones leading the charge in the future. Just like how John Henry faced the steam hammer in the past, today’s professionals must face the reality that AI is coming, and those who embrace it will be the ones who thrive. Companies that resist change will likely struggle, while those who understand how to integrate AI into their operations will gain a significant competitive advantage.
The Importance of Employee Training and Career Growth
One of the key challenges in the multifamily real estate sector is the lack of proper training for employees. Many professionals are thrown into roles without adequate preparation, leaving them to learn on the job. This lack of training often leads to inefficiencies, errors, and missed opportunities. For businesses to succeed in a rapidly changing world, it’s essential to focus on employee development and training.
Stephen Rehea, a multifamily operator and technologist, has firsthand experience with the importance of training and developing talent. Rehea’s journey into real estate began in sales, but his understanding of property management and processes deepened over time. He emphasizes that property management is not just about filling vacancies or collecting rent; it’s about understanding the intricacies of the business, training employees, and fostering a culture of growth and development.
As property management companies expand, they must prioritize talent development and ensure employees are equipped with the skills they need to succeed. It’s not just about hiring people and throwing them into roles. It’s about investing in their growth and providing opportunities for advancement. This approach can help individuals rise through the ranks, just as many of the best leasing agents have transitioned into higher-level roles.
The Overreliance on Software and the Misconception About Technology
Many property management companies mistakenly believe that investing in software alone will solve their problems. While software is certainly a valuable tool, it’s not a one-size-fits-all solution. The real issue lies in how technology is implemented. Many companies focus solely on training their employees to use software. Without taking the time to teach them how to manage properties effectively. As a result, employees may know how to use the tools, but they may not have a deeper understanding of property management necessary to drive success.
The size and complexity of large property management organizations present significant issues. Making significant changes or adopting new technologies can be a slow and difficult process in large organizations. In contrast, smaller, more nimble operators may be better positioned to innovate and disrupt the industry. The flexibility and adaptability of smaller companies enable them to move more quickly and experiment with new models, which may ultimately lead to greater success in the long run.
Tech Giants and Their Role in Disrupting Multifamily Real Estate
Companies like Amazon and McDonald’s have already disrupted industries by introducing new models and improving operational efficiency. Their ability to scale and innovate quickly has set them apart from traditional businesses. The multifamily real estate industry could see similar disruption from tech companies, especially as they bring efficiency, automation, and fresh business models to the table.
Some companies, like Lifetime Fitness and Marriott, are already testing long-term rental models, which could further shift the landscape of multifamily real estate. These companies are bringing new ideas and strategies to the table, challenging the conventional approach to property management. The future of multifamily real estate could involve collaboration between experienced operators and tech companies to create a new, innovative model that combines technology with traditional expertise.
Tim Safransky, a multifamily operator and industry expert, believes that the real success lies in allowing technology to define new ways of doing business, rather than merely adapting it to existing systems. Tim argues that early adopters of new technology often try to fit it into old practices, which limits its potential. Instead, businesses should embrace the possibilities of technology to reimagine processes and create new, more efficient ways of operating.
Reimagining Job Roles and Redefining Success
One of the most significant areas for disruption in multifamily real estate lies in the traditional roles within the industry. Many of the job roles in property management were created in the 1980s and 1990s. During a time when manual processes like paper ledgers and bank deposits were the norm. While technology has advanced significantly since then, many of these traditional roles remain unchanged.
Tim Safransky’s experience shows that the key to success lies in rethinking these traditional job roles and aligning them with modern needs. For example, sales shouldn’t be viewed as an entry-level position, but rather one that requires specialized skills and offers higher compensation. By shifting the perception of certain roles, businesses can encourage employees to aspire to higher positions and create a more motivated, skilled workforce.
Another sector that is ready for interruption is maintenance. Despite its importance in the resident experience, maintenance services have remained largely unchanged, and no company has figured out how to scale maintenance services effectively. Avalon Bay’s experiment with centralized maintenance in Washington, D.C., is a step in the right direction. More work is needed to build a scalable, efficient maintenance model that can be replicated across properties.
Improving Operational Efficiency Through AI
AI can also play a significant role in improving the operational efficiency of property management companies. Most property management technologies focus on customer-facing services, such as resident interactions and lease processing. However, there is a significant opportunity to use AI to streamline back-end operations, such as accounting, reporting, and vendor management.
Property managers may manage more properties with fewer resources by automating these procedures, which eases the workload for their teams. This increased efficiency can lead to lower operating costs, higher margins, and ultimately, a more profitable business. AI can also help property managers make more informed decisions by providing real-time data and insights that drive better financial outcomes.
The Future of AI and Robotics in Property Management
Looking ahead, Tim Safransky envisions a future where AI and robotics are integral to everyday operations in industries like property management. While robots may not fully replace humans in the next few years, AI will become a crucial part of the workforce by 2030. AI will augment human capabilities, helping workers perform their jobs more efficiently and effectively.
The challenge for property management companies is to understand how to use AI effectively. Those who fail to embrace AI will risk being left behind. While those who adapt will reap the rewards of increased efficiency, better service, and higher profitability. AI aims to enable human workers to perform their jobs more effectively and efficiently rather than to replace them.
Embracing AI for Long-Term Success
Multifamily real estate’s future depends on adopting AI and rethinking conventional procedures. Companies that focus on improving operational efficiencies, rethinking job roles, and leveraging AI to drive better decision-making will have a competitive edge. The challenge is not just about adopting new technologies. It’s about changing the mindset of the industry and embracing the possibilities that AI offers.
For multifamily real estate professionals, the AI wake-up call has already arrived. The time to act is now. Those who resist change will fall behind, while those who embrace it will lead the charge in the next wave of innovation. It’s not just about adopting new technology—it’s about transforming the way business is done and creating a more efficient, profitable, and resident-friendly industry.
In the end, AI is not just a tool for property managers. It’s the key to the future of the multifamily real estate industry. Embrace the AI revolution today, or risk being left behind tomorrow. AI is driving the future, which is already here.