Renting in America by Mediaplanet_USA

A Mediaplanet Guide to the Evolution of the Modern Rental Market

Renting in America

Byrdy Kelley The real estate mogul on how the rental market has evolved during COVID-19

How paint color can make your property more appealing to renters Learn about the future of property management software

DECEMBER 2021 | FUTUREOFBUSINESSANDTECH.COM

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ment homes under management nationwide. “They created a realistic and user-friendly system that allows our on-site team to focus on what really matters, which is taking care of the residents and running the property in the best way possible,” says Rosenbach. “Generally, within three clicks users can go from summary data to knowing every detail they need to know and completing every task they need to complete” she says. And the approach the software takes has many spectacular growth stories. “It has been an amazing journey to partner with customers who started with only a handful of assets and have grown to well over 30K units in their portfolios,” says Francisco.

Is Your Property Management Platform the Growth Partner You Need It to Be? Property managers know time is money and the right property management platform can help make business easier and more efficient. So how do you know if your property management software is maximizing your potential to grow revenue and operate more efficiently? Look for one that that truly understands the industry, the people, and the tasks that need to be done. “Who touches the software day in and day out? How easy is it going to be for them to use? How does the technology help drive results?” says Elizabeth Francisco, president of ResMan. “Our platform increases

efficiency, especially for on-site teams, enabling property management companies to grow and scale more effectively.” ResMan is one of the fastest growing property management platform providers in the United States, becoming a trusted growth and operations partner to some of the industry’s most respected property management companies. The ResMan platform streamlines and automates many time-intensive activities and provides greater visibility around property-level to-dos, performance metrics, and helps to identify areas of risk for the leadership. But it takes more than just great technology to be a trusted growth partner in this industry.

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“Our biggest competitive advantage is that we’ve walked in our customer’s shoes,” says Francisco, who has over 25 years of experience as a property manager and shared that she and a team of 50+ property management professionals developed the platform. “A lot of times when people build software, they make assumptions about the tasks at hand. And it’s a very surface-level view, but the devil is in the details. It’s when you get into those individual workflows that you see the intricacies of what needs to be accomplished. When software can not only anticipate those tasks but actually do most of the work, reducing the workflow down to only two or three

steps, well than that is really powerful,” she says. Saving time and money ResMan’s software solutions streamline accounting, budgeting, reporting, and property maintenance. The platform helps save time, which saves money. Francisco says case studies show users of the platform save four hours, per week, per employee. Sonya Rosenbach, CFO of Allied Orion Group, says ResMan’s platform has been a savings and streamlining tool for her team, which provides investment, construction, and property management services for multi-family communities, including a growing portfolio of over 23,000 apart-

Winning together Good software empowers and enables teams to perform better and to be the very best they can be in their individual roles. ResMan’s motto is “win together” because they believe the way they succeed is by helping their customers succeed. Rosenbach feels valued: “They pick up the phone when we call or when we email, and they really take it to heart, and they really make us a priority.” If this sounds different from the relationship you have with your current provider, maybe it is time for a change. n Kristen Castillo

To learn more about how ResMan can help you, visit myresman.com

Property Management Software: Making the Leap If you’re considering moving to a professional property management software system, you’ve probably seen many discussions about what the best software package is to use. Choosing a new software system is never an easy thing to accomplish, and it will probably take longer than you anticipate. The reward comes later when you start benefiting from the efficiencies you gain. Some key points to consider are: • Is the software system adaptable to your business or will you adapt your business to how the software works? • What is the typical learning curve and integration time? • What customer service

resources are available? • What is the cost of the system compared to your company size? • Will this be a desktop version or cloud-based system? • Is it scalable for future growth? • Is this an open platform system that allows integration with other systems? Customer service Customer service will be a big part of the startup phase. How does the company offer their support services? Are they included or optional as an add-on? Are they by phone or only online? In my opinion, the more assistance they provide and the faster they provide it, the better.

