Is artificial intelligence the latest iteration of proptech? 

The hype surrounding artificial intelligence (AI) is inescapable and yet, in early July, it was widely reported that ChatGPT, the poster child for generative artificial intelligence, showed a drop in website visitors since the first time it was launched in November 2022.

Is AI something different, something better, something to be feared or a new revolutionary tool that will once again transform the real estate industry? Is AI just a new version of proptech and what does it actually do for multifamily owner-operators? 

The umbrella term of “AI” includes software applications that perform tasks that mimic human intelligence by crunching data into patterns that can help make better decisions about leasing strategies and resident retention. The latest incarnation of AI that’s getting all the buzz is labeled “generative,” which can write text and create images based on prompts put into the system by human users.

Who Is Using What?

Amy Weissberger, Senior Vice President of Corporate Strategy for Morgan Properties, based in King of Prussia, Pa., uses proptech tools for security deposit transactions, monthly payment options, property management and credit reporting. Weissberger hears pitches from vendors about adding more AI on a regular basis, but she’s not interested in bells or whistles.

“My focus has been on promoting operational efficiency and alleviating administrative tasks that have been traditionally performed by people,” she says. “This shift allows our staff to put stronger efforts into other areas that enhance the resident experience. Everything our innovation team looks at has to meet
these goals.”

Mike Wagar, CFO-CAO of Magma Equities, based in Southern California, is also seeing AI influence creeping into proptech pitches. So far, his favorite smarter software system rolls AI into a classic form of digital drudgery. “The best results have been simple tasks like responding to an email or text about leasing a unit,” he says.

“The AI tool receives the inquiry and crafts a friendly, personalized response back to the prospect with information on current availability and a call to action to schedule a tour.”

Wagar is also taking a long look at AI-enabled systems that track collections and follow-up with residents. “This is a huge time suck on the management teams and will free-up their time and allow better tracking of delinquency,” he says.

According to Wagar, Magma exper-ienced rapid growth in their first years as an operator and their manual reporting systems were quickly overwhelmed. “We found a proptech group that uses AI to aggregate all of our financial and operating data into a single spot, so they can allow the AI to analyze all facets of our operations, flag issues and eventually suggest solutions,” he says.

AI is used to map Magma’s data from various sources and answer nuanced questions including how much the firm pays for payroll in Texas per unit and what is the variance from last year.

Trion Properties, based in Miami and Los Angeles, is using a combination of legacy proptech platforms combined with AI-based systems to help schedule tours and run website bots while handling service requests, payments and delinquencies.

“AI-based platforms are not only revolutionizing leasing but are also set to redefine how multifamily businesses operate in the future,” says Steven Sapp, Director, Property Management, Trion Properties. “As AI technologies progress, they will grow smarter, more personalized and offer additional valuable operational resources.”

Chatting on the Web

Multifamily owner-operators who specialize in student housing routinely deal with digital natives used to working in cyberspace. Pierce Education Properties, based in Southern California, relies on several proptech tools that assist with resident referrals and social media postings. Favorite physical tools include connected package rooms and smart home systems that work through a resident portal app. 

The AI-enabled system that’s making the most difference for Pierce is all about communication. “The integration of chatbots has proven to be a highly advantageous asset for our property management,” says KrisAnn Baker Kizer, VP, Leasing and Marketing, Pierce Education Properties.

“These intelligent bots offer both our residents and prospects the convenience of obtaining answers to their queries at any time, regardless of our office hours. Moreover, our chatbot is consistently learning and evolving with each interaction, seamlessly becoming an integral part of our workforce.” According to Kizer, the unpaid bots improve overall efficiency by scheduling tours, processing work orders and offering pricing information.

Writing Tests 

Pierce is also assigning writing tests to the new technology. “We are utilizing generative AI to create marketing copy, social media posts and text for resident and prospect emails,” says Kizer. “The AI-generated content is working as expected and has proven to be beneficial in streamlining our writing-based tasks. We exercise significant oversight and take great care in providing carefully curated prompts to the AI system.”

Michael Hand, Vice President of Marketing for Morgan Properties, has also been experimenting with turning AI loose on the keyboard while keeping a careful eye on what comes out. “In the production of in-house creative, we have begun exploring the role that ChatGPT can play in streamlining efforts during the draft development phase,” he says.

“It has proven useful in assisting with initial ideation and copy for select resident communications, emails and web copy. Anything developed through generative AI tools still requires a high level of review and customization to ensure accuracy and correct brand tone.”

One Platform + Proprietary 

DB Capital Management, based in Denver, has moved most of their proptech chores onto one AI-enabled platform that handles a variety of troublesome tasks. “The AI program manages leasing, collections and resident requests,” says Brennen Degner, CEO, DB Capital Management. 

“The response time is invaluable and allows us to expedite responses that historically could have taken 20 hours or more by a busy onsite team member into just minutes. The AI is robust enough
that it feels like you are speaking to an actual person.”

DB Capital is also leveraging generative AI to help with financial reporting chores. “We have spent considerable resources setting up an internal asset management platform that feeds information into ChatGPT and also talks through application programming interfaces to our management software,” says Degner.

“What we have developed allows us to reduce quarterly asset narratives and financial analysis that used to take our team hours to produce each quarter into minutes. This is a proprietary product we have worked with engineers over the past six months to develop internally.” 

Leveraging Third-Party AI

The new technology is also making its way into multifamily’s online referral partners, which could influence a community’s marketing materials. “We are seeing AI-powered features being introduced on listing applications… which allow shoppers to search for homes in a more expedient and user-friendly way,” says Allen Aldridge, Asset Manager, Park Central apartments, SVP, Co-Director of Asset Management, KBS. 

“This would also be an opportunity for owners and operators to highlight the amenities and features of their multifamily communities and attract renters who are seeking those elements,” he says.

KBS is also tinkering with AI-enabled software as a starting point for some of their marketing efforts, but not rolling it into their finished product—so far. For them, the human element is still playing
a vital role.

“Technology historically has changed the way people communicate, contract business and operate in a very profound way. Similarly, AI has the potential to alter the multifamily sector exponentially in terms of efficiency, convenience and service,” says Aldridge. “Apartment communities, like all areas of real estate, are fundamentally people- and relationship-oriented, and this is unlikely to change regardless of technology.”

Predicting the Future

Smart locks, connected thermostats, virtual tours and contact-free leasing have helped transform the world as we know it. Will the effects of AI cause similar disruption? “I think as time goes on, AI will be a vital component of a multifamily owner-operator’s tool chest,” says Degner. “At a time when we are seeing heightened resident and employee turnover across the industry, anything that you can implement to provide a better environment for both can enhance your likelihood of success.”

From a financial reporting point of view, the new systems have potential for huge time savings.

“AI will help compress the time it takes to produce reports and will complete the difficult analyses for you in real time,” says Wagar. “There will be far fewer account-ants and analysts needed to operate large real estate portfolios, and far less time spent preparing and reviewing, and much more time spent developing and executing strategies.”

Real estate remains a human-centric business which could limit AI’s reach. “It’s crucial to recognize that AI is not meant to replace human interaction; rather, it serves as a valuable tool that complements human efforts,” says Kizer. “The successful integration of AI in multifamily business operations will require careful consideration of how it can best support and enhance the human touch rather than replacing it.”

 

Scott Sowers is a frequent contributor to units.