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PropTech: What is it and What Does it Mean for Real Estate?

PropTech (literally property + technology) represents a digital sea change disrupting real estate and property…

PropTech (literally property + technology) represents a digital sea change disrupting real estate and property management. The phrase earmarks a wave of innovation, describing the various apps, digital services, and startups working to improve the industry using technology. 

PropTech follows suit of other booming sectors tagging “tech” on the tail end of their industry to put a name on the various technologies striving to improve a particular experience. “X” + Tech has transformed your everyday life in nearly infinite ways: FinTech brings together financial technologies like those that invite you to split a restaurant bill with a tap on your smartphone while HealthTech lets you view the results of your latest lab tests in an easy-to-use app. PropTech serves up benefits to the real estate industry like: 

  • Smart apartment amenities like automated lights, locks, and thermostats 
  • Drones that provide immersive property tours
  • Marketplace apps that serve as virtual real estate agents handling every step of the selling process from start to finish.
  • Building management systems that use AI and machine learning to optimize operations
  • Robo-real estate agents offering virtual or self-guided unit tours
  • Accounting suites targeted at multifamily complexes like Yardi 
  • Online portals for paying rent or signing up for various building services or resident experiences. 

As with any newsworthy tech trend, the sector has received increasing attention from venture capitalists, and with cash infusion, more entrants are flooding the market every day. In PropTech, the sky’s the limit, and technology leaders are chomping at the bit to help grow your multifamily community. 

What can PropTech do for your multifamily community? 

According to KPMG business analysts in their 2018 report, “The road to opportunity: An annual review of the real estate industry’s journey into the digital age,” many property owners are lagging behind PropTech adoption. Out of a possible score of 10, only 44% give their current strategy a 6 or above. 

Despite the digital dawdle, property owners are well aware of PropTech’s substantial benefits. In fact, 73% of the same real estate professionals view digital innovation as a massive opportunity. Here’s how top PropTech players are improving the property management experience for owners, operators, and tenants. 

How it benefits owners

The advantages of PropTech can be felt in every nook and cranny of the real estate industry. Here are the top ways it’s helping property owners add a much-needed boost to their bottom line. 

Boost Net Operating Income

PropTech businesses are behind premium features like smart amenities—tech that can be a huge boon for your NOI. Younger generations don’t cherish the same dream of homeownership as their elder cohorts. But, they’re looking for ways to give rented units a less sterile and more personalized feel. 

Smart features like thermostats and smart plugs are a top way for renters to curate a homey vibe. Connected communities that offer basic smart apartment packages like these experience a $25 to $45 lift on monthly rents. Residents polled in metropolitan areas will fork over even more—upwards of $50 more per month for hot features like smart hubs. Partnering with a PropTech purveyor is a sure-fire way to boost rental premiums and in turn, your overall NOI. 

Arm your team with ironclad data to back up budgeting decisions

Budgeting is no longer a one-time annual sit-down: it requires the ability to spring into action and make instantaneous changes. Tech-savvy property managers are turning to advanced PropTech services like digital twins: a virtual replica of a building where you can test out different scenarios to see how they affect costs and utility usages. 

With PropTech offerings, planning is no longer a guessing game or based on a gut feeling—real-time data platforms can help you make cost-effective decisions on the fly to save you significant money over the long run. 

Accelerate operational efficiency and energy efficiency

PropTech also includes players in the building automation space. Automated systems turn buildings into living, breathing entities able to let tenants interact with spaces and make autonomous adjustments to run more efficiently. 

Automatic lights can schedule public spaces to illuminate when your earliest riser arrives for their daily 5:30am gym session. Unoccupied apartments can autonomously light up to deter criminal opportunists. Smart solar films introduce daylight harvesting to your community— automatically dimming window tints based on available sunlight. 

PropTech can also help propel forward-thinking data models. Instead of relying on past performance, smart buildings can take in information as it happens and inform users of ways to adjust behaviors and other utility schedules in real time. Some smart buildings can also access external information, churning through anonymous data from other similar complexes to make suggestions or forecast costs for the future. Monitoring weather trends and air quality conditions, buildings can adjust their behaviors to save costly resources.  

Protect assets from costly damage 

Predictive maintenance software that provides real-time observation of equipment behavior can reduce costs by 30% and eliminate up to three-quarters of equipment breakdowns. Sensors stand sentinel, keeping an eye out for water leaks or the presence of mold in real time. By proactively warning building operators of potential hazards, these high-tech devices can save your bottom line an average of $23,000 on annual labor costs

How it benefits operators

Self-guided apartment tours are the new talk of the town, and PropTech leaders are introducing software that supports the burgeoning trend. New platforms help enable this sale-closing strategy by running quick identity checks on prospects, providing unit access information upon passing the identity check, and bringing up the lights and temperature to kindle a welcoming environment. Once your irresistible apartment has won them over, they can even start the application process right from their phone. 

Done right, DIY tours yield a healthy conversion rate: one-third of prospects who embark on one wind up signing a lease. PropTech helps facilitate the process, making it as easy as possible for operators to take advantage of winning trends like this. 

How it benefits residents

PropTech offers up a bevy of digital amenities to ease the lives of residents, like smart home tech and convenient online rental pay portals.

When asked what missing features they’d most like owners to add to their living space, smart thermostats, security cameras, smart lighting and door locks topped renters’ lists. In fact, a staggering 84% without smart tech listed it as their most in-demand amenity. PropTech is more than a hot passing trend, but a harbinger of convenient living—a quality consumers demand from nearly every brand they interact with. 

Ask younger tenants to pay rent by check and you might be met with raised eyebrows. One-third of Generation Z, used to exchanging money between friends using mobile apps like Venmo, have never written a paper check. In fact, there are many banks that don’t even offer them. Enter PropTech: companies looking to help property managers accept and process rent payments in the ways modern renters prefer. 

Why wait? Invest in PropTech now 

PropTech covers any technology that aims to reinvent or improve a bumpy or red-tape-heavy process within the real estate and property management space. Its mission is to make property management easier and more cost-effective, an advantage few owners and operators should turn down. 

When the pandemic hit, PropTech was no longer a choice, it became a mandate for remote building management. Tenants needed ways to interact with management staff without visiting offices. Managers needed ways to keep their eyes on spaces, even when they could not be there in person. If there’s an aspect of the job that feels downright inconvenient—there’s now a PropTech player ready to help ease the process. 

Are you waiting on the sidelines, or are you ready to join the thriving market of multifamily owners and operators improving operations and community appeal using PropTech? 

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