Cost I found that cost can vary depending on the size of your company. Do they charge by user or by doors or some other method? The days of a oneand-done payment are long gone. You will most likely be paying a monthly or yearly fee. Even QuickBooks and Microsoft do this now. Don’t forget to check on what is actually included and what will be add-ons. Think about how big your company will eventually be for future planning as well. Will the system be capable of growing with you, or will you outgrow it and have to migrate to another system down the road and do it all over again?

Data access Having an open platform for data access, or Application Programming Interface (API), will be a big plus in future software development. The ability to have integration partners access your data will lead to even more efficiencies in your processes. No single software developer will be the end-all solution for everybody. Using a collection of business expertise across an open platform will lead to faster development and deployment of solutions. There are also new tools coming out that will let novice developers create their own applications that can access and act on their data. In conclusion, you will want to get the most out of

the program because of your investment, but it will take time. Make a list of your priorities and learn different areas of the program to implement, as needed. You don’t need to do it all at once. Capabilities will continue to change and grow, and your software partner should be ready to commit to that. Just like when interviewing a prospective tenant or owner, ask a lot of questions. As a property manager, your gut feeling will probably tell you what is the best choice for you. n

Tim Snelgrove, RMP, MPM Candidate, Owner, Checkerboard Realty, Inc., NARPM Member

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The Modern Rental Market According to the Experts

Dylan Lenz Founder & CEO, Naborly

Kulveer Taggar, Co-Founder & CEO, Zeus Living

Barbara Corcoran Shark on ABC’s “Shark Tank,” Founder, The Corcoran Group

Elizabeth Francisco President, ResMan

Real estate industry leaders share their insights on how the rental market has evolved in the face of COVID-19 and rapidly advancing technology.

What is the biggest trend you’ve seen in the rental industry during the pandemic? Dylan Lenz: The overwhelming trend has been the need to very quickly adapt to virtual — virtual showings, virtual rental applications, virtual signatures, and virtual screenings. The pandemic accelerated the digital transformation of these processes for many landlords and property owners. Kulveer Taggar: The biggest trend that we’ve experienced at Zeus Living is demand for flexibility from renters. We’ve seen a sixfold increase year over year in residents booking month-tomonth leases with no predeter-

mined end date. This gives them flexibility to stay as long as they want and make a decision on where they’ll go next when they’re ready. With over 50 percent of the U.S. workforce fully remote, people have a great deal of geographic flexibility and want to take advantage of that. How has technology helped empower the modern property manager? Barbara Corcoran: Real estate technology is booming, and for good reason. It’s an industry ripe for innovation. New tools are helping brokerages and realtors move faster, more effectively, and with more efficiency. It’s a wave that’s taking off and if you’re not riding it,

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you’re being left behind. In this competitive field, it’s crucial to not just keep up with trends but to be a trendsetter yourself. Remember that the old boys get cocky and fall asleep at the wheel. It’s the new kid on the block that owns tomorrow. What is the most common risk property owners face from tenants when renting out their property, and how can this be avoided? DL: While digital services have provided an easy way to advertise rental vacancies, it’s also opened your property (and your information) up to unscrupulous actors. Many landlords still don’t bother to vet or screen their tenants;

they go on a “gut feeling,” and this can have disastrous consequences. Screening is proven to lower the risk of defaults by over 85 percent and is key to protecting your property and your investment. Elizabeth Francisco: Before the pandemic, there was growing concern about fraud among property managers. Since the onset of the pandemic, property managers have reported a 48 percent increase in fraudulent incidents. When fraud is uncovered after move-in, eviction is usually the only recourse. With the pandemic-related eviction moratorium, many owners have been left holding the bag facing significant losses in revenue.

What do you think is the key to increasing tenant retention and satisfaction? KT: The key to improving tenant retention and satisfaction is anticipating their needs and acting on them. What we see with the younger generations is that they want to invest in experiences over possessions. They want to be more mobile. And they want to do that without a ton of headache and hassle. If we can give them an easy booking process, flexible lease terms that allow for shorter stays, and furnished homes with household essentials already stocked, we’re giving them a style of renting that works for them. n

Resident Preferences and the Impact of COVID-19 to the pandemic. This significant increase in the number of residents changing locations may reflect the new flexibility many apartment residents enjoyed when firms moved to a workfrom-home model. The amount of remote work that residents are taking part in is already having an impact on what those residents are looking for in their apartment community.

