08/012022

What To Do About the New Multifamily Cable Changes Before 9/26

Article, Sponsored Multifamily Innovation, Multifamily Leadership, Multifamily, multifamily article

Note: The analysis of the FCC ruling in this article is for informational purposes and should not be considered legal advice. Readers are encouraged to consult with legal counsel before taking any actions based on the analysis in this article.

This article was written to accompany the What Multifamily Leaders Need to Know About the FCC Broadband Ruling event. It is available to watch for free with the rest of our on-demand multifamily events tackling industry problems through our Events page..

The Federal Communication Commission (FCC) made a ruling on February 15, 2022 that changes the landscape of how telecom agreements are arranged with multifamily apartments. The FCC made this decision with the goal of increasing competition in multifamily units for residents. These begin enforcement on September 26th, 2022.

It’s worth remembering that not all of these are new laws. Some are updated interpretations of existing regulations. As a result, these will affect past and future agreements instead of only newly made agreements.

These are based around changes regarding exclusive marketing agreements, tiered revenue shares, and the “Sale and Leaseback” components of some agreements.

Exclusive Marketing Disclosures

Although the FCC does not straight-out ban exclusive marketing agreements, the service provider is now required to notify all current and prospective residents of any such agreement.

Service providers have discretion on how to communicate the details of what this means, but the notices will be included on all marketing materials. Building owners lose any opportunity to influence this if exclusive marketing is part of the agreement.

This does not require immediate action from the property owner or operator, but it is still in the best interest of the owner to rework these agreements as soon as possible into non-exclusive marketing. Very few residents are likely to be happy to hear about any exclusive marketing agreements.

However, not all providers are concerned about how this affects the building owners’ relationships with the residents. The building owners’ relationship with the service provider is the critical reason why service providers may want to renegotiate these agreements to remove this risk from the building owner.

Tiered Revenue Shares

Since the FCC rulings in 2007, multifamily properties have not been able to enter into telecom agreements that include a restriction that prevents other providers from entering a property, previously referred to as “exclusive access” agreements.

With the new 2022 ruling, the FCC found that the “tiered revenue share” model had a very similar effect to the no-longer-permissible “exclusive access” agreements.

Also known as “penetration-based” models, this is when the revenue share paid to owners will change based on the percentage of available residents that service provider has as subscribers. That percentage is known as the “penetration rate”.

Properties should attempt to renegotiate these tiered revenue share models immediately. Service providers are already making decisions regarding if they will pay any revenue share at all, or if they will offer a flat percentage of revenue share regardless of penetration rates on a property-by-property basis.

Waiting for each service provider to tell the building owner what they will pay is not a great idea because the owner does not have any opportunity to argue for better terms. According to the FCC, the provider has no obligation to pay any future tiered revenue share after the changes.

There are strategies that the top telecom negotiators use to encourage renegotiation from reluctant providers. Some of these are difficult to utilize, so it’s highly recommended to talk to an expert to get a better deal.

This directly affects the property owner. Any agreements that include this style of revenue share will need to be reworked or else the property may no longer receive this revenue.

Sale and Leaseback

“Sale and leaseback” arrangements were not permitted under the 2007 FCC rulings. Unfortunately, there is significant debate within the FCC legal community regarding if this restatement of the FCC’s 2007 ruling will have any significant impact.

It is similar to a parent telling a child, “I told you to clean your room. Please do it!” This will probably only be determined as a result of future court cases, so don’t be that owner.

Like the decision on tiered revenue share agreements, this will directly affect the property owner. Any agreements that include this type of stipulation will need to be reworked promptly. Fortunately, most agreements done since 2007 with any major national service provider are unlikely to be a major threat.

Even so, check with a specialist who understands the wiring infrastructure in the exact building. This is a bad time to presume knowledge without a specialist reviewing the agreement and the wiring.

Moving Forward

The deadline to take action on the ruling is September 26th, 2022. That’s only a short time to get critical changes done to important contracts. It’s worth noting that these rulings currently only affect television and telephone contracts, though it’s likely that similar changes will target internet service providers in the future.

