Multifamily Unpacked, Season 1, Episode 7: LIVE EVENT — AIM Panel — How centralization is being reinvented/democratized by proptech for small + large firms
How to get started, today, no matter your size and ownership structure
In this episode of Multifamily Unpacked, we are thrilled to rebroadcast a session from AIM. We are grateful to our friends at the Apartment Innovation and Marketing Conference for allowing us to share this conversation about centralization, and how leading operators are changing the status-quo multifamily operating model.
Listen as Sunny Juneja the CEO at Canopy Analytics moderates a conversation between Stephanie Versin SVP, Head of Marketing and Leasing at Veritas Investments; Heather Wallace Managing Director at Bozzuto; and Tyler Christiansen CEO at Funnel.
Centralizing key functions of the real estate industry is no longer just for REITs or large players, it’s an opportunity for everyone to lower costs and improve customer service.
In this session, panelists answer questions like:
- How can a firm triple its portfolio while adding no more maintenance coordinators?
- What advances are being made for Centralized Leasing (CLO) and Centralized Maintenance (CMO) operations including AI and cross-department information sharing?
- Large firms were leaders in centralization, but where are they focused now?
- How do mid-to-smaller firms use proptech to enjoy some of those same benefits?
- On the flip side of the promise of proptech, residents/customers are wary of “person less” services, so how do firms integrate proptech efficiencies without diminishing trust?
- Can property managers benefit from the centralization the same way owner-operators have?
Read the transcript below, listen using the player above, or on Apple Podcasts and Spotify.
Tyler Christiansen, Funnel Leasing
Welcome back to season one of Multifamily Unpacked. In this episode, we’re going to try something cool. We’re going to share a panel that I was a part of at AIM. In this panel, we have Sonny who’s the CEO of Canopy Analytics, Stephanie, who leads marketing at Veritas, and Heather from Bozzuto. In this topic, we dive into some of the biggest controversies surrounding centralization. Why don’t people do it? What does it mean for third-party managers? And what about those who don’t have geographic density? I really enjoyed this conversation. It was provocative, it was thoughtful, and I learned a lot. I hope you will as Well as you enjoy this session of Multifamily Unpacked courtesy of AIM.
Josh Patino
Okay, welcome.This is a full house and clearly not a big enough room for this session. We appreciate everyone being here for this session. I’m just going to quickly introduce it and I’ll hand it over to our panel. This session is: How Centralization is Being Reinvented/Democratized by Proptech for Small and Large Firms. And on our panel we have. Stephanie Versin. Did I say that right, Stephanie? She’s the SVP Head of Marketing and leasing for Veritas. We have Heather Wallace, Managing Director for Bozzuto. We have Sunny, and Sunny I don’t want to butcher your last name… Juneja, was that close? With Canopy Analytics. And then I’m a little biased, I am introducing our CEO for Funnel Leasing Tyler Christiansen, with Funnel so I’m gonna go ahead and hand over to Sonny to take over from here.
Sunny Juneja, Canopy Analytics
Cool. Firstly, thank you, everybody, for joining today. The goal for today is to have a really great working session. I’m glad there are so many people here that are interested in this topic. So we’re going to do about 40 minutes of content. And we’re going to have questions at the end. So if you have questions, please hold them until then, we want to do a little bit of poll because we want this to be really interactive and really fit everyone here’s goals. If you’re an owner-operator, would you mind raising your hand? Wow. So we have a lot of owner-operators here today. If you’re here with a property management company, would you please raise your hand? Okay, so a lot of both. And then finally, if you sell for our products to the multifamily industry, would you mind raising your hand? Cool, great. So we have a great full house here and incredible speakers. So what I want to do is open up with real stories of what happens when you centralize your business. So we have Camden here on the slide. They’re a public REIT, when they centralized, they brought over $4 million dollars in savings, their agents were making more money than ever, and they’re managing more units. LCOR, which is an owner-operator, midsize had about a 62% increase in tours year-over-year. And they’re getting more residents from cross-selling, meaning that they have fewer leads and less marketing spend. And Essex, one of the most incredible iconic public REITs, saw 35% time savings across their staff, and their agents are handling more units than ever. So thank you for actually don’t know who was who introduced us. But we have a great panel here of wonderful people. And what I love about our panel is each person here has real-world experience actually bringing centralization to the firms that they work with. Okay. So Tyler, one thing I want to wonder is you’ve seen so many companies, those are all your customers up there. Why isn’t everyone already doing this? What’s the pushback you get when centralization seems to have such great results?