What residents valued in their apartment homes was changing before the pandemic. Now, some of those changes have only sped up. Every other year, the National Multifamily Housing Council (NMHC) and Grace Hill release the Renter Preferences Survey Report. The report surveys hundreds of thousands of apartment households to capture opinions and reveal what the nation’s apartment residents like, love, and can’t live without in their home. Given the seismic changes the pandemic caused across the nation and society, this report, which will be released in January 2022, comes at a critical time

to help us better understand the impact of COVID-19 on community behaviors; what we value in our apartment homes; and what owners, operators, and managers will need to consider as they look to attract the next generation of apartment residents. Greater flexibility One of the most notable takeaways from this year’s report was that 60.3 percent of respondents had moved in the past 18 months, and 45.1 percent had moved in the past year. For reference, only 26.7 percent of apartment households moved in 2019. Of the respondents who had moved in the past 18 months, a quarter (25.1 percent) reported that their move was due

The internet age There is no greater connection than between remote work and the need for high-speed internet access. Across all age groups, 54.4 percent of respondents stated that they “won’t rent without high-speed internet access;” 53.8 percent of respondents said they would be interested in pre-installed Wi-Fi. Before the pandemic, interest in flexible apartment homes and workspaces was increasing, and the need for dependable, efficient high-speed internet was clear. Indeed, it was almost seen as on par with utilities like water, electricity, and gas. After the past year and a half, apartment residents have made clear that strong Wi-Fi is an essential amenity at any apartment community. These findings are only the tip of what the 2022 NMHC-Grace Hill Renter Preferences Survey Report found relating to the pandemic and how behaviors have radically changed. Going forward, the need to be responsive to the values of apartment residents will be more imperative than ever before. n Rick Haughey, NMHC Vice President, Industry Technology Initiatives

The Pandemic Paradox: Tenant Credit Scores Are Higher Than Ever It may surprise you to find out consumer credit scores increased throughout the pandemic, a time of record high unemployment and eviction moratoria. FICO reports that the average credit score now stands at 716, eight points higher than 2020, with consumers in lower score ranges seeing the biggest improvement. How did this happen, and how does it change how we screen tenants? Fewer missed payments The CARES Act helped keep millions of Americans afloat financially, not only through unemployment and stimulus checks, but also by requiring creditors to work with customers going through hard times. Given that payment history makes up 35 percent of a FICO score, it’s no surprise this cooperation played a big role in improving credit scores. Less consumer debt Consumer debt levels also dipped as consumers began spending more conservatively due to reduced income, fewer opportunities to spend during lockdown, and uncertainty. Rather than taking on new debt, consumers prioritized paying down their debt or deferring it, which in turn improved credit scores. Fewer credit inquiries When a consumer applies for a new line of credit, their credit score takes a slight dip. Fewer consumers engaged in credit-seeking behavior, which meant fewer hard credit inquiries and improved scores. Although a credit report is still important to use in your tenant screening process, to get the most holistic picture of an applicant’s financial stability, you should also look outside of a credit report. Spending the extra time to verify income in multiple ways, including calling the employer, asking for paycheck stubs, and collecting a W-2, is worth the time and energy. Asking to verify a bank balance also goes a long way. Your applicants are more than just a credit score. Get the full picture by doing your research and you’ll be in a better position to find a quality tenant who will pay their rent on time. To learn more, visit: https://www.american-apartment-owners-association.org/ Alexandra Alvarado, Director of Marketing and Education, American Apartment Owners Association

