Here Is One New Word To Learn And It Isn't Pretty

As I wrote and described in a white paper of two years ago entitled RESOLUTION, we in multifamily were entering the era of the ‘end of business as usual’. 

The construct and premise of the white paper was founded on three axioms:

1.       The fragmentation of our industry was its Achilles heel

2.       That ‘capital’ would soon chase down our inefficiencies and asset management decision making

3.       That unless there was an aggressive adoption of a digital transformation ( I called it “going digital at the core”) conventional operating methods would soon debilitate and expose the weak from the herd as easy prey for predators

Two years ago I set the timeline for a significant industry restructuring as five years. Two years have now passed, so we are now down to three years. 36 months, which is not a lot of time.

Look and see. In just the last few weeks we have seen the moves begin. Learn a new word: ACTIVIST.

Two companies of industry renown are just now under pressure – from activists. And so it begins. 

These activists are ‘capital’ style companies not operators. They smell the ‘opportunity’ for profit. Their actions will bring attention and attract even more activists and the frenzy will build. The herd mentality surrounding aggressive activism will create very strange and in many cases unwelcomed new bed fellows. New alliances and consolidations will occur at an increasing rate. It will be ‘white water’ time for many. As a defense, hiding out is no longer an option in the age of the automated patrolling and culling of business data and intelligence. Be assured that ‘big data’ is already at work to expose the weak and inefficient in our industry. The big data ‘radar’ screens are filling up as you read this, with a veritable slew of potential targets.

The end game is to create an ‘entity’ worthy of attracting massive capital infusion. The first phase will be in simple size consolidation. And we have already seen that happening. The next will be deciding on being an owner or a fee manager. We see that now happening. Building out an infrastructure of magnitude and import will set the activists on the hunt for the underperforming and exposed. It is always an activist’s belief that it can be done better and more efficiently and technology at scale holds the key. They know that housing will be at a premium in the years ahead. And with the supply limitations controlling housing as a ‘natural resource’ comes the opportunity for pricing arbitrage and access to state and federal subsidies and tax benefits. Such fertile ground.

The future will demand unparalleled disclosure of operating performance and the value being derived for investors. The metrics will steer many to privatization away from ‘public’ markets making the cost and availability of capital a devil-driven paradox. Others will see that the best protection is to be found in operating results and in the improved use of capital in asset decision making. 

My point in the white paper was that the new era will absolutely require the adoption of ‘digital efficiencies’ that can deliver increased ROI and better business intelligence used in decision making. It will become ever more understood that technology is the new finance. 

How long before local property offices seem like an airline check-in operation? How long before a national service handles all leasing? How long before the ‘internet of things’ totally monitors the performance of your local assets? How long before a robot says “Welcome to Happy Hollows – here is your key”?

Not long.

As always, I am here to help. Send me an e-mail at Mike.radice46@gmail.com if a conversation on ‘going digital at the core’ would be helpful to your planning for the future

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Mike

Does Your Multifamily Business Have Answers to These 5 Tough Questions?

The multifamily housing industry is one of if not the most fragmented industry in the United States. Fragmentation is characterized by the fact that no significant national housing investment vehicle yet exists that can attract capital seeking to dominate and secure national market control and gain financial synergies on a massive scale. However, capital markets and the next wave of technology driven by cultural influences will combine to consolidate and motivate the enablement of just such an ‘industry powerhouse player.’

Don’t be misled, the game is changing. We are rapidly approaching the end of business as usual in multifamily. The economic outlook for the future of the industry is too alluring for investors to ignore. Business model moves by Blackstone, Zillow, Renter.com and Greystar serve as clear evidence of this trend. Not so obvious, however, is the underlying importance of technology on executing a successful future outcome. Multifamily leaders (read, ‘survivors’) in the new era will be driven by how well they embrace becoming ‘digital at the core’.

Becoming ‘Digital at the core’ is about reducing asset investment risks, creating competitive marketplace advantages, and increasing asset values in light of the industry’s future structure. Anyone with a stake in multifamily cannot afford to ignore the impending mandate to become digital at the core.

