Technology’s Burgeoning Impact on the Multifamily Sector

The impact of technology in multifamily is often difficult to quantify due to certain industry-specific factors, the most prominent of which is a diverse ownership spectrum. This lack of natural scale in the property management industry contributes to a cautious approach to the adoption of new technologies. That said, the findings of Capital One’s annual RealShare Apartments survey suggest there is a growing appetite for technologies that will revamp the underwriting and approvals process on the lending side, and, on the property management side, facilitate easier interactions between owners and tenants.

Technology Begins to Streamline and Simplify the Underwriting Process

 When Capital One asked industry professionals last October where new technology would be most welcomed in 2019, the underwriting and approvals process was by far the leading answer, at 48 percent. Banks are presently evaluating software that can read and process information like financial statements and rent rolls, and in turn significantly streamline the standard timeline for closing a loan. These kinds of solutions could also greatly accelerate the ongoing financial performance review of properties in their existing loan portfolios.

Banks are also developing proprietary tools that would help them serve clients better and faster. At Capital One, we’re very interested in tools that would, for instance, evaluate all our internal loans and offer additional insight on market rents by culling data from various online sources. Such a tool would provide rent comps for a particular address and other valuable data that would enable us to make informed credit and underwriting decisions more quickly. We believe that technological advancements like this can help keep real estate professionals focused on lending decisions and reduce the time it takes to underwrite deals.

The Role of Technology in Adding Value to Landlord/Tenant Relationships

 There’s also plenty of room for technological revamping on the property management side of the multifamily equation, with 28 percent of survey respondents replying that technology in multifamily would be most welcomed in the arena of landlord/tenant relationships. And, perhaps not surprisingly, when asked what the biggest challenge is that developers and property managers face in bringing innovative technology to properties, 40 percent of those polled answered it’s deciding which technologies would bring the most value.

The inherent ownership structure of the multifamily market plays a central role in this dilemma. Unlike the automotive industry, for example, whose major manufacturers can be counted on two hands, the plethora of owners in the multifamily sector means that even the top 50 landlords combined own less than 5 percent of all multifamily. This sprawling and disparate ownership base inhibits the widespread penetration of technological tools at significant scale. But in an environment where many landlords still communicate with a note under the door, there’s tremendous market opportunity for apps and other tools that facilitate communication and foster transparency between tenants and property managers. If a resident has a maintenance request, for example, an app that sends the request, shows that it was received, and replies when it will be fixed is an idea with transformative potential.

Many owner operators, faced with a vast slate of such emerging technologies, are turning to firms like Fifth Wall—a venture capital firm that connects real estate owners with innovators whose solutions create more livable environments. Meanwhile, platforms like coUrbanize, which works to combat NIMBYism by providing a forum for constructive dialogues between developers and residents, are helping owners and developers to identify the most promising investment opportunities.

Without question, technology has the potential to touch every facet of multifamily and is already impacting the sector in an array of ways. The burgeoning need for data and scale will continue to drive the development of innovative technological solutions that will benefit lenders, owners, and tenants alike.

Evan Williams is a Senior Vice President and affordable housing specialist at Capital One Multifamily Finance. The views expressed here are the author’s own and not that of ALM’s Real Estate Media Group.