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The multifamily rental industry is facing daunting challenges in the wake of COVID-19, from supply shortages to labor shortages. How can owners and managers find, train, and retain on-site employees, especially in maintenance? Within the multifamily industry, current staffing challenges go beyond recent economic factors. Over the past decade, we have witnessed a noticeable decline in qualified maintenance technicians entering the industry, and COVID-19 has amplified that trend. Once an inexperienced technician is hired, management must do everything possible to provide focused training, encouragement, and a healthy work environment. Our Chadwell University training programs offer basic skills training, industry certifications, and higher-level troubleshooting classes that are vital to both new and seasoned maintenance personnel. How can owners and managers best navigate supply chain challenges and maximize fulfillment success? The nation has faced months of supply chain difficulties which have created new challenges for multifamily properties. It is key for management teams to have strong relationships with suppliers who will work with you to identify new sources and options to keep your properties running and ready to lease. Chadwell Supply continues to work with manufacturers and vendors to find substitutions and workarounds to minimize the impact on our customers. What will the phase-down of 410A refrigerant mean for the multifamily industry in the near future? As the EPA puts new energy regulations in place, the HVACR industry continues to innovate to meet requirements. Manufacturers are being required to phase out the production of equipment that uses certain refrigerant types in favor of more energy-efficient, environmentally friendly refrigerants with a lower global warming potential. The impacts of these regulations go beyond the capital expenses of new equipment. Training will be a necessity as these new refrigerants will require considerable changes in handling protocols and servicing practices to protect the safety of your properties, residents, and employees. To stay up to date on refrigerant restrictions and rules, visit epa.gov/section608. John Daniell, Senior Vice President of Sales, Chadwell Supply

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Property Management During the COVID-19 Crisis: What’s Changed? Byrdy Kelley, founder and CEO of Melan Property Management, shares the ways that the rental market has evolved since the COVID-19 pandemic began. During the pandemic, technology changed the game. Many property tours went virtual, providing property managers and prospective tenants with more flexibility and safety as the novel coronavirus spread. Video platforms like FaceTime and Zoom as well as virtual reality options like Matterport made this possible. “It became vital because their virtual technology allowed prospective residents to see the apartment floor plan in 3D,” Kelley says. “This also allowed us as property managers to enhance the online leasing process, and it allowed for prospective residents to complete their leasing application forms online.” The COVID-19 pandemic led to other unexpected real estate trends, such as a newfound value in bike storage as more American families sought safe outdoor activities and a way to avoid public transit. “It’s not something you’d think of right away,” Kelley says, “but last year there was a surprise bike shortage, and that was due to sales rising to the triple digits.” Changes in income Nonetheless, some things in real estate haven’t changed over

PHOTO:ARI SKIN

How the Pandemic is Affecting Multifamily Property Management

the past couple of years. A top priority for property managers remains finding and retaining reliable tenants who pay their rent on time. For those who don’t meet the income requirement, asking for a guarantor who can step in for extra security can be helpful, Kelley suggests. In the case of tenants who have experienced an income change and can’t pay their full rent, it can be a good idea to retain them if they’re willing to work out an arrangement to pay off their debt. “Getting something is better than nothing and then having

to deal with the cost of replacing them,” Kelley says. “I truly believe property owners need to remember that their properties don’t generate optimal income while there is high vacancy.” It comes down to talking with your tenant. “I believe the key to increasing tenant retention and satisfaction is communication,” Kelley explains. “How you make people feel is a key indicator of how effectively you’re communicating with them.” n

Melinda Carter

IREM Survey Reveals Top Technology Challenges Among Property Managers When it comes to technology and how it’s impacting property management, a survey of IREM members in the United States and Canada indicates that much has changed over the last two years — and much has remained the same. IREM’s technology survey, first conducted in 2019 and repeated in 2020, asked members to rank their top challenges from a list of more than 20 concerns. In both 2019 and 2020 — even with COVID-19 — document management was the top concern. As property managers and their teams seek to deliver or retrieve paper reports, grab a lease out of a filing cabinet, or print out a document to be signed, the pandemic revealed that the infrastructure to digitize and manage documents was sorely lacking. Overnight, document management went from being important to urgent. System integration System integration also remains a large hurdle for those companies that have implemented technology solutions recently. When asked what could make the biggest difference to property management in the next three to five years, one sur-

There’s a craving among property managers for “technology that gives property managers all the information pertaining to their portfolio at their fingertips...”