When businesses become ‘digital at the core’ they are smarter, quicker, more efficient and significantly more powerful and competitive. When people work in businesses that are ‘digital at the core’ they secure unique advantages. They become knowledge workers that can find what they need, know, what they need to learn, do what they need to do, exactly at the right moment. And, they can take action from anywhere and at any time. The depth of benefits derived and being driven by this change are profound.

The mandate to become “digital at the core” is inexorable. It is driven by residents, workers, lenders, regulators, competitors, investors and technology itself. It is these constituencies, stakeholders and powers that make becoming ‘digital at the core’ a required strategy for survival.

The great businesses of the 21^st Century have already demonstrated what it means to become ‘digital at the core.’ This means, digital operations, digital workflows, and digital processes that permeate, and ooze within their business DNA.

Digital operations mean success, and here are some reasons why from Dr. Peter Weill, MIT Sloan School of Management’s Center for Information Research, Wall Street Journal:

ü  IT-savvy companies are 21% more profitable…

ü  IT-savvy companies make information technology a strategic asset

ü  They use their technology to reduce costs today by digitizing their core processes…

ü  IT-savvy companies use their digital platform to collaborate with other companies, customers, and suppliers

ü  It’s about the whole company thinking digitally

ü  For the IT-savvy business, there are two sources of their greater profitability: lower costs for running existing business processes, and faster innovation.

A survey of the landscape of successful companies in this digital age quickly surfaces those that have crossed the great divide, having moved from legacy data processing infrastructures to becoming truly digital at the core. By doing so they become not only highly competitive, but also highly valued. Nike, blending technology with sports shoes and clothing. JetBlue, integrating entertainment and communication technologies with air travel. DirecTV, putting advanced entertainment systems and choices in the palm of your hand. And of course there remains the ubiquitous Facebook, FedEx and Apple with its iTunes, Apple Watch and Apple iPay. Think of the success of Samsung with smartphones and smart TVs that put a seemingly endless amount of entertainment content at your fingertips. Amazon and now Alibaba that puts digital shopping and shipping and now even ‘entertainment media’ one click away for millions shoppers. And, UBER – where a ride is just a click away. Each and every one – creating and exploiting marketplace advantages by being digital at the core and gaining significant valuations and returns on their investment and innovation.

For multifamily executives, embracing the opportunity and challenges of technology, determining technology investment levels that the future will demand, might seem a bit overwhelming. It doesn't have to be.

.

Drive to answer these few important questions:

1.      Do I understand how advances in technology will change the basis of competition in multifamily?

2.      What will be required in technology to meet if not exceed the expectations of residents, customers, and business partners and investors? How would you describe those future expectations?

3.      Do your current business plans clearly incorporate the role of technology as a performance contributor, knowledge differentiator, and value creator?

4.      Do your technology plans and investments clearly identify and align with your views on the threats, opportunities, and economic outlooks you consider probable?

5.      How agile and flexible are your technology plans and programs in light of rapidly changing economic and regulatory compliance conditions?

In the end, the below list of key objectives for multifamily businesses will remain sacrosanct, and, yes, they too must be kept ever in mind:

v  Asset value development via new development, acquisition and divestiture

v  Risk mitigation

v  Resident acquisition and rent yield

v  Resident satisfaction and loyalty

v  Property management effectiveness and efficiency

v  Local marketing and brand and reputational development

v  For Fee Managers: customer acquisition and longevity

Blending these objectives into a technology strategy that addresses the above suggested macro questions will help you frame out a path forward.

The point is, that it will be technology that frames the future successful industry business models. Not just for the efficiencies technology can deliver but more importantly for access to the ‘knowledge’ that drives sound, risk mitigated decision making and operations.

As always I am here to help. If you would like me to lead a team session to help formulate your strategic technology planning send me an e-mail at: mike.radice46@gmail.com or call me at 603-580-5497.