Tyler Christiansen, Funnel Leasing
Well, thank you Sunny. Yeah. And I’m Tyler. I’m the CEO of Funnel, excited to be a part of this conversation. So this question, obviously, those stats that were on the screen, they seem worthwhile to put in the effort to do so. But I think that the number one reason is this is still fairly new, or at least there’s a perception that centralization is fairly new. I see some friends in the audience that are at places like UDR, or formerly at Archstone. Were at some of these ideas of off-site leasing. I heard somebody yesterday on a panel say that ‘We don’t know what centralization is, it can be whatever you want it to be.’ And it is not whatever you want it to be. It is moving on-site operations off-site. And that is not a new concept. There are innovators that have done that for some time. The difference is with some of the stats, there’s now technology and vendors that specialize in the role of specialization. But legitimate reasons do exist. Obviously, they make it harder for some than others. This panel was a great panel. In Stephanie’s case, they have tremendous geographic density. We often hear folks say, Well, I don’t have geographic density. So it doesn’t apply to me. We have Heather representing Bozzuto. And third party managers have real contracts that in some cases prohibit them from doing shared leasing. So, there are legitimate reasons, but they are all in our experience, things you can work through, especially when you have objectives, like the ones we saw on the screen in terms of why it’s worth the effort.
Sunny Juneja, Canopy Analytics
Yeah, and I think that’s the thing that’s really true is a lot of our clients, some of them have as few as 1000 units. And they’ve already rolled out some level of centralization. Some of them are management companies, and some of them are owner-operators. And I think something that’s unique about centralization is that it’s not really a new topic. It’s one that’s been around for a long time, and Heather I know, you worked formally at a company that had tried centralization in the ’90s. Could you tell a little bit about some of the challenges you face then? And why didn’t pick up maybe?
Heather Wallace, Bozzuto
So typically, I don’t tell people how long I’ve been in the industry. But you have to go back to the late ’90s, I worked for a REIT that recognized that pulling some of the responsibilities of the property manager off-site would create some efficiencies, we didn’t have the technology that we have today. And the level of detail that went into the initial rollout wasn’t done in a way where we really thought through the ramifications of how that would impact the residents and the onsite team. So a little cautionary tale around pulling rent collections off-site, when you’re still allowing your property manager to be responsible for their P&L and pulling their accounts payable off-site, while you’re still asking them to be responsible for their P&L. So you have to have some touch points. And you can’t have an accountant or a bookkeeper, that’s leaving the checks in their inbox on the fifth, and then three days are getting sent out on the sixth, then, you know, you’ve got 30 people who’ve paid their rent, and it isn’t counted for on, you know, in your operating system. So those were some flaws with that system. But at that time, we didn’t have online rent payments, we didn’t have check scanners, there was a lot of technology that we have today that we didn’t have back then, needless to say, that didn’t go very well. So it was abandoned. Nowadays, we’re in this convergence of insane expense creep, that’s just eating away at our profit margins, and a real issue with trying to hire, you know, capable people to fill the void that’s coming up through this pipeline that we’re delivering new product. So it’s very competitive for staff, and our expenses are just going crazy. So I think now is the time for us to use the technology that we have. And to be really thoughtful about how we’re rolling out these pilots and or programs. Sharing with each other what we learned so that we can really help our industry make the next step.
