Multifamily Technology Myths and Realities

Multifamily technology is finally moving at record speeds, but keeping tabs on the ROI of emerging applications is still an exercise in tuning out the buzz to find the benefits. Here's a look at the myths and realities behind social media, mobile mania, and resident portals. Not long ago, in the summer of 2007, the buzz in the multifamily industry centered on a then-emerging technology known as resident portals. Some envisioned portals as a cross-promotional cornucopia where residents could engage with their management company, while simultaneously arranging for dry cleaning pick-up, shopping for groceries online, even getting a pizza delivered to their door.

Reality hasn’t lived up to the hype.

“I remember people talking about the pizza,” jokes Donald Davidoff, group vice president at Englewood, Colo.-based Archstone, which owns 83,000 units nationally. “I didn’t believe it then, and I don’t believe it now.” Yet there is a lesson to learn from the pizza that never came: Like most cutting-edge innovations, portals didn’t deliver the functionality that was originally imagined, but they have become a cornerstone technology for multifamily.

Today, just as in 2007, several new technologies are creating a stir. Social media, mobile search, and augmented reality are the hot topics in 2010. These bleeding-edge technologies seemingly come with myths and realities that the multifamily operator constantly needs to parse. Statistical analysis of social media within the apartment industry suggests low resident usage even while property managers say it’s a must-have item. Likewise, the use of mobile search and augmented reality apps continues to proliferate but still seriously lag traditional lead-to-lease categories such as Internet listing services (ILSs). And of course, portals have morphed into something other than their revolutionary promises.

The bottom line for multifamily tech pros? They must consistently evaluate how new technologies maximize efficiencies and create tangible ROI today—while effectively managing expectations to spare the disappointment of waiting for a pizza that’s never going to come.

If you’re growing your social circle …

Perhaps no area of multifamily tech has received more attention over the past year than social media. With “fan pages” for apartment communities littering the Facebook landscape and management companies tweeting about their latest lease promotions with second-to-second frequency on Twitter and other micro-blogging sites, it’s hard not to get caught up in the whirling dervish of multifamily’s social media obsession.

“It’s gotten to the point where you’ve got to do it,” says Andrew Marshall, chief information officer at Philadelphia-based Campus Apartments, whose core college demographic is the mainstay of Facebook’s user base. “You’ve got to be visible on social media [sites] because, although it’s extremely intangible, there’s no doubt it has an impact on new resident engagement.”

Still, it’s unclear exactly how large that impact is. In a survey of 11,905 apartment residents—individuals living at properties owned or managed by four of Multifamily Executive’s Top 50 apartment firms as well as one large regional operator—Houston-based J. Turner Research found that 92 percent of residents had never visited an apartment community’s page, whether on Facebook, MySpace, Twitter, LinkedIn, or Orkut. “With all the excitement that we’ve seen in the industry regarding social media, these numbers are shocking,” says J. Turner’s president Joseph Batdorf. “On its face, unless these numbers grow significantly, this has all been much ado about nothing.” Indeed, Highlands Ranch, Colo.-based REIT UDR, which owns 45,000 units nationally, has only recently began creating Facebook pages for a handful of its properties; the firm has yet to see a justification for doing so portfolio-wide.

“Often, when you go to a community’s fan page, you see that they only have five or six people there. What that says is people don’t go to those types of pages looking for content,” says Steve Taraborelli, vice president of marketing at UDR. “On the other hand, third-party sites such as ApartmentRatings.com and Yelp! have commanded a lot of online respect.” UDR tends to pay more attention to those third-party sites, Taraborelli says, where it can effectively manage its online reputation and respond to problems. “The main goal for us is to listen to our customers,” he adds.

That said, the goal of developing a social media presence for properties isn’t to drive traffic online—it’s about creating leases. Many companies say they have successfully used social media for leasing and resident retention purposes, increasing traffic to their corporate Web sites, and improving search engine results.

Take New Orleans-based HRI Properties, an owner and manager of 3,800 units in New Orleans; Jackson, Miss.; and St. Louis. When HRI debuted its King Edward property, a 64-unit luxury rehab in downtown Jackson in January, it did so via a social media campaign. Instead of using traditional print sources, it marketed the property through a Facebook page with paid Facebook advertising and a few ILS placements. Given the awkward seasonality of its January opening, the current economic climate, and its luxury price point, the firm expected lease-up to take at least six months, if not more. But by the end of January, the property had less than 10 percent of its inventory (a mere six units) left. “We leased it up before we even had our brochures completed,” says David Abbenante, president of HRI’s property management division.

