Discover the latest trends disrupting the multifamily industry. Explore cutting-edge technology innovations such as smart home solutions and AI-powered leasing that will shape the future of apartments in 2022.
The Emergence of AI-Powered Virtual Assistants: Revolutionizing Technology Interaction
Discover the transformative power of AI-powered virtual assistants in our latest blog post. From Siri to Alexa, we explore their rising popularity and game-changing capabilities within the world of technology.
The Importance of Due Diligence for Apartment Building Owners and Operators
As an owner or operator of an apartment building, there are many important factors to consider when evaluating a potential acquisition. One often overlooked area is the property’s risk of storm damage and the importance of understanding its insurance claims history. This is where due diligence comes in, and why it’s crucial to have experts on your side.
Many buyers focus solely on the financials of a potential acquisition, but neglect to investigate the property’s insurance claims history. This can be a costly mistake, as storm damage can result in significant expenses that can eat into profits. However, by thoroughly examining the multifamily property’s claims history, owners and operators can identify unreported or uncovered claims that can provide the funds needed for capital improvements.
This is where having experts in your corner, such as our client WeatherShield, can be invaluable. These experts can help owners and operators navigate the complex world of insurance claims, ensuring that all claims are properly reported and that the maximum amount of funds are recovered.
“You would never want to go into an insurance claim on a high-dollar value property without an expert that understands damage identification. Someone who understands the insurance processes, the estimating, the evaluation, and how to handle large-scale commercial projects,” says Founder of WeatherShield, Marc Ness.
In addition to the potential for hidden capital improvement dollars, owners and operators need to be aware of the risk of storm damage to their property. This is especially important in areas prone to hurricanes, tornadoes, or other severe weather events. Understanding the property’s risk of storm damage and taking steps to mitigate that risk, such as reinforcing the building’s envelope or installing storm shutters, can help prevent damage and ensure that the property remains safe for its residents.
In the event that damage does occur, having experts on your side can be crucial in ensuring that the insurance claims process goes smoothly. This can be a complex and time-consuming process, but with the help of experts, owners and operators can recover the funds needed to make necessary repairs and improvements.
Due diligence is a critical part of the acquisition process for apartment building owners and operators. Understanding the property’s risk of storm damage and thoroughly examining its insurance claims history can help identify hidden capital improvement dollars and prevent costly surprises down the road. Additionally, having experts on your side can ensure that the insurance claims process goes smoothly, providing the funds needed to make necessary repairs and improvements. By prioritizing due diligence and partnering with experts, owners and operators can make informed decisions and protect their investments.
Connect with Marc Ness on LinkedIn: https://www.linkedin.com/in/marc-ness-101bbb7a/
Visit the WeatherShield Website for more information: https://weathershieldpro.com/
5 Hallmarks of a Great Multifamily Smart Tech Supplier
There is a large demand from residents for smart home tech in apartments. In fact, 57% of renters are willing to pay an extra $38 per month for access to smart technology.
Smart tech isn’t hard to implement into a multifamily property – IF you partner with the right provider, that is. It’s possible to install smart apartment technology across an entire multifamily property in as little as two weeks or less.
That’s within weeks – and no onsite staff will have to lift a finger.
Investors who are looking to buy will prioritize properties equipped with smart home devices, since it’s an easy way to modernize their portfolio. Do you really want to be left with an outdated property that can’t draw residents?
Smart home tech is no longer an optional investment – it's a must in today’s competitive housing market. The question now is which smart technology provider you should partner with.
Let’s explore 5 pivotal factors to consider when choosing a multifamily smart home provider.
Their Devices Are Designed for Multifamily
Multifamily smart homes are vastly different from the single-family homes that most smart tech companies aim to serve. Rather than purchasing a dozen smart light bulbs and some switches off Amazon, multifamily communities require hundreds of devices.
In multifamily communities, each apartment’s devices must communicate with each other while still functioning within a broader property ecosystem. This means single-family home devices repurposed for the multifamily space won’t cut it.
Smart tech preferences also differ between residents and property managers/owners. Residents want to control their devices from their phone like a single-family home user, while owners and operators need dashboard access to monitor device statuses across all apartments on property. To accomplish this, managers need unique software built to solve multifamily challenges.
A right provider will supply the devices a community needs along with the infrastructure to manage those devices, and those needs can’t be met with single-family smart home products.
They Use the Best Connection Technology
There are many aspects to the technology behind smart homes, but perhaps the most underrated aspect to consider when choosing a provider is which connectivity protocol they use. Z-Wave, Zigbee, and Wi-Fi are the current major protocols that allow smart devices to communicate with one another.
Although many smart devices can now connect directly to Wi-Fi, this isn’t practical when considering that owners and operators manage hundreds of devices that would all have to share limited bandwidth.
