REAL ESTATE TECHNOLOGY PERSPECTIVES THAT COUNT

Centralization is transforming real estate, and for good reason – owners and operators find that centralization improves the quality of property operations, lowers costs, and boosts productivity.

What is Centralization

Traditionally, most property operations occurred onsite. As tech has matured, a growing amount of activity can be centralized in an off-site location.

• For front-end operations, centralization streamlines and manages prospect screening and communication, property marketing and ongoing resident engagement.
• On the back end, owners gather, store, and analyze portfolio-wide data behind one pane of glass – producing more accurate reporting, driving better decision-making, and simplifying compliance.

What’s Behind Centralization

Economic challenges and a labor shortage have real estate owners looking internally for value creation. Centralization can play a crucial role.

• Centralized systems are inherently scalable, enabling owners to onboard new acquisitions more easily.
• Moving screening, collections, and renewals offsite to specialized teams allows onsite staff to focus on resident experience and retention.
• Centralized roles allow operators to provide a uniform, repeatable approach to things like screening.
• Consolidating resident communication channels enables more prompt responses to inquiries and more effective conflict resolution.
• Centralized platforms offer robust reporting and data analytics, providing actionable insights on resident sentiment and asset performance across a portfolio.
• Streamlining administrative work allows owners to optimize onsite resources and/or reduce overhead costs.
• Centralized management promotes a more consistent resident experience. It creates true relationships with renters, prompting them — when they move — to favor apartments within the operator’s portfolio.
• Centralization creates clearer career progression pathways and more stable work environments for onsite staff, enhancing employee retention.

Many RET portfolio companies are at the forefront of the centralization trend, streamlining operations for multifamily and SFR properties.

Optimizing resident and prospect processes

Funnel is a front office platform using AI to centralize multifamily marketing and leasing.

• Why Residents Care? It utilizes a unique “Renter-centric” model to automate tasks, engage residents, and simplify applications - providing a cohesive renter experience.

• Why Users Care? Reducing remedial tasks and providing leverage for enhancing career prospects.

• Why Owners Care? It’s a no brainer… increasing efficiency and reducing costs.

Centralizing apartment operations and resident communications

Travtus delivers a true AI solution to transform conversational data into actionable insights.

• Why Residents Care? It improves customer interactions and accelerates issue resolution times, ensuring the best customer experience.

• Why Users Care? Consolidates customer and employee conversations into one platform, enhancing operational efficiency with smart automation and digital teammates.

• Why Owners Care? Supports centralization efforts with tools for remote management, providing essential insights and custom action plans for better decision-making.

Automating time-consuming accounting tasks

PredictAP automates the ingestion and coding of invoices specifically for real estate-related accounts payable (AP).

• Why Residents Care? It ensures that property managers can focus on providing better service instead of being bogged down by manual data entry.
• Why Users Care? Replaces manual data entry, allowing AP, accounting, and property managers to focus on high-value-add work without changing existing workflows.
• Why Owners Care? Provides the ability to scale without relying on costly labor while improving processing time by 50-80%, increasing payment visibility, and simplifying compliance.

Creating a more accurate and equitable tenant screening process

RentButter uses predictive analytics to reform the resident screening process.

• Why Residents Care? Ensures a fair and holistic assessment of their financial capability, making the process more equitable.
• Why Users Care? Relieves onsite teams from making screening decisions across multiple platforms, allowing them to focus on other critical tasks.
• Why Owners Care? Provides in-depth financial and credit reports, helping to avoid rent defaults and reduce turnover with more accurate assessments of residents’ ability to pay rent.

The multifamily sector is facing challenging market conditions. On the deal side, construction costs and high interest rates are slowing investment and development activity. Operationally, the industry faces a continued labor shortage that property managers are beginning to deploy technology solutions to address.

Real estate professionals have been navigating these market dynamics for the past 18 months, and it’s increasingly apparent that technology can help address some of the most pressing challenges. At RET, we’re proud to be at the forefront of an ecosystem working to innovatively solve these problems — liaising with strategic investors to pinpoint operational challenges in need of solutions, and investing in cutting-edge technologies that address those pain points and drive efficiencies.

As we work closely with our stakeholders to help the industry navigate the current environment, we’re excited to host our second annual “Multifamily Kick-off Summit” at the Blueprint conference on September 17 to talk about the various ways in which technology is pushing the industry forward. Panel sessions at the event will include:

• Centralized Property Operations: Creating Efficiencies Across Leasing, Maintenance, and Broader Property Operations
• Generative AI’s Impact on the Multifamily Sector
• From Concept to Reality: Operationalizing Innovation in Apartment Properties

Among the speakers will be executives from leading multifamily owner-operators, including AMLI Residential and Berkshire Residential Investments as well as real estate tech companies, including PredictAP and Stake.

We’d love to see you at our summit and the rest of the Blueprint event. Join us in Las Vegas by following this registration link.

Early this year, the RET team sat down with a crystal ball to forecast the major trends of 2024. Our predictions include:

Construction tech will help construction bounce back

• Given the major construction slowdown of late, tech tools that can lower costs are part of the solution that will help developers put shovels in the ground.

The real estate tech “haves” will separate from the “have-nots”

• For most of the last decade, real estate tech was a rising tide that lifted all boats (startup life is easy when there is easy money). But in 2023 that changed and startups have been optimizing their business models to extend their runway.
• This year, we’ll see a clear divide between firms that have been successful at delivering a product the market needs with a sustainable business model and those that have not.

The year of consolidation

• Some companies will inevitably find themselves in dire straits. For many of the “haves,” those struggling firms could be intriguing acquisition targets that will bring economies of scale and customer concentration.
• We'll also see consolidation for tech users. Previously, there was a move away from platform solutions in response to innovation stagnation and the need for customization. In 2024, we will see a shift back toward consolidating services under one platform with integrations and economies of scale.