Abbenante says nearly all of the property’s leads came via Facebook at a discount cost of $115 per lease, compared to $377 per lease historically. “If you think about what our traditional advertising would be, we would usually have a significant budget to penetrate a new market and then sustain it,” Abbenante says. “We got this done with nothing more than a little Internet creativity. These units were literally absorbed overnight.”

At Indianapolis-based J.C. Hart Co., which owns 3,200 units in Indiana and Ohio, vice president of marketing Mark Juleen estimates that the firm has saved $100,000 over two years using social media by eliminating most of its print advertising. Not only has the firm maintained occupancies in a down market, it has boosted its ranking in Google search results for the term “Indianapolis apartments” from 40th to as high as 12th. “We did that organically, without buying Google search terms,” Juleen says. “Plus, when I build a Facebook fan page, unlike a print ad, it’s there forever.”

Scottsdale, Ariz.-based Mark-Taylor Residential, which manages 11,622 units primarily in the Southwest, grew its Web traffic by 55 percent from August 2008 to August 2009 after launching a social media campaign. “We increased the size of our digital footprint,” says director of marketing Kim Atkinson. “It means we’re creating more roads that ultimately lead to Mark-Taylor.com.”

Indeed, increasing one’s “Google juice” is a primary motivator for using social media. “It helps you get found more quickly,” says industry consultant Lisa Trosien of ApartmentExpert.com. “The real benefit is a higher ranking in the search engine results.”

If you’re leveraging mobile mania …

When it comes to turning online avenues into rental leases, John Helm says a smart phone in the hand will soon be worth two PCs at home. The founder and CEO of San Francisco-based ILS MyNewPlace.com says mobile apartment hunters have twice the conversion rate of traditional Internet prospects.

Helm first noticed the trend in May 2009 when MyNewPlace launched its proprietary iPhone application, and a small percentage of the site’s 2.5 million to 3 million monthly visitors started using it. “We drove up our lead volumes appreciably,” says Helm, who estimates it took three months and $30,000 to develop the app. “Basically, the thing paid for itself within 30 days.”

That makes sense, given the way people use their phones today. “The mobile platform naturally lends itself to contacting a community,” Helm adds. “They’re already on a phone.”

While mobile users account for just 5 percent of MyNewPlace.com’s total traffic today, mobile use in the United States is growing at a blistering pace. According to wireless trade group CTIA, cell phones now have higher penetration rates than Internet or cable TV, and 70 million Americans regularly use mobile Web browsers. Add to that the explosion of iPhone apps—more than 2 billion have been downloaded worldwide—plus the appearance of Google’s Android in late 2009, and mobile search has clearly arrived.

The numbers are notable even within multifamily. At UDR, mobile search accounted for 9 percent of all apartment searches at its Web site in 2009, and visitors racked up 427,000 mobile page views there. The company generated 97 mobile leases last year. “We feel that mobile offers a far better experience than PCs or laptops,” says UDR’s Taraborelli. The firm has developed its own proprietary applications for the iPhone and Android and is working on a Blackberry offering. “We get a greater depth of audience demographics, and we can conduct marketing campaigns based on location targeting,” he adds.

In late 2009, UDR launched multifamily’s first augmented reality application, a technology that uses location awareness to send information along with images captured in real-time by a phone’s camera. Imagine pointing your phone at a UDR property and seeing pricing and availability data superimposed over the live image. “We launched augmented reality in September of 2009 and by year’s end, we had more than 125,000 downloads,” Taraborelli says. “It just tells us that even within the apartment industry, demand is outstanding.”

At Norfolk, Va.-based ILS ForRent.com, mobile and augmented reality have also become, well, a reality. The firm has apps for both the iPhone and the Android; it also launched its own augmented reality functionality in December 2009. Mobile searching now accounts for 10 percent of all traffic.

“For us, mobile search and augmented reality are a natural extension of the way consumers interact with our brand,” says Brock MacLean, ForRent’s senior vice president. “Ultimately, it’s becoming the way they’re finding their new apartment home.”

While neither UDR nor ForRent would disclose the cost of developing their augmented reality applications, both firms characterized it as minimal. They were also able to launch them quickly. UDR said it only took three weeks to overlay its augmented reality app onto its existing technology, while ForRent’s rollout took less than four months. “If you’ve got the technological expertise, building it isn’t a quantum leap,” MacLean says.