Both Zigbee and Z-Wave can connect easily and reliably with devices of the same type, which is a significant advantage over Wi-Fi devices. For example, this allows Zigbee devices to extend your network's range as long as they are within proximity of each other.
Between the two, Zigbee has the largest selection of compatible devices of the three and is faster than Z-Wave with a longer range. Meanwhile, Z-Wave is more flexible in terms of third-party compatibility. Z-Wave recently released a new version (LR) of their protocol to catch up with Zigbee, but it still has a very limited number of compatible devices.
If a supplier uses multiple connection types to weave together all of their devices, it gets complicated quickly. A great smart home provider will use the best technology available and stay consistent with one connection protocol.
They Offer Transparent and Flexible Pricing
There are two main costs owners must pay when investing in multifamily smart tech: upfront costs for hardware and subscription fees for device management software.
Most providers will charge reduced amounts upfront but make their money by charging higher monthly fees for software. This continuously eats away at ROI. It’s the same scheme used with printers and ink: the printer is cheap, but the ink is expensive.
Beyond individual device and software costs, every property is unique and will require different smart devices and pricing structures based on size, revenue, class, location and more. A 150-unit property will have vastly different planning and budgeting than a 3,000-unit portfolio.
The right supplier will offer pricing options that are flexible and can mold to fit different owners’ budget and property constraints. They should offer monthly installments, upfront purchases, or resident funding programs.
A mediocre smart tech provider will try to upsell you devices that make little sense for your community and exceed your intended budget. Instead of having to fight for every penny, find a supplier that’s willing to get the best results within your budget.
They’re Your Partner Into the Future
Multifamily communities face a different set of challenges that single-family homes rarely encounter. For example, smart smoke alarms/CO listeners and water leak detectors are not very popular smart devices in single-family homes, but they make more sense for multifamily apartments, since preventing expensive property damage can help residents avoid insurance premiums and spare owners/operators in renovation costs with asset protection.
Trusted multifamily smart home providers know what products make the most sense for multifamily properties. They will partner with owners to prioritize the type of devices that are most valuable for their property as a whole.
After setup, a partner-provider will advise you as the multifamily landscape changes. It’s no longer “You bought our product, goodbye!” and you never hear from them again. They will answer any technical questions your onsite staff might have, as well as advise you with device selection as your needs change and as technology evolves over time.
Some will even customize their product offerings based on your needs. The best providers are always on the cutting edge of the smart tech industry, discovering problems that are arising and tackling them head-on. Ultimately, a provider that best understands the short and long term needs of the property will give the best service.
They Don’t Create More Work for Staff or Owners
Installing smart devices can be cumbersome, confusing, and time-consuming. If your property includes thousands of apartments, this process can drag on for a while.
Regular onsite staff don’t have the time or bandwidth to install hundreds of devices. Leasing agents and office staff are busy servicing leasing prospects, and maintenance has its hands full responding to incoming tickets.
Hands-off installation handled by the provider is your best option. It doesn’t overload onsite staff or maintenance, doesn’t involve the owners, and minimizes errors during installation. When done correctly, you can round out this process in as little as two weeks.
Once installed, smart home tech simplifies work for onsite staff. For instance, these devices catch maintenance issues – water leaks, carbon monoxide, smoke, etc. instantly. Smart locks also enable self-guided touring by sending prospective renters a one-time passcode so they can view your property on their own time.
These automations decrease operational strain and reduce the need to hire more employees, which cuts payroll expenses and boosts revenue.
Finally, when investing in a smart device package, make sure the provider won’t abandon the company they sold to. Both the apartment operator and the resident will need support whenever technical issues arise, so choose a provider equipped to handle any troubleshooting claims that come their way.
Who Should You Pick?
The right pricing, technology, partnership, and devices are important. Yet the #1 issue we hear most often is that owners and managers don’t want more work or stress. Technology isn’t very helpful if it only creates more work. Find a provider that will be your partner, and will help guide your smart apartment portfolio so that it’s easy and useful for everyone involved.
Our client, Arize, is a multifamily smart apartment technology provider that takes the time to understand your property management business and the challenges you face, then pairs you with the solutions that will streamline your operations and maximize your revenue and occupancy/retention rates.
They’re a business built for multifamily that adapts to owner and property needs. Arize uses quality Zigbee connections that make it easy to manage your devices, and they work within your budget. Finally, Arize handles device installation for you, and they even pair you with a dedicated service representative to contact whenever you need technical assistance.
Multifamily owners need the right smart apartment technology for their properties. However, it's not just about the sustainability of your assets or about optimizing your portfolio's short-term returns.
The secret to long-term success is finding a strategic partner, like Arize, who will address your challenges with fitting smart solutions -- both today and tomorrow, as your needs change and your portfolio continues to scale.
Ready to bring smart tech to your property?
What To Do About the New Multifamily Cable Changes Before 9/26
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.