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Technology Revenue Drivers

Technology Revenue Drivers

The multifamily industry has truly turned a corner. Rather than being skeptical that technology will produce any ROI at all, many apartment owners and operators have begun evaluating technology based on how much ROI it’ll produce.

It’s no longer a zero-sum game in their minds. But it is vastly more complex to evaluate every technology based on how much revenue it’s going to generate rather than whether it will generate any at all. And technologists certainly aren’t making it easy.

Ever the optimists in search of being the next Google, technologists tend to over promise when it comes to revenue projections. Yet, we’ve now had enough experience with technology in the industry to know what drives the most revenue and the most value for our assets.

Here’s a rundown of some of the new and old technologies that have clearly proven ROI and what I believe will drive revenue going forward for apartment owner/operators.

Revenue Management
Revenue management is the clear winner in revenue driving technology. It not only helps owners and operators increase rents intelligently in hot markets, but it also protects against rent losses in slow markets. Of course, the technology doesn’t work on its own. It needs human input, but it’s ability to capture and process large quantities of information to provide a suggested price that maximizes revenue is something no owner or operator should live without. Implementing revenue management technology is simply a no brainer.

Customer Relationship Management Systems
Sales is a numbers game. The more quality leads you can attract, the more leases you’re going to sign and the more money you’re going to make. Customer relationship management systems give you the ability to capture endless information about customers and to leverage that data to attract the right customers. Once you know which data points matter the most, the more efficient your marketing and sales spend gets and the more leases you sign, driving up revenue and improving NOI.

Smart Home Technology
It used to be said that smart home technology didn’t pencil out for developers. They didn’t know how they could possibly garner ROI after spending thousands of dollars per unit installing smart devices. But demand has skyrocketed for smart home technologies and new smart home-as-a-service models have made it possible for apartment owners and operators to capture significant ancillary revenue from the technology. If they install the right, high-quality devices, owners/operators can capture upwards of $50 a month ($33 a month in NOI) for each unit. That equates to an asset value increase between $741,000 and $1.1 million. Additionally, the breakeven period is less than 30 months for some supplier partners while offering an annual return on costs as 45% compared to the industry standard of 10%. It pencils out.

Leasing and Renewal Apps
Whether it’s self-guided or leasing agent led, leasing apps are revolutionizing the leasing experience and driving revenue from two directions. First, they’re increasing qualified leads, which indicates to revenue management systems that demand is high. This occurs because every lead that tours a community is captured and never left on some sticky note in the office. Second, these apps make it convenient for residents and prospects to get the deal signed, resulting in more leases and more renewals. Who wouldn’t want that?

This is just a small selection of technologies in the industry that are truly driving revenue growth. As the industry continues to further embrace the impact technology can have, there are many more to come in the near future.

 

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