By: Paul Bergeron
The 2021 multifamily budget planning season takes on added meaning given the unprecedented revenue and operations challenges created by Covid-19’s complications.
Simply comparing year-ago budgets with current-year spending is wasteful – and waste is never a popular byproduct when it comes to budget analysis.
Want vs. Need
As is typical, for many companies, it likely will come down a want vs. need debate. RedPeak COO Jared Miller sees it that way.
“Need versus want will be our theme when considering anything from capital projects to technology,” Miller says. “If the product or service is necessary, we will move forward, but if it can wait, that is what we will do.”
Miller says the most significant multifamily budgeting questions his team is asking going 2021 are:
- What will the new normal look like?
- When will the new normal occur?
- For those residents that are not paying any rent and aren’t communicating with us, when will evictions take place?
- Can residents who are months behind on rent catch up?
- How high will the unemployment rate be as we enter this new normal?
For most companies, it can involve combining the known, the hoped for and the unknown.
“As we start to budget 2021 revenue, we are consulting multiple data sources and digging deep into our own operations to determine a conservative approach to 2021 revenue numbers,” Miller says.
“This means no rent growth on some assets, little on others and still moderate on assets in the suburbs or close in, but not necessarily urban assets. Expenses are much easier to forecast, but revenue is the challenge going into 2021.”
Tech Keeps Residents Happy And Teams Focused
David Perez, COO, Carroll, says his company is focusing more on customer-centric technology.
“In this Covid and economic environment, it’s hyper important for our residents to be happy,” he says. “We want the leasing and apartment living process to be a great experience. Right now, we’re thinking about what we could invest in to make this happen.
“We’re looking into things such as creating a more interactive rent-paying process and considering an apartment living app that features many aspects of apartment living such as work orders, rent payment, scheduling for grocery or package delivery; the app being that one point of contact. We’re looking to see if we have the kind of bandwidth to support this.
Perez says he is delaying any non-customer-centric upgrades.
“They are very important, but an employee Intranet system with an internal help desk is not as important while our residents deal with such volatility,” Perez says.
Tech for Tomorrow
Keisha Martin, Director of Training, Griffis Blessing, says Covid-19 sped up the industry’s adaptation of technology out of necessity.
“We’ve all had to embrace technology,” she says. “We might have been talking about self-guided tours a year ago, and maybe hadn’t even thought much about virtual tours, and we’d never need something like a Zoom conference call. Now look. I sense that in 2021, there will be more self-guided tours than in-person tours.”
Edgewood Management and Vantage Management Vice President of Marketing Wendy Simpson says being able to demonstrate the value of the investment helps to make a winning case.
That comes with consistent, accurate forecasting, which has become that much more challenging this year, many executives will tell you.
Simpson says her recently-adopted CRM from Knock is taking a pressure point off of her process.
“With real time data, we can analyze and tell our stakeholders that in order for us to hit this absorption rate, we’ll need to invest this amount of marketing spend,” Simpson says. “Then, we can verify our predictions with which sources are performing best. For example, by doing ‘this’ it led to ‘that’ outcomes.
“It also helps us to plan out 30 to 60 days on what we’re spending and how we’re spending it. You want to believe that all your friends/partners who offer ILSs or websites are truly working ‘the best,’ but that can’t always be the case. With Knock, it helps us to truly measure which is working best, rather than thinking, ‘Oh, they all work great.’ ”
Putting a Price on Peace of Mind
Simpson says she has always believed strongly in PropTech, even though she says she has had to have tough conversations with clients about cost.
“I’ve had to learn through experience, that when I pitch something new that we really need to understand any risk, and can anticipate the benefits – especially to the question, ‘Why is it so expensive?’
“We don’t have enough tech in multifamily, we need to do better. With Covid and post Covid, it’s even more critical. Specifically, self-guided leasing, move-in – end to end from first touch to post move-in.
Simpson said the cost savings that comes with better technology is almost immeasurable.
“If we were to need to budget more for the resources that are needed that a Knock provides, the people to do the work that Knock does for us, and the time involved for us, it would be thousands of dollars of effort, and it still wouldn’t even measure up to the results and the performance you’d be getting from Knock compared to doing it on your own.
This technology investment also goes to her employees’ well-being.
“It’s hard to put a dollar amount on the healthiness and the mindset on your team when they have the confidence and ability to better manage their community, and have the insight to talk intelligently with their teams and feel good about the decisions they are making,” Simpson says. “The confidence factor shows the onsite staff person that they are doing the best they can with the info they have.”