Sunny Juneja, Canopy Analytics
Yeah. And so there are real pitfalls, and there are real differences for why companies centralizing each goal is different. And I want to highlight, you know, kind of, as Tyler mentioned earlier, centralization is about bringing the roles and processes that normally happen to property somewhere else. And the goal is really to do it more efficiently. And one thing that’s really, really important to say is that it’s not just rolling out technology, there is a fundamental change in your business you have to account for that is related to the staffing challenge or staffing model. So one company that has really led the forefront on centralization, I believe, is Veritas. You know, Stephanie, could you start by maybe sharing a little bit about who is very tossed? When did you start and why did you have to begin centralizing kind of in the beginning your company?=
Stephanie Versin, Veritas Investments
Sure. So at Veritas, we manage a very unique portfolio of very small assets. We have 350 buildings in San Francisco, Oakland, and LA. And we have three markets and 8,000 units, but the average size of our assets is 20 to 25 units. Therefore there is nobody on site for leasing for maintenance. So back in the days, 10 years ago, we had about 2,000 units and 80 buildings already. And we were doing centralization without that being a buzzword, you know, it was just like, we had to be on a spreadsheet trying to do all of it at one little team centralized already. And the idea was that we couldn’t be growing at that pace without having technology to onboard and to help because at the end of the day, your Excel spreadsheet and Smartsheet as ever capability they cannot handle as much. So we started very early to understand that centralization meant also specialization. I don’t think you can talk about centralization without talking about specialization. I’m going to talk about specialization in terms of roles. So we looked at the traditional leasing team that you have on-site and we basically divided into three main roles. One is called the inside sales team. So our inside sales team receives all our inquiries through phone, email, texts, you name it. Their only job, and are very good at it, is to phone screen qualified inquiries, making sure that we understand we have the key information budget move-in, where do you want to live, that team is trained specifically to only do this. Then the lead is passed on to our leasing team, the boots on the ground, we have 10 leasing agents in the Bay Area, two leasing agents in LA, the only thing they do is take that qualified lead, organize the tour, and tour the prospect. They do that and they love it. It’s like there is no more other red tape to be handled. So we take care of the customer in a very different way. It’s very specialized, our agents cover all our assets. So it’s completely fluid. You don’t have like, you know, one agent doing one thing, they cover the entire Bay Area, the entire LA area. Then once the applicant runs the application, wherever the leasing coordinators team that takes care of the application, the questions you have about insurance, move-in, move funds, etc, etc. So the entire pipeline is basically specialized with a team that really knows it very well. And technology helps us basically to remove all the redundant, mundane work and elevate all our associates to be a little bit more customer service. Because that’s what that’s the deal. Here we are, we’re really trying to serve better and faster for our customers. And I’m going to, this is just the leasing funnel for the Bay Area. It’s not I have another one for LA. And it shows you that we are really receiving a lot of inquiries, we have a lot of duplicates in our systems, because people apply on one unit, one building another unit to another building. But all our agents are able to tour as many buildings as the prospect wants basically. So then we have qualified leads, go down the road with the inside sales team qualifying that leads, there are tours being organized by our agents. And then you have the application and the lease at the end. I want to be notified as well, we’re 100% rent-controlled, which means that all of those leads are actually new leases. We don’t do renewals because we don’t need to. So our turnover over the year annual turnover is 25 to 30%. Whereas at a market rent, you would see 50% and above, as you know, it’s pure quality acquisition.
Sunny Juneja, Canopy Analytics
That’s extremely interesting. I think what’s unique about your portfolio is that it’s so different. And it seems like you know, you started so early on. And one thing I kind of want to note right off the bat is that to you centralization isn’t even actually self-guided tours, you have tours being done by agents every single day. Right. And I think that’s a little bit of an interesting kind of thing. Tyler, something I’m wondering is like, a lot of people when they think centralization, it’s synonymous with self-guided tours or cross-selling, like when it comes to marketing and leasing. And then also centralization, like, what are the different ways people can kind of focus on that and drive value for their own business?
Tyler Christiansen, Funnel Leasing
Yeah, it’s a great question. And I could listen to Stephanie talk about centralization all day, that was remarkable. And we’re incredibly fortunate that our partners are driving us to push a little further. Veritas does more cross-selling than any one of our other customers. Because of that, they’re pushing us to build the interface in a mobile environment, which we really want to do. But to your point, Stephanie always harps on this in our prep conversations. One of the reasons people don’t do it is they hear these stories and think well, yeah, that’s a very different portfolio than mine, therefore, it doesn’t translate. But it does translate. You made the comment about you know, sharing best practices as an industry. And there are so many things that we can do that should be the default way we operate with our customers. Customers should expect when they rent an apartment to get their questions answered. And we don’t do that today. That’s not secret sauce, we should share how we’re good at that. But then the how behind that, of ‘Hey, we are a REIT. And we want to provide self-guided tours because we believe that technology enables self-service and that’s great.’ And that’s one path. But then there’s another path where we have high-end apartment units that our people are our value and they are great salespeople and I love that you know as a salesperson myself, if I had one available apartment that’s constantly being leased, I wouldn’t stay a salesperson to multifamily for long, but if my only job is to across multiple properties, meet with individuals take them on tours that could be and we had the stat up there for Camden Property Trust, where their earnings per agent went up 50%. That can be like software sales-type money, a lot of folks in here started as leasing agents and then transitioned to working on the vendor side. Maybe they don’t have to, maybe they can become leasing professionals, regional leasing professionals making six figures. And maybe they’re only doing tours. So, yes, there are a lot of different flavors to this. I do think if your ‘why’ is cost reduction, then moving towards focusing on self-guided tours is important. If your ‘why’ is more about consistent customer experience. Now, those two things are not completely separate, you can do both. But I think it’s important in everybody’s centralization journey to identify early on, what is our North Star in this process? Is it customer experience, is it cost reduction? Because they all end at the same place, but they don’t get there the same way.