Two Ways to Put More Profit in Your 2015 Expense Budget

1.       Reduce the expense that continues to surround ‘evictions and collections’ processing.

Over and over I see the following:

o   It’s like every case is almost a new experience….OK, for some it is…

o   Gathering the necessary paperwork remains a medieval practice.

o   Physically get the needed paper files.

o   Maybe, even then copy, pack and pay to ship them to a central office.

o   Make multiple copies of the files.

o   Pay to re-ship the copied files to the collections service or the law firm.

o   Review paper docs to determine what’s missing.

o   Make multiple copies of the files.

o   Hold multiple, multi-site conference calls to explain what is yet needed, from whom and why.

o   (Collections probability inexorably slides ever more negative due to time delay.)

o   The preparation of eviction packages with multiple law firms in multiple jurisdictions and are thus scattered on desks in paper packages across the legal country side.

o   Constant follow up (nagging?) to source missing documents.

o   The time and effort that goes into on-going ‘tracking and reporting’ is a huge time sink.

In this digital age it is possible to set up (1) electronic files to store all resident related documentation (2) create ‘shared secure electronic files’ for each resident case, providing real time access by collections services and law firms and (3) run compliance documentation audits to be sure that what might be need is there. Eliminate the copying and shipping cost and time. The property management company and the collections service or law firm can all now have real time shared access to needed documents-instantly.

Done properly all this documentation can be electronically sourced directly from property offices. No need to fill out shipping labels and pay for shipping! What is the shipping cost times how many packages?

We seem to understand the need for electronic maintenance task tracking. We all seem to understand the need for electronic A/P processing. Why should ‘evictions and collections’ task processing - which means REAL MONEY TOO - be treated so poorly and remain a paper based process?

Electronic document exchange and electronic workflows can easily handle all of this – stunningly well.

2.       Portfolio wide printer fleet management and support by using an outsourced ‘managed print service program’. (I have reviewed many and have suggestions.) Lower your printer equipment purchase and supplies costs, practically eliminate IT support expense and lower the cost of paper.

A managed print service program is no different in rationale than why you would hire a landscaper or a painting contractor. They probably can do the task quicker, better and cheaper. So it is with a managed print service provider. If you have more than 25 office printers in your portfolio and you are not subscribed to an outsourced managed print service program. What can I say? 

Why do you want to pay more than you should in printing, support and supplies? Do you think that all those cartridges and ink toner tanks that line the walls of office supply stores are there because they are low margin products for the retailers? Do the math on printer support. If you are good, 10% of IT help desk time is taken up with printer issues. How much do you pay an IT person? What does it mean to ‘leasing’ when the printer is not working? Do I really need that model of printer that can do 5,000, collated, stapled, three-hole punched copies a week? (What would it mean as a paid resident amenity if residents had access to a printer at the community to support their personal 24/7 printing needs?)

Too often we think that because our printers are spread out at local community offices and not all in a central location that an outsourced managed print services program will not make sense. Wrong. The savings can be stunning. And, you can find out just how much savings for FREE!

So, there you have it. Two ways to reduce your expense budget!

As I always offer - if you want to learn more about taking advantage of systems and programs that can provide these specific benefits, send me an e-mail at mike.radice46@gmail.com I’d be happy to help.

Mike

Isn't It the Time and Technology for Centralized Leasing?

I know first reaction to this idea raises all kinds of subtleties and nuances. So be it…but, let’s carry on. 

It’s called innovation.

How much do you spend on the investment in systems, equipment, training, and local staff time allocated to generating a final lease package? Next, consider just how much ‘violation’ of law, policy, compliance and regulation finds its way into localized lease package preparation. How many of your lease packages are done correctly and are in compliance? The answers to just these two questions should more than justify a re-consideration of how things are being done now. After all, if it is all working so well, why the need and expense for annual on-site lease audits? What and why for in this digital age? Does it make sense to take a plane ride to a storage locker to open paper files? Is every paper file reviewed or is statistical sampling used? Electronically, legal can actually review every resident the entire lease package-- if they are stored centrally, and digital right from their office.

Imagine a centralized or regional leasing staff that prepared all of your leases. In this day and age of digital interaction and responsiveness this can surely be done. Fact is, I know of one company designing just such a regional platform for just such use.

With ‘centralized/regional’ leasing, the gains in control and compliance would be significant. The reductions in risk and legal exposures would be legion. The discipline gains surrounding lease terms agreed to would make any multifamily legal department have instant ‘happy feet’. Just the fact that ONLY the most current version of a lease or addendum is being used, would bring comfort to the heart of any multifamily legal department.