As of the writing of this article, service providers nationwide have already been sending change proposals or notices of stopping revenue share payments. Likewise, building owners should expect to see letters to residents in August and September if they have an exclusive marketing agreement so that providers can claim compliance by delivering notices prior to the September 26, 2022 deadline.

The easy way to deal with this is to let the telecom companies contact you and then accept whatever changes they send your way, perhaps with some slight bargaining.

In the end, this route could be leaving tens or hundreds of thousands of dollars on the table and have your residents believe the building’s ownership didn’t care about the services available to residents. This makes now the perfect time to completely renegotiate your contract terms.

For any questions, watch the FCC Changes Q&A meeting we hosted with Mark Weaver, as well as our What Multifamily Leaders Need to Know About the FCC Broadband Ruling on-demand event.

Discussed questions include how the ruling affects bulk services, how to add new providers, how to negotiate high-quality contracts with small properties, and many more.

Have the Experts Negotiate for You

Our client, the Cable Contract Negotiation Group (CCNG), negotiates the best of internet, cable, and telecom agreements. They’re led by Mark Weaver, a telecom industry insider who knows exactly how far providers are willing to go and capitalizes on it in the best way possible for multifamily owners and operators.

Standard real estate lawyers are out of their element in this. They don’t handle this every day. Expert telecom negotiators are the best option for multifamily properties who want to take advantage of these changes, getting better terms compared to even the top 20 national multifamily companies.

Reach your NOI goals and provide better services for your residents.

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07/112022

What to do About the Data Behind the Multifamily Staffing Shortage

Article, Sponsored multifamilyleadership, Multifamily Innovation, multifamily technology, Multifamily

Note: This article is written to accompany the How to Tackle Multifamily Labor Shortages event. It is available to watch for free with the rest of our on-demand multifamily events on our Events page. This article reveals the data we collected as part of our research leading up to the event.

In March alone, 3% of the workforce quit. That’s 4.5 million people walking away from their jobs.

Finding high quality employees has always been a struggle, and it’s gotten even harder in the last two years. Employees that have stayed for years are leaving. It’s often referred to as “The Great Resignation.”

Most employers weren’t ready for this. The work environment changed with COVID moving workers to their homes. Now these companies aren’t fully prepared to handle their workers quitting.

Our research revealed that only 50% of multifamily properties expect to be able to handle all their incoming calls, and 65% think they would benefit from having another leasing agent.

There are not enough leasing agents on staff for many properties. What’s going to happen when no leasing agents are available and a prospect comes looking?

They will go to another property.

Most large properties are spending tens of thousands of dollars on marketing. Every prospective resident turned away is marketing dollars being wasted.

Yet even hiring more leasing agents (if they can find them) might not be enough. A majority expect that prospects prefer to interact with the property after office hours. We found that 32% use a call center to allow for more after-hours interactions, but it can’t cover the rest of the leasing journey.

The multifamily leasing environment is changing. Everyone wants instant access and convenience. If a future resident can’t get it from one property, they’ll get it from the next.

In the past several years, we’ve seen a shift towards technology-enabled leasing. Tech can fill holes effectively where hiring wouldn’t be able to.

Websites with basic information aren’t enough anymore. The future of leasing is technology, and properties need to take advantage of the opportunities it provides.

Those opportunities are already here. Properties need to adopt them. Ease of access is critical in today’s world, and more staff won’t always achieve it.

Properties need to enable touring in convenient ways. Online 3D tours that can be experienced in virtual reality (VR), letting leasing agents Facetime or Zoom with prospects to show them the apartment, or self-guided tours after hours with smart locks.

Although in-person tours are still an option, there are now more ways to tour. Properties need to take advantage of that.

But touring is only half of the equation. What is the process of getting a future resident to the point of touring?

We found that right now, 93.3% of multifamily executives expect technology to change the way we lease apartments. Over half picked artificial intelligence (AI), guided conversation, or voice assistants to make a change to how we lease apartments.

It makes sense. Staffing is a massive issue for all industries right now, not just multifamily. Artificial intelligence can do the same work that properties would need to hire more workers to complete.