We also asked a few of our CEOs to chime in with their predictions:

"EV charging will reach a tipping point" – Mohammad Akhlagi, Plugzio

• With almost 2.5 million EVs on the road, we will begin to see a winning EV-charging strategy take hold. Owner-operators who haven’t solidified their EV charging strategy will “back a horse.”

"This will be the year of centralization, automation and elimination" – Roman Pedan, Kasa

• As revenue drags across real estate sectors, owners will be more focused on cost savings. Labor cost in most asset classes constitutes one of the largest line items. Owners will accelerate their thirst to centralize, automate or eliminate labor. Technology systems that can prove they do so will thrive.

"Housing affordability and rental regulation as a focus grows" – Tyler Christiansen, Funnel

• Renter regulations will hit the national political stage as a key element of housing affordability with a serious dialogue around “junk fees.” Eventually, this will impact which types of ancillary income are permissible.

There’s no technology trend getting as much attention as generative AI, so let's take some time to preview how it will impact real estate this year.

AI is a trend you cannot ignore
Every real estate professional should be thinking about how ChatGPT — which boasts nearly 200 million users — and similar tools will change the way they work.

• But remember: The technology’s glitz is only as good as the substance that underpins it.

Data is the key to quality
ChatGPT is built on a massive trove of publicly available information; ChatGPT would be nowhere if not for the data it was built on.

• So what? Real estate-focused AI tools will also only be as good as their underlying data.
• It’s still early for RE-focused generative AI and there are just a few RE-focused generative AI companies built on large reams of real estate data.

The winners may have already been chosen
Impactful generative AI companies for real estate aren’t likely to be built by technologists moving into the industry. Instead, existing real estate tech companies with massive amounts of data will be playing the biggest role.

Here is what our portfolio companies are doing, leveraging their data collections and generative AI to provide value to clients.

• • Travtus reviews and analyzes troves of information (emails, service requests) to understand a property. Its digital employee — "Adam" — then uses that information to address resident concerns, train employees and reduce costs.
  • Markerr launched its generative AI dashboard for market analysis in the summer to help real estate professionals identify emerging market opportunities, predict future growth, and assess risk factors with precision.

• Lula, a smart property y maintenance platform, uses generative AI to converse with the system and residents regarding maintenance requests.
• Picket, a tech-enabled property management platform is leveraging generative AI to simplify massive HOA CC&Rs into structured resident rules; and automating the responsive capabilities of the system for resident questions.

We also have other portfolio companies using AI in similar ways, using large troves of proprietary data to develop powerful insights.

• Funnel Leasing, a multifamily CRM and automation platform, is leveraging generative AI to transcribe and summarize prospect and resident calls, saving leasing teams valuable time.
  • It’s also using AI to engage, answer, and convert prospects via email, SMS, chatbot, and voice in a quick and human-like manner.
• OnsiteIQ, a construction intelligence platform, analyzes visual data from under-construction projects and leverages AI to track progress across 18 major milestones, identifying patterns of inactivity and predicting potential delays across an entire portfolio.
• PassiveLogic, the first platform for generalized building autonomy, is creating an ecosystem of solutions that enables anyone to design, deploy, operate, and maintain their own autonomous building systems.
• PredictAP, is a machine-learning invoice ingestion and coding product for real estate accounts payable (AP). The tech ingests a historical record of a company’s AP coding data to build an automated, self-learning ingestion and coding protocol that can flag instances of fraud and identify spending inefficiencies across the business.

Even amid a challenging 2023 for both the real estate AND venture capital industries, RET continued to pursue our core investment program.

As a firm, we’re proud to look back on a year with many highlights, including:

Investing in four new portfolio companies, including:

• OnsiteIQ — a construction intelligence platform for developers and other stakeholders to document, monitor and verify progress on development sites.
  • Why? 70% of construction projects fall behind schedule; OnsiteIQ leverages video and computer vision to detect and address potential issues early, mitigating project delays.
• PredictAP – a machine-learning enabled invoice ingestion & coding solution for real estate accounts payable.
  • Why? Large real estate firms rely on key stakeholders to code thousands of invoices a month; PredictAP uses automation to systematize coding knowledge and to reduce the labor time by 80-90%.
• Rent Butter — a tenant screening solution that combines ID and document verification, banking history, and credit behavior analytics into a predictive tenant performance report.
  • Why? Property owners have traditionally used credit scores to accept or reject tenants; Rent Butter leverages alternative financial data overlayed with financial behavior analytics to create a more predictive decision model for tenant screening.
• Sparkfund — an energy transition management platform that helps commercial institutions manage the participants that deliver green capital projects.
  • Why? Sustainability teams are understaffed and overwhelmed with conflicting demands from key stakeholders (management, regulators, vendors, and consultants); Sparkfund provides technology-agnostic expertise, analytics, and deployment capabilities to cut through the noise. It helps real estate firms deliver on sustainability goals and save up to 35%.
• Follow-on investments in many of our most successful portfolio companies, including:
  • Conservation Labs' $7.5-million Series A round
  • Engrain’s $12-million Series A round
  • Gigstreem’s $59 million strategic raise
  • Markerr's $6.6-million Series B round
  • Picket’s $20-million Series B round
  • Funnel’s $32-million Series B extension

Organizing the first ever public RET event

• The Multifamily Kick-Off Summit at Blueprint featured four curated panels on timely topics at the intersection of real estate and innovation.

Expanding the RET team

• Former RealPage and On-Site.com executive Monte Jones joined as a senior advisor alongside other industry veterans Jerry Davis and Shawn Mahoney.