Second level benefits would be the removal of paper based files from local property storage, reducing risks, and the capacity to expedite the paper/document assembly required for eviction and collections processing. In addition, the care and feeding of IT interfaces for capture and storage of a finalized lease package being prepared at local properties becomes simpler. With todays ‘capture and route’ capabilities using smart MFP devices final filing upon signature is made simpler and ever more compliant. There are even technologies that can ‘survey’ the documents upon attempted filing to see if they are actually completed, initialed and signed properly. If not, filing is prohibited.

Think of the increase in service and responsiveness when lease terms can be ‘adjusted’ and instantly, in real time, approved by a ‘centralized leasing staff supervisor’ working at the regional lease service center. And, oh yes, since so much of the back and forth is with renters who are remote from the property anyway – a centralized service center can work the interaction and finalization 24/7. A very powerful service differentiator among property choices.

“Hello, I am Robert, your personal lease associate at your 24 hour leasing service center…you can call us at any time or day with questions or to obtain your final lease package for review.” It has a nice cadence to it.

When tied into the advance of ‘consumer driven leasing’ as I discussed last week, such a business model would position ‘the movers and shakers’ in multifamily very well to secure and hold the high ground of the future of leasing.

So let me see… more control, less staff time and training, experts doing the work, increased service and responsiveness, no remote audit time and expense, lower IT costs and strong future service positioning….sound like pretty nice concept to be explored.

If indeed you would like to evaluate becoming a ‘prototype site’ for just such a platform and model send me an e-mail at:

Mike.radice46@gmail.com

…and I will be glad to arrange to introduce you to the model…

Mike

Is Personal Identity Theft In Multifamily Greater With Paper or Digtial Use?

There are very few businesses that request and require the level of detailed personal information that we as landlords do. As a result the need for secure practices at every level ‘physical and digital’ are critical to avoiding personal identity theft liability.

More than 50% of personal identity violations/thefts are the result of paper based thefts. When we think about it, this makes for an understandable finding. While we are always stunned when there is a major digital hack, in total, what actually materializes into an active theft of someone’s entire identity is a small number among those type of incidents. Sure, bogus financial transactions are prevalent but many are trapped out early and the costs are modest to individuals – in most instances. And, a hack of a Facebook account, while it may be concerning, these types of hacks usually translate into a nuisance or embarrassment.

But when someone is able to capture not just a credit card number or a password to one system but the entire, all-embracing metrics of a person’s entire personal identity – this is a situation now taken to a much higher level of exposure. If you can piece together a driver’s license, SSN and credit report data for an individual, now you have a true identity theft situation. The stakes for everyone involved have now escalated. So, hmmmm…if I was a criminal intent on surfacing opportunities to snatch such a complete record of such information where might I look? You got it…an apartment leasing office!

Not only is the opportunity there, the apartment leasing office can be a fairly well trafficked, somewhat ‘public’ space with visitors. Or, as John Dillinger, the notorious bank robber once said of his criminal activities, in answer to the question: “John, why do you rob banks?” “Well,” he responded, “that’s where the money is!”

I have seen the reality of this condition, personally. Resident files left on the desk, perhaps even overnight for the cleaning staff’s casual reading or copying with the click of a smartphone’s camera. Rental applications and credit reports sitting in unattended print output trays. Driver’s license paper copies dropped in trash cans because the original attempt at a copy came out a little too dark. Do you do frequent security checks to see what’s in your trash? Do you have a secure disposal container? Do you have a shredder? While these security procedures can be good for paper that is to be disposed of but what about your active paperwork and live files? Laws regarding a business’s liability which are designed to ensure that adequate protections and management oversights are in place continue to get ever more expansive and draconian.

But alas, this is a blog about multifamily technology. Driven by security standards such as HIPPA, PCI, and the increasingly energetic Consumer Financial Protection Board (CFPB) to cite a few, new print management technologies are coming to market that can significantly reduce paper based breaches resulting from the active in office use of paper.

As a starter, you can now get all the ‘paper’ digitized and avoid storing paper files on site.

I also have recently tested one excellent example of this new print management technology. It makes unattended printing a mistake of the past and a risk you can now easily avoid and for FREE. It also helps reduce print costs since print jobs can be managed ever better before they go to print. Ever go to the printer to find your financial report has been printed on sticky address labels?