Sunny Juneja, Canopy Analytics
That’s extremely helpful. Um, Stephanie, I just want to kind of wonder something here. So, you know, I’m familiar with the San Francisco market we work together. Uh, one of the challenges is, you know, these buildings can be very far apart, right? And, you know, if you’re looking, you’re doing tours all day, how do you know, what’s the pricing? What’s the availability? That information is changing in real-time?
Stephanie Versin, Veritas Investments
Yes. So the technology I was talking about is, we built a Salesforce application that helped us with automation workflows. And Salesforce is basically our main warehouse database, where all the key important data points are stored, pricing, real-time pricing, real-time availability, building access, unit access, marketing automation, etc, etc. Anything that you need to know about a building, or unit from a pricing perspective, availability, renovation, it’s there. And it’s on the mobile or so agents could say, let me get you down to the next level of this building or another building because they know that it’s available. So we are completely fluid, we are completely flexible to really what the prospect wants to see. And as you mentioned, we have 55% cross-selling by purpose because most of the time someone sees a unit on the internet and says ‘I want to see this one.’ Sure. Okay, so you tour. You didn’t like it as much, I have another one down the road in two buildings down the road. Here we go. So at the end of the day, 55% of our prospects enter with one unit and finish up with another. And that’s the beauty of it is like we listen to them, what do you need, you don’t want a two bedroom, I have a one bedroom here. But they have this knowledge because they have the technology on hand. It’s completely mobile and fluid.
Sunny Juneja, Canopy Analytics
I think that’s really cool. So you literally have agents that are able to go from apartment to apartment based on the feedback they’re getting in real-time, they can unlock the doors and enter that apartment. And this is even on 1920’s-1930s product, which are very old buildings in San Francisco. And I think something interesting about what your company has done is you chose to build the technology internally because you’ve been doing it for so long. But Heather, you know I guess something is your company, totally different asset class, totally different business type. Could you walk through, like where your centralization journey has kind of been right now?
Heather Wallace, Bozzuto
Absolutely. So let me give you a little bit of the DNA of the company. So we’re almost 100,000 units. We’re about 40% towers, and our average building size is right around 250-280 units. So each of these buildings is already pretty massive. And so the complexity of what Stephanie is dealing with is different for us. So when we looked at where we could, and cost savings was a big part of our approach, but also employee retention, and then taking a look at how do we run the same amount of units with fewer associates because they’re just not as available to us as they have been in the past. So what we did was we took four buildings in two separate pods that were geographically concentrated. This is all in Washington, D.C., where we have about 65% market share. The complexity for us, that Tyler mentioned earlier, is that where 91% third-party operators. So most of these buildings are owned by multiple owners, so getting ownership on board with sharing resources is something that you have to go back to the property management agreement. Because most of our agreements we found, after going through our abstracts, state that if the associate isn’t working on the property, that their payroll is not covered by the property, so you have to go back and renegotiate that agreement. But what we found was we took four assets, one with one owner, and the other one with a collection. And we were able to restructure the teams in a way where we elevated Community Managers to GMs, where that was appropriate, where we had a community manager position available. And what I would say about how we reorganize the teams is it had a lot to do with a few things: the geography, the asset class and type, the people we had available to us, and the software we were running on the assets already. We did not customize software, we took the software that we’re already using, and are using it for this. We didn’t have to go and create anything fancy or expensive, it can be done without making those big investments. Because that would have gone against what we were trying to do, which was save money.
Sunny Juneja, Canopy Analytics
And how large is this portfolio they’re rolling it out at right now?
Heather Wallace, Bozzuto
So two separate pods, I would say they’re probably about 1000-1,200 units each.
Sunny Juneja, Canopy Analytics
Gotcha. And, you know, one thing that’s kind of interesting that you brought up is that it wasn’t actually a technology challenge internally, right? It was totally like more of a process and maybe a contract and maybe even a budgeting challenge?