A prospective resident can get the same information from an AI as it could from a leasing agent. Instead of them coming to see a leasing agent, the leasing agent comes to them.

Our data found that only 72% of apartments have a way for prospects to find availability, ask questions, schedule a tour, or lease, without talking to a person. Well over half think an apartment can be leased without a leasing agent.

Automation is growing, but it’s not finished. The entire leasing process has been automated in pieces, and properties need to make the jump, or they will continue to lose leads through the cracks.

There’s an obvious solution to staffing problems, and it’s not hiring more people.

Our client, LeaseHawk, helps multifamily properties lease faster by using an AI leasing assistant that handles phone calls, text messages, and online chats, at the same time. Prospects can ask questions and get information just like a normal conversation. This supplements employees and allows them to focus on more important tasks.

Don’t let staffing problems hurt your business. Let AI pick up the work.

Your Guide to AI and the Apartment Industry

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04/142022

The New Standard for Multifamily Underwriting is Turning 4 Hours into 4 Minutes

Article, Sponsored Multifamily Innovation, multifamily technology, Multifamily

Underwriting is all about assessing risks. That means a lot of paperwork.

Companies hire MBAs and other professionals to do multifamily underwriting. It’s expensive. It’s slow. And it’s worked for decades.

Technology is getting more powerful, and jobs that have always been done by humans are being done by computers. More and more companies are realizing that these innovative technologies can take hours of work and finish it in minutes.

Ten years ago, no one would have thought you could underwrite a deal in four minutes. Entire companies exist to help with underwriting so employees can focus on more important work.

One of our clients, Parag Goswami led a company with dozens of analysts doing the same basic tasks every day. He realized that more analysts was the wrong answer.

The industry is changing, and billions of dollars of real estate deals are underwritten by artificial intelligence every year. Companies are starting to recognize that.

Clik.ai was an early software company that did the underwriting for deals. Parag Goswami, the owner of Clik.ai, had to teach companies what AI could do for them. It was new. No one was used to it.

That was five years ago. The environment has changed. When he talks with clients, they are often already aware of the benefits of the technology.

Finishing deals faster and getting onto the next one. Enabling workers to focus on more important work. Being fast enough to get that one breakthrough deal.

Automatic underwriting is becoming the industry standard. Seventy years ago, “computers” were people who did simple math for a living. (They “computed” math.) It was basic labor. Computers were the standard then and are the standard now, but instead of a person it’s a device. A calculator.

Are your underwriters people, or an AI? The people doing your underwriting are professionals with degrees. They are spending their time doing work a computer could be doing instead.

“Computers” did math by hand for decades. It worked. Businesses did underwriting by hand for decades. It worked. Now the industry is changing. AI is able to assess deals faster. Fewer deals are slipping through the cracks.

Clik.ai automates over $50 billion in real estate underwriting every year. That number is growing. The industry is changing. Are you?

Underwriting is Being Completed by AI

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01/312022

How to Get Smart Home Tech Without Breaking the Bank

Article, Sponsored multifamily smart tech, Multifamily Innovation, Multifamily, multifamily clients

There’s a great misconception that providing smart tech for your multifamily assets can only be done with ease on new developments and lease-ups.

Multifamily owners and operators think the learning curve is to high for staff, the startup and maintenance costs will be too high, smart tech only belongs in Class A multifamily properties, installation is a burden and you’re already understaffed, and there are too many providers without a single-source for cross-app integrations.

The list is long. The list is wrong.

Most multifamily owners and operators are thinking about the cost of utilizing smart tech rather than the cost of not utilizing smart tech.

Consider the cell phone in your pocket or on your desk right now. Remember how big and clunky they were in the 90s? Remember having to hit the buttons multiple times to scroll through the alphabet and numbers? They were a commodity. Something for rich people (remember when you had to pay per text?).

Look at where we are now. The sheer computing power of the modern mobile phone has grown exponentially year over year.

According to Pew Research Center, 97% of Americans own a cell phone now and that is because it has become a deflationary asset. As technology advances, cell phones become smarter, more powerful, and more affordable.

Our research partner and client, Arize, states that by “2023, 53.9% of homes across the United States will feature smart tech (that’s 20% more smart homes than in 2019).”