I can send you a link for a FREE access used to install a print security system and if it fits your print systems profile it’s yours to have.

So, if you have an interest in this technology and want to reduce risk and exposure to paper based personal identity theft liability, send me an e-mail at mike.radice46@gmail.com I’d be happy to send you the link. Yes, it is FREE.

 

Mike

The Consumer Driven Technology Model Will Now Overtake Multifamily Leasing

For some time now I have been predicting that the multifamily leasing world would be turned upside down. What was previously driven by landlords will now be driven by consumers. 

Multifamily had been orienting itself around a leasing model that is now about to begin to crater. The conventional model has been one whereby a potential renter must present themselves (read expose themselves to a sales pitch) either in person or engage via a property web site conducting ‘one to one’ negotiations. Potential renters were held, understandably so, captive to having to make an on-site visit, completing a guest card and ‘getting the pitch’ one property at a time. An effort they find increasingly exhausting in the digital age.

Today’s tech savvy consumers demand control over their time and effort. They want speed – driven electronically. They want open options. They want leverage. They don’t want to make physical visits, have meetings, schedule appointments, wait in line or negotiate terms. We all have seen the power of these consumer driven drivers in industries like insurance, hotel bookings, taxis or car rentals for example. We are now seeing this same consumer driven model gaining traction in apartment rentals.

The consumer driven leasing business model is simple. Consumer goes on-line, completes an application, specifies the credit bureau to be used to get a credit report so as to protect their personal information and sends the application to the leasing property for acceptance. Over to the leasing agent – accept or decline the application?

The ‘Priceline style web sites’ for generating competing ‘bids’ from multiple property options regarding a rental are also starting to appear. On the surface the business model is also simple. A potential renter (consumer) spies an acceptable property and launches an ‘active competitive open bidding process’ against other properties which are also acceptable choices. Game turn is now over to the ‘electronic leasing sales agent’ to bid, compete and the game plays on.

The issues in front of multifamily business leaders and technologists in this new era are significant. 

First will be the necessity for determining IF and how to participate. Major policy decisions will be required. Skill and systems development surrounding the ‘leasing agent’ interactions with such gaming/bid systems will be paramount. How will open disclosures of terms and concessions effect local and industry rent yield ‘pricing’? How much will you pay to play in this new game?

The issues in front of the technology leaders will be the ‘integration’ of what will become a super hyper-active, real time data stream of inventory, active bids and pricing surging at you from multiple consumer bidding sources.

The above examples are only a very few of the emerging strategic elements to be considered.

The fundamental drivers are threefold:

First, we all must recognize that this is the age of seeming unlimited access to the information we need to make choices and decisions. Physical is replaced by virtual. Virtual visits are already replacing the need for on-site persuasive sales pitches. The quality of the information being made available by the ‘property web site’, by ‘social media’, by Google Satellite views, etc. and soon by ‘bidding engines’ will carry the day.

Secondly, as I have also stated previously this is the age where for multifamily, ‘going digital at the core’ is an inexorable force (I have a white paper available by request on this very subject) one that will need to be met by multifamily. Only the ‘digital’ will prosper.

Thirdly, consumer desires always win the business model design contest.

We will see a significant ramp up of these new leasing models – you can bet on their popularity, and success.

As always, if I can help further in grappling with these issues just send me an e-mail at Mike.radice46@gmail.com. I’d be happy to help.

Mike

Why Your New Multifamily System Will Fail

I was recently asked –another question:

Why is it that new system initiatives using technology that actually works well, often fails to be adopted?

Anyone with any level of experience in systems and technology deployments has also most likely experienced some level of failure when deploying a new system. Far too often, however, that failure was not driven by the choice of the technology or the underlying system concept itself.

Failure ‘to adopt’ was most likely driven by the following:

1.       Too much change. As fast as technology advances, it seems that every week we should be adopting something new and better. Organizations are complex ecologies of people and processes. People and processes have an embedded DNA code against change. It’s called survival. Radical restructuring driven by new systems and technology ignites the survival ‘fight or flee’ instinct. Driven by the fear of ‘what if I can’t do my job using the new ‘thing’? Every obstacle real or imagined will be thrown back on the innovator.