Both say the key for using mobile and augmented reality is to make sure your data ducks are in a row. For a mobile-friendly Web site, that means paring down graphical elements, while presenting listings with simple, easy-to-read text. For example, UDR has a link to an “iPhone site” from its home page—click on it in a PC browser, and you see just four lines of simple text on the screen. In the augmented reality area, a good strategy is to feed continually-updated data from a back-end property management system into the app. UDR uses Scottsdale, Ariz.-based VaultWare’s availability software. “You’ve got to have the electronic information set up correctly in the first place,” says UDR’s Andrew Cantor, vice president of investor relations. “If you don’t, it’s going to take a lot longer.”

Other firms are waiting to see where these technologies head, especially augmented reality. “I don’t think augmented reality is a fad, but I also don’t think people are going to drive around, point their camera at a random building and say, ‘I wonder what’s available there,’” says Archstone’s Davidoff. “Remember, an apartment rental is usually the biggest check an individual writes. Believe it or not, they actually do a lot of research before they get in the car.” More likely, Davidoff says, is that prospects will use mobile search and augmented reality once they’ve narrowed their search. “What this will be good for is delivering information to them after they’ve done that initial research and have a plan for what they want to see.”

If you’re crossing the portal …

Even after moving in, Campus Apartments’ core demographic of college-age, Gen Y residents know exactly what they want to see, as well as exactly how they want to communicate with the company. And it’s almost never face-to-face. “Our residents expect to be able to get service fulfillment 24/7 using their laptop, PC, smart phone, whatever,” Marshall says. “Other than that, they don’t really want to talk to us.”

In fact, the “Don’t-call-me, I’ll-text-you” attitude of America’s future leaders pushed Campus Apartments to develop its own proprietary resident portal in 2006. Today, more than 75 percent of its 24,000 residents regularly use CASHPort, which is accessible via the Web, integrated with multiple social media sites, and tailored for easy viewing in a smart phone browser. Through CASHPort, Campus Apartments’ residents can pay rent, submit a service request, check their payment history, and even get updates for community and school events that are simultaneously blasted to their smart phone via Facebook and Twitter.

“We’ve integrated the Web site, social media, and our resident portal into one proprietary solution,” says Marshall, who puts its development cost in the high six figures. “It’s set up for any device that can be used on the Internet.” And while no one’s ordering a pizza via the system, Campus Apartments has had some success in cross promotions. Residents paying their rent online can get a discount to Bed, Bath & Beyond, for instance, when using the portal. Campus Apartments collects approximately 17 percent of its rent payments online, a number that’s grown 50 percent year-over-year, tracking close to industry averages. Likewise, at Carrollton, Texas-based RealPage, whose software supports more than 30,000 apartment communities nationally, customers on its OneSite portal saw electronic payments nearly double last year, from 16 percent in 2008 to 28 percent in 2009. “Clients are really pushing portals because they save so much time in the leasing office,” says Ashley Glover, executive vice president at RealPage. The firm estimates manual rent processing consumes two days a month at a typical community. “Just moving a portion of your payments online is huge because you have that many fewer people walking in the door to pay rent.”

The trick, operators say, is to get residents to buy into the process. One firm that’s been able to do so is UDR, which rolled out electronic payments using RealPage’s portal in February 2009 and had 63 percent penetration for electronic payments by year’s end. It did so (at least in one instance) by no longer accepting rent checks in its drop box. Posts on the Facebook fan page for UDR’s Gayton Pointe Townhomes community in Richmond, Va., give residents a friendly reminder that any check left in the drop box will be returned. “It’s reduced the administrative time of our on-site staff,” says UDR’s Jerry Davis, senior vice president of property operations, who notes that35 percent of the firm’s service requests are now submitted online via the resident portal as well.

While payments and work orders represent the largest segment of portal activity today, other uses are emerging. RealPage says clients are beginning to harness portals for lease renewals, too. “Renewals are the next area we’re seeing significant interest,” says Leslie Turner, president of RealPage’s OneSite division. “They’ll notify residents via e-mail that there’s a time-sensitive renewal offer waiting for them. Not only does it incentivize the resident to act quickly, but it frees up more time in the office.”

And while Campus Apartments spent well into the six figures developing its proprietary portal, Glover says most firms can get started with an off-the-shelf system for as little as $1,000 to $2,000 per property. “The ROI is fairly significant,” Glover says.

Now, if the portal could just deliver that pizza.

Joe Bousquin is a freelance writer based in Sacramento, Calif.