Do you see that? That’s over half of all the homes in America that will be using smart tech.

Whether you like it or not, these smart devices are now a dealmaker or dealbreaker for your residents.

In fact, residents are expecting multifamily properties to have these features for security and cost-efficiency and will go as far as to rent an apartment based solely on those amenities.

Not only are residents choosing the smart apartment, they are staying longer and paying more for it.

According to Arize, “91% of renters believe home intelligence is a necessity, and 66% of current renters are willing to pay at least an extra $20/month for a smart device package.”

Certain smart technologies have the ability to perform climate control activities and avoid wasteful utility usage through water leak detection and other services.

This allows properties to distinguish where they are losing money on unnecessary expenses while giving them a tool to prevent this all together.

All of the sudden, those objections to smart tech in apartment communities become obsolete because of the necessity for this technology.

Additionally, smart tech is a deflationary asset that is now benefiting stabilized properties. Most owners and operators think it is too expensive, but companies like Arize are coming up with innovative ways for operators to fund and get smart tech into existing apartments.

Arize believes that by providing a personalized experience along with unique services like competitive payment plans and customization, they are making it possible for all properties to have smart technology in their portfolio without breaking the bank.

Those multifamily owners and operators who choose to provide smart tech for their communities will scale faster, stay competitive, retain residents, and thrive through any impending real estate bubble pop.

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This report on Smart Apartment Tech Trends will explain the statistics behind smart home technology and how increasing demand has moved beyond solely Class A properties.

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01/052022

Finally, Apartment Leasing Teams Can Do What They Do Best Without Missing Calls

Article, Sponsored

Properties are facing more challenges today than ever before with residents not paying rent, the struggle to keep up with the competition, and making sure units are fully occupied.

One problem seen today is that many leasing offices are currently understaffed, leading to record-breaking rates of missed calls at a whopping 49%.

Even offices that have full staffing still only have a certain number of hours each day that the office is open.

One of our clients, LeaseHawk is a multifamily software company, and in a recent interview offered shocking statistics regarding tenant interactions: 87% of callers won’t leave voicemails and 52% won’t call back if you missed their first call.

Each missed call, LeaseHawk says, is a missed opportunity.

“Prospects typically begin their home search online,” explained Larry Gorman, President of LeaseHawk. “In fact, research shows that four out of five renters use online resources to assist in their home search. So, when a prospect decides to call, they are highly motivated and more likely to be ready to convert to a tour and sign a lease.”

But the software helps with more than funneling potential renters through to schedule tours; it also sifts out the 30% of calls to leasing offices that are NOT made by prospects.

LeaseHawk uses data and artificial intelligence to change the way technology is used in multifamily. The company aims to benefit both the renter and the property owner by making the prospect vetting and lease signing processes more efficient.

That’s done with a virtual apartment leasing assistant that LeaseHawk calls ACE, which answers phone calls, acts as a chatbot, and automatically responds to text messages.

It’s the only software of its kind that answers prospects on all three of those channels. It also offers call tracking, call routing, and a full IVR system.

Those interactions can lead to the collection of information about a prospective tenant and can even schedule tours.

Gorman states, “The use of virtual leasing tools is now more widespread than ever. Some even say that 10 years of multifamily technology was created in just 100 days due to the pandemic. Prospects are more than willing, in fact they are seeking, to get instant answers and information from digital resources to make their rental decisions.”

LeaseHawk says 73% of Millennial renters believe they should get a response within a day or less. And, as we mentioned, most are unlikely to call back if they don’t get through on their first attempt.

A vast majority of prospects are also intolerant of being placed on hold for a long time or having to repeat the same message to multiple representatives.

Responding to callers under those circumstances and time constraints is only possible with the use of AI software or some form of automated technology.

Tackling Missed Opportunities in Multifamily Leasing

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01/032022

How Rent Delinquency is Affecting Profitability and Beyond

Sponsored, Article Multifamily Investments, Multifamily, Multifamily Investing, Multifamily Operations

Rent delinquency is increasing and as we all know, resident priorities are shifting as well. This is causing the multifamily industry a lot of uncertainty during a time of already rapid change. Due to these changes in wants and expectations, multifamily companies must start strategizing for the future to ensure profitability and continue to create places that residents want to live.