Solution: Plan incremental adoptive steps. Find ‘adaptive internal leaders’. Make staged changes to processes. Be sure the new process is a complete process.

2.       Giving Senior executives a free pass. “Well, it will be good for the staff but not for me. I have been storing my paper files in boxes for 42 years- and that’s where they are staying.” Or – “OK, let the properties use it, but for me I will just give the task to Frank, as I always have.” Frank, is better that any touch screen I have seen.” When total organizational use and commitment is lacking, the smell of ‘the kill’ starts to show up. The organization senses a ‘kill’ and knows full well that non using senior execs will facilitate an eventual ‘thumbs down’ vote.

Solution: If the senior execs won’t learn and use the very same systems – bag it.

3.       It was not ‘of the world’ I work in. Sure most technology performs well when the world you’re working in is a blest place. For many the world of ‘reality’ is often plagued with – well, reality. “So let me understand this - I need a laptop with Windows 6 (but I am already using Windows 7) and I need to revert to IE 9 or download Chrome and I need to always be near a WiFi connection (hell, I can’t get a connection in the break room at this place) and the router needs to be plugged in (you are kidding – someone is always unplugging from the one electrical outlet we have for the copy machine, the telephone system, the fire alarm system, the time clock and the coffee machine. The coffee machine always wins! The point is that environmental and working conditions in and where the technology is to be used needs to be treated as a crucial consideration in successful deployment planning.

Solution: Know the real world nuances of where the technology is planned to be used.

4.       Don’t train users –formally. Just tell them to sign in. They can click on the “?” in the upper right of the page and search the FAQ section. They’ll eventually get it figured out. It turns out, pre-release training NOT post release training sessions are your best friend for success. Everyone learns and benefits. The buy-in is stronger and employees feel respected, engaged and take a pride of ownership.

Solution: Do pre-release training sessions. It is that simple.

5.       Avoided having to spend a week on site actually using it yourself. I mean, after all, with live web sessions, videos, tele-conferences and the ability to link to a live desktop why leave my ‘chair’? Doing so would mean I would actually be able to hear the end user breathe and see their faces fill with fear. Besides they are too busy to pay attention. This is the exact point. Life in the real world is a cacophony of unplanned moments and unintended consequences. Without on-site actual, real time, usage amid the chaos of a ‘day in the life’ experience of the end user by the ‘inventor’ of this new thing, success is like a deer in the headlights.

Solution: Go into the field and perform as an end user and experience the actual usage yourself.

6.       Don’t schedule end user follow up de-briefs soon or too frequently. Let’s face it having to hear of all the trials and tribulations of sustained attempted use can be painful. History teaches that ‘rev 2’ is usually better and ‘rev 3’ finally gets us where we want to be. Understanding and uncovering these enhancement stages need to be part of the long term stated plan. A technology plan that makes no room or allowance for follow on support or development is doomed. Planning to roll it out and forget it because we are too busy now on the next thing is all too often what happens.

Solution: Plan early on for gathering staged enhancements driven by actual user experience. Live it and learn it.

7.       Do not track and analyze ‘trouble tickets’ received by the help desk. Who wants this evidence lying around? (This is of course means that you have a centralized support help desk ready and working.) Documenting use case failures is essential. Being able to analyze the frequency and density of ‘hot spots’ is required for a road map to improvement and successful adoption.

Solution: Document and analyze all end user difficulties. Period.

8.       Avoid having an experienced ‘system adoption success expert’ help. Why spend the money and create all the extra work they would suggest? I can do this myself.

Solution: Two rules: At a minimum find a system provider to work with that is EXPERIENCED IN MULTIFAMIY and if your effort is a major project consider using a consultant with a track record of experience in the deployment of systems for multifamily operations to help you plan for successful system adoption.

New systems and technology success in any industry is tough enough, but as I stated at the outset success it isn’t always just about the technology. It is about taking a deep and honest look at the people, process and environmental underpinnings that will craft a system’s launch and orbit.

As always, if I can be of help based on my experience with successful systems deployments or if you want a recommendation on a multifamily experienced ‘system success’ consultant send me an e-mail at mike.radice46@gmail.com I would be happy to help or introduce you.

Mike