Heather Wallace, Bozzuto
Yeah, so I would, I would say as we took the bookkeeping function, and pulled it off-site, so the accounts payable and the accounts receivable. Where we had four assistant managers, we now have two bookkeepers, rather than four assistant managers. And we were able to create two GM positions in each pod, rather than having four community managers. So the payroll savings that we’re achieving is what I would say nominal, it’s not enormous. But it’s helpful because we have really talented people, working as teams, across these different specializations. And so what we’re looking at right now is about a $35,000 savings per property, per year. So it’s not huge. But we did solve for the coverage piece because you have to have coverage for your property. And if you take those humans off the property, you can’t physically be open. So in these cases, these are stabilized assets, we were able to close the properties on Saturdays and Sundays, and they’re operating just fine. The pivot we would need to make is: if our ATR climbs above 7-10%, depending on which pod it is, and in which ownership group it is, we would need to add team members and open on the weekends. So this is a test, it’s a pilot, and we’ve had it going now for about eight months. We feel like it’s something that’s unique, and that we can take out to different portfolios. But the other thing that I would caution you on is you have to have a detailed rollout plan, a team of people that are coming in and checking on how that operation is working. Each one of those bookkeepers visits their properties once a week. So they’re staying connected with their team. They are working in our corporate office two days a week, and then they work from home, and then they float. So I think just depending on your properties, your clients, and your geography, and the type of assets that you’re running, you can put together very unique plans that will serve your goals if you’re looking for either trying to reduce the need for people or expenses.
Sunny Juneja, Canopy Analytics
Thanks. So that’s super, super interesting. So Tyler, one thing, you know, I’m calling you Mr. Centralization. You’ve been talking about centralization for like, three, four years nonstop. And I’m really glad that people are finally hearing you out here. Something I want to know is, I would say probably you’re uniquely situated more than anyone having seen, how to get started, what are some of those first steps kind of as Heather was mentioning. Like when you roll out new clients, and you’re helping them kind of on their centralization journey and your journey, what is that first step to getting started?
Tyler Christiansen, Funnel Leasing
Yeah, Well, Heather just mentioned it, we often describe it as the ‘whiteboarding exercise.’ You know, our industry goes through cycles, I used to be a part of a really great property management software company. And we would always walk in on his whiteboards. And everybody had all of their integrations that was what we were solving for ‘this integrates with that.’ The whiteboard we walk in on now, when we come in to meet with our partners is ‘what is actually happening on site?’ What are the… On your screen here, you can see, these are tasks that are being done on-site and you can list out there’s, you know, 80 to 100 at any given community. You know, that doesn’t include the angry resident coming in and yelling about the air conditioner. These are things we’re planning to do. And then you have to ask yourself, which of these adds value in our strategy and our brand being on site, right? And everything else, therefore, is open to being moved to a shared services model. Now, I think what’s really important that Heather highlighted is we see the most success. There’s been a few exceptions, we’ve worked with some stellar companies that do it all at once. But typically the most success comes from separating out the technology transformation, from the operational transformation, from the staffing transformation. Those are three different things that sometimes when you try and change all three simultaneously, ‘Hey, we’re going to turn on a new software, we’re going to fire all the assistant community managers, and we’re gonna have an entirely new workflow for our renters.” Things are bound to go wrong. And so I think as Heather highlighted, you need to decide what is your ‘WHY’ list out the things that you believe could be centralized, which gives you a scope of the available opportunity. And then really kind of think about in what order are we going to sequence this transformation? My biased answer is you should start with software. The logic behind that though, is many of our partners before they put a system in place and to Stephanie’s point, a lot of our partners started doing this before Funnel existed and so they did have to go out of the industry to a Salesforce or Microsoft. The reason they did that was not because property management software is not great, they are great, but they are not built for centralization. They are built for property management, their architectures are designed around a single property. And the reason I think that putting a system in place is it gives you data, it informs you of what is actually happening in a cross-property workflow. One of our partners Cortland — the largest owner of apartments in Atlanta and in Dallas — they did not have visibility prior to turning on a renter-centric CRM to how often is a renter organically cross-selling themselves? As Stephanie mentioned, they’re driving their cross-sell ratio up. But you need to know where we are beginning, right? And then I think when you understand that data and you understand your objectives, then you can look at “Are we are we the type of organization that leasing is where we start?” Or maybe we’re a third-party, and maybe we don’t have a lot of density, what you have on your screen has nothing to do with density, right? So maybe the low-hanging fruit is, uh, you know what, we’re gonna move the assistant community manager, or we’re gonna centralize renewals. But yeah, I think to start small. And think about this is a journey, none of our partners are done, even those that are saving millions of dollars a year, they’re still pushing on improving that customer experience.