It is always important to listen to the customer, which is something that is often overlooked in this industry. Yet it is also important to make sure that they are following their agreements by paying rent on time and that they have the ability to do so. Everyone is looking to raise rents to meet certain revenue goals; however, there are other issues going on beyond the scope of rent increases.

We invited one of our clients, Lisa Strauser from CredHub to speak on what they are doing to alleviate some of these stressors.

CredHub is a service that companies in the multifamily industry incorporate to help reduce multifamily rent delinquency. It works by associating rent payments to tenants’ credit reporting agencies. For most tenants, that’s a great thing – it allows them to use their largest expense as a way to improve their credit scores, just as mortgages do for homeowners. For others, it’s the extra incentive they need to pay their rent on time, so their credit score isn’t brought down by a late or missed payment.

Lisa Strauser is the Sales Director for CredHub. In this recent interview, she discussed some of the ways the multifamily industry is struggling, as well as how it can improve.

Strauser says the way to make sure properties aren’t bleeding out revenue to delinquent payments is to make sure their residents are truly held accountable for their rent. If they aren’t held accountable, there’s no incentive to make their rent payment a priority among their list of bills.

By implementing resident credit reporting, Strauser says that the accountability factor is put in place immediately. In fact, she says properties that implement CredHub’s technology see the delinquency rate lower within a period of just 60-90 days.

“The delinquency rate naturally reduces when there is finally a consequence for not doing what one is supposed to be doing,” explained Strauser.

CredHub also goes above and beyond by impacting credit scores for previous residents who still have an outstanding balance with the property.

“Impacting their credit for balances owed has a way of motivating people to pay outstanding expenses to remove it from their credit report,” said Strauser.

She says that although CredHub aims to ensure rules are followed, the company’s work isn’t about punishment – on the contrary, it’s about helping boost those who are paying on time, typically boosting FICO scores by 42 points. It levels the playing field between renters and those with mortgages who see improvements for on-time payments on their living space. Some people are credit invisible and can use this as a way to leave their mark.

“For those with established credit profiles, the increase in FICO scores leads to an offering of better interest rates on credit cards and higher credit limits,” said Strauser. “For those without social security numbers, in assisted properties, or lacking social security numbers, it establishes for the first time a credit identity by rewarding them for their timely rental payments.”

Strauser also argues that CredHub can, in some instances, be the final deciding factor in where someone wants to live. It should be included as an amenity, just like a pool or gym, since it’s something intended to improve the residents’ lives. If a potential renter knows they’ll pay on time, they would see an enormous benefit in renting from a property that offers CredHub. Likewise, the usage of that technology would discourage those who know they may not pay on time, meaning the property gets a higher quality resident.

By using services like CredHub, multifamily properties can incentivize residents to pay on-time, increase resident retention and create a competitive advantage for their property. Services like these are paving the way for residents to get credit for one of their most costly expenses and to hold others accountable who may have fallen behind.

Ready to find out more?

Text "Credit" to 480-780-2611 for a free report with more information.

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12/142021

Why Property Management Teams Need to Stop Depending on Emails

Article, Sponsored Multifamily Innovation, multifamily technology, Multifamily Operations, Multifamily, multifamily leasing

Recently, our client BetterBot put forth a bold statement: “Property management teams need to stop depending on emails.” The company released an explanation for their challenge, but we wanted to learn more about the thesis.

BetterBot is a Marketing and Leasing Automation Software that replicates your best leasing agent and allows customers to inquire about apartments and homes and receive an instant answer at any time of day or night. There are over 200 property management companies already signed on with the company. The business says its BetterBot for Web solution helps find prospective renters who are more qualified, increases the time it takes to secure a lease and frees up team members to focus on other work.

We set out to learn why improving this may benefit the multifamily industry. We spoke with Trevor Park, the Head of Marketing at BetterBot. He says emails are, put simply, failing.

