AI and automation are no longer buzzwords. Large and small, forward-looking developers and owners have implemented processes to increase renter outreach to rent and retain more units efficiently.
As a tech entrepreneur and a real estate finance and development veteran, I am excited about how we have adopted new ideas in the post-pandemic world. We talk to many developers, property owners, and lenders each week and have a strong pulse on the market needs and demands and how they are evolving.
The OpenAI/Chat GPT era is here and has changed how our multifamily housing industry functions. It has given multifamily developers and operators tools to automate renting units and increase rental retention using sophisticated algorithms, saving owners and operators enormous amounts of time and resources.
Rent and retention
Organizations today are adopting AI-driven solutions to automate creating ad campaigns, reaching out to potential renters, offering lucrative incentives, and making the leasing process (leasing forms, credit checks, and move-in) simple and pain-free for their new renters. Adopting cutting-edge technology has elevated tenant satisfaction and retention, from optimizing rent pricing to implementing AI chatbots and robust CRM systems to managing tenant interactions.
The automation of the entire front-end engine leaves property managers with time and resources to be creative in attracting and retaining tenants. At a conference recently, I heard a large developer-owner executive talk about how she wants to give back time to her team and staff to be creative, stay engaged, and still offer the best customer experience. It was vital for her to think about automating tasks one at a time, allowing the focus to be on strategic planning, higher-level decision-making, and predicting how market shifts and trends will impact their portfolio in the future.
Development and finance
AI-driven solutions are now actively adopted across the property management lifecycle, and leveraging technology and automation for development and financing is next.
The development process is still long and cumbersome and takes anywhere between 18-24 months, from site selection to financing and starting construction. The development and finance teams lead the process, collaborate with dozens of experts, consultants, and lenders, and make complex analytical decisions. I would argue, this creative team must have the best data and technology solutions to make speedy decisions and move through this much too lengthy process with clarity.
The technology investment for this labor-intensive and highly creative operation is negligible. Our current approach heavily relies on Excel, phone calls, and emails, leading to staff burnout and ultimately lengthening the process of building more housing quickly.
Here are some use cases where technology, AI, and automation are now assisting housing development and financing teams.
Site selection and feasibility analysis
Finding the right site for the right price to bring together the right unit mix is critical. Developers need to know the size of the lot, zoning rules, entitlements, cost, and size of the development that can be built. If a potential project has even a 10 percent success rate in making it into the pipeline and the financing process, the time spent on site selection should be remarkably small. Today, this information is pieced together tediously from various sources, taking weeks and months, but it doesn’t have to.
Before we can consider AI automation to extract property data or zoning and entitlements from government sources, we need to digitize the data at its source. Modern systems must be able to provide this information to developers quickly in an easy-to-navigate potential pipeline.
There are newer technology companies that are now providing schematic drawings and pricing by using AI to do all the upfront work. A massive technological shift is coming in how professional services will work to help build multifamily housing finance.
Create automated offering memos for your lenders and investors
It may take months of back and forth with city officials, architects, contractors, and your development team to piece together the development project. While this is exciting and satisfying, it is now helpful to have a step-by-step repeatable blueprint, easy to use for one project after the other. Rinse – Repeat. Technology Platforms must have the ability to store information, communicate with all parties, and establish a single source of truth.
Now another powerful use case of newer systems is to help create an automated AI-driven memo that compiles all necessary information into a comprehensive package for lenders. This allows easy dissemination of information built for your lenders and is guaranteed to move quickly and bring in better rates and pricing from multiple lenders.
This package contains proformas, detailed construction and operational forecasts, due diligence on the site, developer, and contractor, and long-term market feasibility analysis. Now one would hope the lender does not need 120 days to get through due diligence and loan approval. Yes, this is possible today for both lenders and developers!
Data Architecture and Analytics
The development and financing team now tracks all their proforma data and compares them apples-to-apples across their entire portfolio and other third-party market data. This data is available at your fingertips, and within clicks.
For the folks who are putting together budgets, comparing costs, and finding the most efficient capital, the most important information should be to be able to compare budgets of other projects extensively and easily. We should be able to compare operating potential budgets with actual operating costs. This does not have to be a “project” anymore, it should be as easy as selecting properties to compare and view graphs and data to make the right decision.
Many large and small developers are utilizing the Builders Patch technology platform to do complex data comparisons in minutes, write out narratives and summaries of market studies using AI chatbots, and put together offering memos to send out to potential lenders.
We have spent the last five years building useful deal management features and innovative AI technology at Builders Patch. Today, one can use technology like ours and many others to automate and streamline the development and finance team’s processes. Tasks are expedited, duplicative work is eliminated and your most creative team is spending their time solving higher-level challenges.
The AI revolution is here. Technology solutions and innovation are focused on the multifamily and CRE markets. Technology companies are making rapid progress with early adopters and without a doubt, this is the one defining advantage that will create a chasm between the early adopters and technology development-owner teams.
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