Sunny Juneja, Canopy Analytics
Yeah, and one thing that our company does when we help companies do some of the assistant manager role kind of internally is, and this is a kind of concept that comes from technology, it’s called parallel testing. It’s when you run the two processes at the same time and compare the results, right? So you have your centralized team running one thing in one portfolio, I always suggest you pick your best-performing portfolio, the one where your team is the strongest because you want to isolate the factors between what’s a staffing issue and what is a technology or operational process issue. And then, you compare the results. Are we getting better results than we had before? And are we even outperforming our existing portfolio? And one thing I think is really important is taking out the rollout period, instead of kind of rushing into it and saying, ‘We’re gonna do the whole portfolio all at once we’re gonna do everything kind of all at the same time,’ It’s really taking it step-by-step and saying, ‘Okay, this portfolio was really successful, here’s all the processes, we learned the things we didn’t even know we were doing on-site. And let’s try to add another portfolio and see if we can replicate that success.’ And I think one challenge is a lot on the software side, people want to go so fast, but you have to go at the pace of the owners you work with. Stephanie, your company has been doing this for such a long time. And you have a lot of robust training and process. I’d love for you just chat with us a little bit like, what’s the first day at Veritas, as a leasing agent like? I mean, it’s got to be very different than you know, these other companies.
Stephanie Versin, Veritas Investments
Yes, we really try to make sure that the training is a very important component. And it’s not just the training. It’s not just understanding the technology that we’re using, because we have to have the right people and the right technology, if the people that we have do not understand the technology or do not understand the why we are using technology, we don’t have the right people. So I’m really, when we hire and recruit, we make sure that people are very embracing the technology, embracing the CRM, or embracing the automation that we put together to help them/to support them. And before I wanted to go back to the CRM and the benefits of having a CRM. I want to know who is using a CRM or lead management tool here today? Great. Because we, you know, lead management is really the first step of centralization, but it’s not the last step of centralization. We have combined marketing and leasing into the same team for a reason: to make sure that we understand the marketing cost; to understand with the CRM, where is the source of truth; which leads are coming from which sources and to make sure that you understand your return on investment. Because there is nothing worse than spending money here and not understanding if it’s really relevant. Are you really signing leads’ lease at the end? What is your lead-to-lease ratio? Thanks to this CRM we are using, we have a traceability of everything we span. And we know which source is the best source. And we adapt. And we are agile, because we are dashboards, because we look at it on a weekly basis to change the strategy, if needed. There is nothing set. That’s what I think it’s important to know. It’s like we move very fast, thanks to the technology. But we also need to sometimes pause and be like: are we spending the right money at the right place at the right time? And we do that every week, we look at the dashboards, we look at Funnel, we look at how are we doing? And making sure that we hear also from our leasing agents, the type of leads who are passing by to them. Are you okay? Is touring okay? So we have a complete 360 feedback between marketing and leasing. So back to the training, we have a, we don’t have a leasing team, we have a marketing and leasing team. We speak with each other all the time, we also are incentivized the same way. This means that marketing also gets a bonus when we hit our leasing goals. And that’s very important to motivate everyone to do a very good job. It’s just a 360. Very important. So anybody that is the training is the complete ecosystem of the training. It’s not just like I’m going to teach you leasing, we’re going to show you how we do marketing as well. What’s behind the why? That’s the training we do. And I spend a lot of time actually making sure that everybody understands the ‘why’ because otherwise, we’re not a team.