“Ultimately, it comes down to response time and staying top of mind,” explained Park. “Response time instantly drops for communities after-hours, and most of them do not have any sort of nurture campaign to ensure they stay top of mind. Even with a nurture campaign or quick response times, it can be challenging for property management companies to stand out in a sea of crowded inboxes. Not to mention the work involved for the leasing teams to maintain and track follow-ups if they don’t have a solution that can help with both of these.”

There are some obvious ways the days of the multifamily chatbot have been reigning supreme. With people browsing on their phones looking for new places to live, they expect answers quickly. Office hours only cover a specific portion of the day, and with today’s technology, people just don’t want to wait. If they send an email late at night and the property doesn’t answer until the following day, they could lose interest. Automation helps accommodate the immediacy of the modern era.

But BetterBot presents some other compelling arguments, too. For instance, promotional and branded emails are often filtered out and automatically sent to the spam folder, defeating the purpose of creating it in the first place. BetterBot has worked to ensure their emails make it to their inboxes by working directly with the major email providers. Email boxes can also get over-crowded, and the vast majority of people tend to delete marketing emails without ever opening them. It can also be challenging to categorize leads well enough to pay proper attention when property management teams are flooded with emails each day.

“The problem isn’t necessarily with how Property Management teams handle emails; it is the volume of emails and leads that come in for them,” explained Park. “Take any specific property and look at the average number of inquiries that come in. How can one leasing agent tell the difference between those ready to convert and those just shopping around?”

He says many of those emails are simple questions that automation can quickly answer through lead nurturing or the use of a chatbot. That’s not only better for the client; it clears out the property management teams’ inboxes of tedious work so they can more aptly focus their efforts. On average, leasing automation saves between 56 - 60 hours per month for a single property.

“These menial tasks take away from the qualified and engaged prospects that the property management teams can be engaging with to build a strong relationship and ultimately convert them to a resident faster than the window lookers,” said Park.

BetterBot recently launched their newest product, BetterBot for Leads, geared towards leads coming in through a community’s marketing sources, such as Apartments.com, Apartment List, or Zillow.

The leads are the element property management teams are most likely to lose as they get bogged down in small, simple tasks that add up to take a significant chunk of their day. Rather than having a person send a quick question and lose interest as they wait for a response, BetterBot’s instant-response AI gets the preliminary steps out of the way. Then, prospects are more ready to move forward and talk with the leasing team more meaningfully. As BetterBot puts it, by giving them time back in their day to do what they do best, be human.

“BetterBot for Leads can then help nurture those leads and sort through the prospects to provide the leasing teams with the ones that have the highest likelihood of converting so they can focus on engaging with those prospects first for easier wins,” said Park.

Park says it’s all about identifying the pain points and bottlenecks that sap efficiency when it comes to leasing. Here, he says, pairing automation with human touch solutions can save the day. It’s not a one or the other solution but rather a partnership that can help improve efficiencies and drive more substantial ROI.

“BetterBot for Leasing replicates your best leasing agent and gives your leasing team time back in their day by responding to and nurturing the leads at the top of the funnel. When automation nurtures a lead effectively, team members can focus on high-value tasks, such as tours, move-ins, and resident retention.”

Automation for marketing and leasing, it seems, is the future of multifamily. BetterBot says 56% of website traffic happens after property management offices have closed up for the night. It’s impossible to compete with companies whose customers have 24/7 access to answers and communication. The final argument would be simply for the loss of human touch a chatbot may have. There, again, BetterBot has a solution. Since property management teams are no longer overwhelmed with the low value, menial tasks, they can be more engaged with the prospects that have scheduled a tour, are ready to convert, and ultimately build the relationship with the resident. It’s a chance, the company says, to “infuse authenticity into customer interactions.”

Although emails likely aren’t going anywhere, software like BetterBot’s can help make old tech function better. If your email inbox is less crowded, you’ll be able to focus more on what’s in there. The logic is tough to argue with. So at Multifamily Leadership, we concede BetterBot may be right: property management teams need to stop depending on emails.

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Did you know that 300 billion emails are sent each day, but only 18% are opened? Most property management teams today are too dependent on email. Usually, they see how much time and energy email takes, but don't know how to break the cycle.

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