Will Moxley is SVP, Product at AppFolio Inc.
For most industries, innovation is driven by a combination of technological advances and larger global trends, and this is particularly true of the residential property management industry. The rental market continues to be shaped by economic, social and technological trends, both in terms of business challenges and resident demand.
As property management teams lean on new technology to improve operational efficiency, grow their businesses and meet customer expectations, three major trends are acting as driving forces: the Internet of Things (IoT), consumer fintech and remote work. As these trends force significant change upon a variety of industries, there’s a lot that business leaders can learn from their impact on the real estate space and, ultimately, how property technology (proptech) innovation is helping property managers meet these changes.
1. The Internet Of Things
The increase in cellular and wireless connectivity of everyday objects, otherwise known as the Internet of Things (IoT), has enabled new services and real-time, always-on communication. Worldwide, IoT devices are predicted to triple from 9.7 billion in 2020 to over 29 billion by 2030.
Within real estate, the emergence of IoT has significantly escalated resident demand for smart home technology and provided an opportunity for property managers to improve efficiency by automating more and more routine tasks.
Smart home features are an attractive amenity for prospective renters, and their integrations with proptech tools can also increase efficiencies for property management teams—like cost, time and energy savings, for instance. For example, connected smart lock systems allow for keyless entry, meaning residents don’t have to be home for maintenance appointments or to let in a dog walker while they’re at work. Meanwhile, property managers don’t have to juggle multiple sets of keys. We’re also seeing increased demand among renters for smart home amenities like voice-assisted home automation, smart thermostats and IoT appliances.
At the same time, IoT adoption has yielded other operational benefits for property managers. It helps them centralize leasing and back-office functions like utility management, inspections, maintenance and access control using new platforms. When these new proptech solutions are well-integrated with the business’ core property management and accounting system, the cohesive tech stack creates a single source of information across the business. This leaves management with more time to focus on the resident experience and other business functions that drive revenue and less time on tedious administrative tasks.
2. Fintech And Flexible Payments
Consumerization has driven a major evolution within the finance and banking worlds, with fintech software and intuitive apps putting decisions and transactions right in the palm of consumers’ hands. Nearly 90% of Americans now use fintech apps to manage their financial lives. As a result, consumers expect seamless digital payment experiences wherever they go, whether in the grocery store, at a restaurant or while paying their rent bill.
New property management software innovations now allow management to adopt this next-gen financial infrastructure to better meet residents’ expectations. Instead of writing and mailing a check each month, renters can make payments through an online portal or mobile app like ApplePay. On the operations side, integrations allow management to securely link their bank accounts with the platform and set up automated transactions. For instance, property management software integrated with Plaid offers more simplified financial experiences and automated transactions.
New alternatives to security deposits are also providing more financial flexibility and expanding on traditional cash and check payments with digital payment methods. Security deposit alternatives can create a better experience for renters by reducing the financial burden of a move while offering the same level of protection for property managers. Property managers can also spend less time tracking and refunding deposits, creating a more frictionless process for all involved.
3. Remote Work
More than half of Americans—approximately 92 million people—now have the option to work remotely at least part-time. This trend, which began as a necessity during the pandemic, has now drastically shifted the economy as well as millions of people’s habits and preferences.
Within the rental market, remote work is changing long-established preferences and expectations from residents. More residents are seeking larger living spaces to accommodate home offices and workspaces. As a result, more than one-third of cities are planning to build larger apartments to satisfy this demand. Luxury rental buildings are adding new amenities (paywall) like high-quality office and co-working spaces—often decked out with conference rooms, strong Wi-Fi and videoconferencing technology.
The remote work trend offers new revenue opportunities within the rental space. For example, demand has increased for short-term rentals as remote workers look to take advantage of the flexibility to travel to or live in different locations. To meet this demand, many property managers are adding short-term rentals to their portfolios. Some property management platforms are adding new functionality that makes it easier to manage these short-term rentals via a mobile-first experience.
What This Means For Other Industries
These trends will continue to drive consumer habits and expectations into 2023 and beyond across various industries. To succeed, businesses should not merely keep pace but rather focus on how they can strategically benefit from these new offerings.
Advanced tech platforms provide major potential upsides for business owners—including everything from increased efficiency and the automation of mundane tasks to reducing user friction and speeding payment processes. While wider tech deployment surges and other global trends shape all industries, business leaders can look to this kind of software integration to help solve pressing challenges and increase customer delight.