Sunny Juneja, Canopy Analytics
Yeah. And something I mean, I noticed just kind of looking at this slide is you have about 21 people for over 7000 units, and that’s like a one to 350 unit agent ratio. And it’s very interesting that a lot of it’s coming from combining the teams and setting up a different incentive structure. You know, something curious about Heather is, how long did it take you guys to really get started on the centralization process? What was the rolling it out, and what’s it called, getting everybody aligned internally on that…
Heather Wallace, Bozzuto
I would say was about three months to identify the clients, the assets, and then really dive into the different tasks that needed to be done, and then create the workflows. This group, once we started, we started slowly, you know, like Tyler would saying, you don’t want to try and roll out too much of the program all at once. You want to kind of feed it a little bit at a time so folks can digest the changes. But we did have weekly meetings and then monthly kind of assessing, how is this working? Is customer service being impacted? What are our reviews looking like? You know, we’ve pulled people off the site, we’ve closed for two days a week, those are pretty significant changes to operations. And what we found was because of the period of time that we’re in, residents were more understanding about being closed a couple days a week, because they were feeling it everywhere in the service industry. So I think that was another thing that really helped us was that we’re in a period of time of people shortage across the entire country. So folks, were a little bit more understanding.
Sunny Juneja, Canopy Analytics
Did you have like a super squad of centralized people? Or were you running this through your normal working group?
Heather Wallace, Bozzuto
We ran this through our normal working group we actually have another pod of properties down in Florida. They’re just not as far along in the process. And so we have one senior vice president that’s over both of these pods. And she’s taken the lead on the centralization team, but there are leaders from every single department that are participating in this pilot. So that we can see how it’s impacting accounting, are there now redundancies, because we have the bookkeeper with the accounts payable accounts receivable accounts. How do they work together? So we’re finding through just constant testing and feedback loop, like what she was talking about with her sales and marketing teams, we’re having the same thing with our accounting and bookkeeping teams just to see if there’s anything that’s redundant so we might be able to even reduce our accountants’ workload in the back office if these bookkeepers are able to pick up more. We do renewals and sales on-site, so we did not pull the, we call it our customer service position is a sales and marketing associate. So it’s not a leasing agent. So we do something similar but it is all on-site and then working hand-in-hand with our marketing director. But we were really conscious of how the customers would be impacted as they’re coming into the property. So we don’t do a lot of self-guided tours, we only have eight or nine properties now across almost 300, that are still doing self-guided tours. We’ve come all the way back to in-person, you can lease through video and online, and we will do a tour on FaceTime if you can’t get there, the agents are all very trained in that coming out of COVID. But for our brand, we feel like the sales and marketing associates really need to be at the property. We have not pulled them off.
Sunny Juneja, Canopy Analytics
That’s interesting. So Tyler, one thing that I’d love for you to share a little bit about is I think you’re really great at helping people get that first step going. And something I’ve heard you say to others is that you may already be on your own centralization journey. And like, what’s some pragmatic advice you can give to everybody here to kind of get their first step going or kind of identify where they’ve already started?
Tyler Christiansen, Funnel Leasing
Yeah. So I do think, again, it’s really identifying the work that you, for your brand, even in the long term do want to have on-site. Listening to Heather speak, Bozzuto has a fabulous brand, and it’s a strategic decision. To Stephanie’s point, constantly that’s evolving. But I think when you put in place some guardrails, then you can begin to look for, you know, what are the things that we’re already doing? And it may be bookkeeping, I mean, there are a lot of functions today, if you have an IT team. It’s a centralized function, right? And in fact, one of the things that’s really exciting about the future of shared services is that some of the pain points we all feel on the proptech side of integrations, there are a lot of workarounds if you have a small, highly trained, consistent team doing workflows, that maybe you don’t have to have the world’s perfect automated integration, because you have one person who knows how to click the right buttons. Right? But I think that the key is identifying what do you want to prove? So whether you’re in a large national third-party manager, or you are a small regional owner-operator, the great thing about this, to your point we have been talking about for years, I’m more bullish than ever is: it works. I mean, revenue management used to be a fringe idea, took 10-15 years for the industry to really buy in that algorithms were better than people at pricing apartment units. This stuff works. And so the data is becoming very clear when you have leasing agents making 50% more on a model. If you’re holding out, your talent problems are only going to get worse. And so whoever are the people in your organization that are opposed to it, ask them what they need to see proven. What do they need to see in the data, that you can begin, whether in a pilot or in a larger initiative to knock those down one by one? Because the results are being experienced by some of the leaders in the industry, they’re achievable by everybody in the room, and there may be artificial barriers that may be ‘Hey, we have an agreement in place that we need to go back and revisit.’ But what’s fun for us is some of the things, for instance, one of the theories about centralization is it will lead to greater loyalty in multifamily. And so we’re testing that with some of our partners, where today, as Stephanie said, if you don’t have a CRM that tells you that is based on the renter when a resident inquires at one of your communities at a sister community, you may not know that, right? Well, that door can begin to be opened, and this idea of loyalty to a brand that’s never existed in multifamily. Well, if you don’t know that they’re your resident, they’re your customer, they probably don’t care that they’re your customer. But think about if you centralize renewals or you have a leasing team, and they have that information. An inquiry comes in at a Bozzuto property, and this leasing associate who has been selected for the pod knows that, hey, this person is current on their rent, they have a pet, they’re living in a two-bedroom and their lease expires June 1. How much better of a salesperson am I going to be if I know that person? That hey, thanks for inquiring again, within the Bozzuto brand, right? So even the things that are more fringe right now that are still kind of, hey, nobody’s doing that at scale. They’re provable. So to your question, how do you get started, pick what you want to prove. Probably what you need to prove are the reasons people are saying ‘don’t do it.’ Right when the asset manager says, ‘Here’s why I don’t want to do it,’ say ‘Awesome. Can I test that?’ Can we prove to you that we can solve for that? At the end of the day, my dad’s an asset manager, he does not like my pink and my marketing and all that stuff, but he’ll listen to a spreadsheet that says it operates better, right? So that’s where I would start is wherever they’re telling you it doesn’t work.
