This is a guest post from Bill Szczytko. Bill is the IT Manager for Maryland Management who loves handling the challenges of driving prospects and creating computer programs. Read more from Bill at BSitko.com.
Skepticism is good. When it comes to purchasing though I am pretty skeptical about everything. It's good to be that way. There's nothing wrong with making sure new technologies fit. The things I'm going to talk here about ARE good technologies. Are there clear and legitimate reasons behind the hype? I'll let you decide:
Revenue Management.This is probably the #1 technology running rampant around the industry today. You're probably horrified that I included it here. Just because the top folks are pumped about something doesn't mean the smaller fish need to give a hoot. Here's my cautionary tale:
Pushing your rents. Duh. This is the fundamental methodology for increasing your NOI. A lot of industry professionals live by the vacancy percentage. While it is certainly relevant, it is just one piece of the puzzle. It's possible to have a higher NOI with an 8% vacancy than a 4 or 5%. My point is that you should be pushing your rents anyway. Let me let you in on a little secret. You don't need a computer system to tell you that it's okay to push. You know your market, you know your personnel, don't replace that knowledge with just a computer system.
Comparable information isn't very reliable. Revenue Management systems include this data in their number generation. Most people that have been in this industry for a while know that this data is terrible. You call around ... the agent remembers what the price was last week but it's gone down since then. They're having a bad day and don't feel like researching. Or they know you're the competition and want to mess with you. Pick your excuse ... these numbers don't really tell the whole picture. Use them as a baseline ONLY. Are you comfortable using systems that use this data? Lots are ... are you?
Changing your rents daily causes chaos. How can you successfully manage and market all of your online sites and paper advertising when the price today isn't the price tomorrow? I understand that hotels turn most of their people daily and so these daily (or hourly) price changes really do benefit them. We don't turn that many apartments daily, weekly or even bi-weekly. It's hard for me to fathom conditions that require prices to jump around so often. It makes renting apartments difficult. I truly believe that the 6 through 15 month price grid can be intimidating for some at first. Is there such a thing as too many choices? Prospects just want to know how much it is per month. They saw $899 and they want that ... after all, it was just yesterday.
"Holding an Apartment" online.Sometimes too much information is just that. Too much. Certain managers have apartments that they like to push. Whether it's a higher commission bonus or a better value; no one can do it better than your agents. The Internet offers great information to your prospective residents. They are more empowered than ever to make smart decisions. At the end of the day they want to put their hands and eyes on what apartment they are going to live in. It's a yearly commitment. It isn't a 1 or 2 day stay. Hard to convince me that most people will commit sight unseen.
Higher Conversions? I'm sure that the conversions from "holding" an apartment are higher than normal. How it can hurt you is it pulls apartments off of your availability that you might be able to rent to your other qualified people. Is it worth it to you to hold an apartment for $10? You could also be affecting your rent amounts (check my topic #1) for that unit type just because two buddies got hammered and reserved some apartments. It is a much stronger commitment to hold an apartment while in the office than online ... $10 not withstanding. I would love to see numbers on how many people actually pay the fee and what rent range the apartments are.
Twitter.Blasphemy! Twitter is a fantastic medium to engage with others. It's one big cocktail party 24 hours a day. Your residents are people with lives. They have families, kids, parents, drama, and bills. Just like you and I. I feel that what a lot of residents want from their Property Management company is transparency. Come and fix their sink when it's clogged and accept their rent but otherwise stay out of their lives. For those that don't want you to stay out ... they'll use Facebook. It's a much better place to engage with your residents. Sure, use Twitter to listen to what others are saying about you. But from our experience thus far, it's been virtually no one. Do we advertise our presence on Twitter? A little. But we see no need to. No one wants to engage us there. Someday? Maybe ... but not now.
Is being cool ... enough? As I said, you know you want one. That's the pull I think that's driving this "We have to invest in this" fad. Are there some relevant technologies you can use with it? Sure. Property Management systems will not work on it. For those of you that use VaultWare (They will never talk to me again I'm sure ... read #2) they do offer an iPad application. Sure you can enhance tours with this thing. But I revert back to my original point: will it REALLY rent you more apartments? Come on ... think about it. If it truly does that I'd have to question your leasing agents ability to rent. Ouch (sorry I know), I'm extra cranky today.
Property Management Software.Okay, ha ha... this last one is just to see if you're paying attention. We love our Property Management software. It does everything we want it to do with hardly any fuss. They are so intuitive, aren't they? I do want to mention one thing though. I would love to see more players in the field. Yardi and OneSite are awesome software packages but they come with so many features that most smaller fish don't need. We all probably only utilize 45 - 55% of our current PM software yet you pay for 100% ... remember that.
Conclusion? Don't cancel your LRO or VaultWare. Don't delete your Twitter handle. But if you're thinking about these technologies remove the NEW FACTOR and ask yourself before you invest your money whether it's right for you and whether you actually NEED it. I urge caution and skepticism before you dive into any new technology you see.
Afterthoughts. I'm a skeptic. It's what I do. I love technology and I personally jump on the bandwagon for everything new. The companies I mentioned are all leaders in our industry and have created excellent software packages. I am trying to generate conversation, and I'm hoping you'll participate.
Happy renting, everyone.