vey respondent said, “Better integrated systems. The key will be smaller companies with products that integrate, not one large user solution.” Others spoke of their desire for fully integrated property management systems so they can get away from multiple sites with multiple log-ins. Improved integration would also enable them to reduce or eliminate spreadsheets that are prone to error and are labor intensive. As one respondent indicated, there’s a craving among property managers for “technology that gives property managers all the information pertaining to their portfolio at their fingertips and connects with realtime data — leases, income, expenses, assets, asset perfor-

mance, smart dashboard — and allows all of the planning to be done in one single tool.” Embracing virtual

The Importance of Accurate and Objective Tenant Screening A troubling trend is occurring in some states that impacts the abilities of tenant screeners to do their jobs and help keep our living communities secure. Tenant screening is crucial for encouraging rental affordability as well as public safety. It is a standard practice used across many types of rental properties to help property owners and property managers assess the risks associated with an applicant. The screening process Tenant screeners provide a report on prospective residents which includes information such as past evictions, criminal history, and credit information. This allows property managers to develop a professional and objective means of evaluating applicants. While in the past, property managers may have relied more heavily on personal recommendations or relationships, now they can make decisions with a factbased evaluation of applicants. Tenant screeners rely on public records to pull together information for their screening reports. Using identifying information like a full name and date of birth (DOB), screeners can access the records that are needed to conduct an accurate background screening. However, some states and localities are instituting rules that redact DOB from public records, making background screening more difficult, lengthier, and, in many cases, entirely impossible.

So, if the key challenges facing property management remain largely the same, what’s changed? The answer is COVID-19, which has had a momentous impact on the work of property managers and forced management companies to quickly embrace new technologies. “Virtual” became a common theme when referring to technology adoption. Respondents cited virtual showings, virtual leasing, virtual training, virtual meetings, and virtual communications with all stakeholders from tenants to vendors to employees as technology they would bring on in the next few years. Other disruptions caused by COVID-19 also surfaced in the survey. Property managers anticipate that they’ll increase their technology spending this year and that flexible working arrangements will be adopted by most companies as we continue to live with the virus. They also expect that tenants and residents will be looking for newer technologies in their residential communities and in their offices. n

To learn more about the redaction of DOBs from court records and how you can make your voice heard, visit www.thepbsa.org.

Institute of Real Estate Management (IREM)

Melissa Sorenson, Executive Director, Professional Background Screening Association (PBSA)

Misguided policy change As California and Michigan look to move forward with this rule change, other states and localities may follow suit. The PBSA has fought to educate the public and lawmakers about how harmful redacting DOBs would be for the safety of communities and places of employment. States are relying on the misguided idea that removing DOBs from public record will help protect privacy. However, DOBs simply do not lead to identity theft. Instead, redacting DOBs will significantly slow down, or halt completely, the tenancy process for both property managers and potential tenants, which is untenable while countless people are looking for housing. This rule will ultimately cause more harm than good. Fact-based, standardized information in a tenant screening report promotes compliance with fair housing laws and fair decision-making, but it cannot be completed accurately and quickly without DOBs.

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How Property Managers Can Utilize Technology to Optimize Their Rentals

energy; it’s all the uses in the building. Are they using parking? When do they use the parking? When are the package deliveries coming in? All of these elements of how people use the building can be used to make the building more efficient — to provide a higher level of service but also manage the cost as well. The multi-family and commercial real estate industries are both becoming more customer centric. How do you believe property managers can meet the ever-changing needs of these customers and prospective tenants?

In an expansive interview, Steve Weikal, CRE Tech Lead at the MIT Real Estate Innovation Lab, explains how technology is changing the housing market for the better. With the current housing affordability crisis and rent prices increasing due to the pandemic, what new models are actively helping to improve the situation? There are some interesting approaches to this. On the rental side, there have been new solutions. For example, how can we rethink the security deposit and how can we rethink the last month of rent? If you’re trying to rent an apartment in New York City, when you add the first month and the last month and the security deposit, that can get to be a very high number. So,

can we rethink something like security deposit? And can we do that by writing an insurance product? Would I, as a tenant, be willing to pay a few dollars a month for insurance coverage that makes my landlord more comfortable with that security deposit, and I don’t have to pay it out of pocket? What major trends have you noticed in tenants’ lease preferences? We have proven through the last 18 months that the workforce can be much more mobile and still be productive.

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Because of this newfound flexibility, tenants are less likely to agree to a 12-month lease. This downward pressure is happening in commercial offices, retail, and all of the asset classes. As a result, owners are getting more flexible on month-to-month leases. What technologies would you recommend that property managers invest in for the next year? Over the long-term, the quickest return on investment has been with companies that have used technology to solve energy efficiency issues. We’re

no longer at the point of just smart thermostats, but also integrated platforms to help better manage either the purchase side of energy or the provision side. I think there will continue to be breakthroughs in this area. You can pretty quickly see the return and the savings. The other area that property owners and operators have been increasingly looking at is better ways of understanding the user. If you can understand how your occupants are using energy, you can be more efficient and effective on providing that energy. But it’s not just

There are a couple of ways, now that operators have a much better sense of how the buildings are being used. One is to tap into the existing building management systems in ways that provide data that is useful. The legacy providers, the existing systems in buildings, are starting to get better at analyzing the data and providing information that’s useful. You can observe how many people are coming through, how many people need access, and at which times of the day. Then you can tie that in with your staffing, for example, or the building elevators. There are also what we refer to as user engagement apps, or tenant experience apps, that are a form of crowdsourcing. If all the tenants in the building have that building app, and they use it to order lunch or to get access or to report a light bulb outage, you now have a bunch of data that’s coming from the users. You can sense what they’re looking for and accommodate it. n

Background Checks Are Essential for Investors in Today’s World

In today’s world, the insight that can be provided by criminal and credit background checks is essential for investors, neighbors, and even the residents themselves. Why? Because background checks evince a variety of reactions, often with mixed emotions by the same individuals. Credit background checks are commonplace in almost all financial transactions. Criminal background checks are common in many work environments, especially if the individual will have access to significant company assets. Hence, it is not surprising that property owners and managers have, for years, required both criminal and credit background checks on applicants. Interestingly, the very resident who claims to desire a less restrictive background check often changes their mind if the applicant will be their neighbor. Protecting local safety Balancing background checks with the reasonableness of a diverse yet appropriate set of determining factors is at the core of the current struggle. Turning over the keys and access to a building that may represent someone’s nest egg and lifetime investment takes more than a bit of trust. In an effort to minimize risk, property owners want to better understand to whom they’re actually renting. Credit bureaus provide access to a history of responsibility, while criminal background checks are often a requirement of local police departments to help minimize calls for nuisance activity. Several years ago, HUD initiated a rule that restricted the look-back time on a variety of criminal actions. Additionally, arrests were banned from consideration. Increasing the difficulty of managing the look-back times was a requirement for data justifying the length of time a property owner or manager would look back. Over the past four years, property

owners and managers have started to settle into patterns of acceptability; that is, at least until HUD challenges those standards in court. Putting investments at risk In the meantime, managing the risk of turning over a building that represents your life savings to a stranger continues to become more and more difficult. Some communities have begun banning criminal background checks with the idealism that past actions do not indicate future behavior. However, aside from crimes of passion, past behavior is often indicative of future behavior. Property destroyed and neighbors harassed do not help improve a community. As most property owners and managers live within a few miles of their rental property (sometimes a few blocks), not only is their investment at risk, but their very own community is as well. This fact is not taken lightly by the real estate investment community. Frequently, those coming out of a difficult situation can often find their first opportunity to stand on their own from the owner of the single-family home or duplex. These “mom and pop” managers represent almost 50 percent of the rental market in the United States and are often willing to take a little more risk than their corporate colleagues. But even in these situations, the property owner needs to be able to verify that the person in front of them is who they claim to be. With fraud running rampant, background checks are a necessary process to confirm who is actually sitting across the table, asking for the keys. The insight provided by criminal and credit background checks is essential for investors, neighbors, and the residents themselves. Hiding identities only helps those with ill intentions. n Charles Tassell, COO, National Real Estate Investors Association

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