Sunny Juneja, Canopy Analytics
Okay, I like it. So let’s kind of wrap up with the same question for everybody here. And then what we’ll do is we’ll take some audience q&a and kind of go from there. Does that sound good? Cool. Stephanie you know, what do you think people should go right tomorrow first thing they want to do on their centralization journey? What’s up protip you’ve got for them?
Stephanie Versin, Veritas Investments
Oh gosh. Well, as, as Tyler said, start with the technology. But I would say find a partner. And I mean it in the sense that, there is plenty of technology solution to centralize nowadays, too many, I would say. Make sure that you really get a sense of their values compared to your values and compared to your challenges. Because at the end of the day, it’s a dating game here, you need to make sure that this partner is willing to modify the little bit their product for you, to fit your challenges. And we’ve pushed the envelope with Funnel, a lot, every day. Because we are very special and unique. But everybody’s special and unique. And it’s important to be heard, it’s important to have a partner that understands your challenges and try to work around it and make it happen. And to me, this is a relationship. If you can find any technologies about the people how they treat you, and how they are willing to change their product a little bit to adapt to your challenges, that’s what I would do.
Heather Wallace, Bozzuto
So I would highly recommend starting by analyzing what your limitations are. Read your contracts, and understand if you’re a third-party operator, you need to go back to your PMAs. Right away, I was listening to Tyler and it sounds amazing, but I could not cross-sell apartments across different third-party owners, they would lose their minds. So I think that if you have a portfolio of assets that are all your own assets, or you have friendly ownership, you might be able to pull that off. But anything that you do I always start with my limitations. What do my contract, say my fiduciary responsibility is to my clients and then how do I work within that framework? And if I can really find cost savings by breaking that framework with them, then bring that ROI to them and let them decide whether or not you are going to break that framework and start with a new agreement. That’s where I would start.
Sunny Juneja, Canopy Analytics
Cool. And then I’ll answer this question. Finally, I will go to the audience here. And if you have a question for the audience walk up to a mic. But I think one thing that’s important is to try to centralize your data flows. I don’t just mean that from an analytics perspective. But like having one line for all your maintenance, having one line for all your prospects to call, and it’s gonna be a really hard challenge to do it. But what happens then is you can get all of your information kind of coming through one process and one flow and start building out the incremental steps to really get started. And that exercise alone was going to identify where your kind of challenges the strengths and weaknesses are. And I think one thing that I’m really passionate about is that when it comes to centralization, one of the greatest values is that you take the onus off the property and the market and you put it on the people. And one thing I just have here as a screenshot is that, one thing that I think is really motivating for all the owner-operators we work with who are within a certain segment, is instead of seeing a property’s name, they see people’s name. And because those people are in charge of those assets, and it becomes much more enticing and personal to them. Kind of want to take an opportunity. Do we want to talk about maintenance or should we go to questions with questions? Let’s go to questions. So can we get some questions from the audience? Anyone have something they’d like to know? We also have a mobile mic as well .
Audience question
Stephanie, I have a question with your smaller buildings as you acquire them, with a centralized marketing and leasing team. Do you retrofit standardized locks? How do they access the ability to get into the unit?
Stephanie Versin, Veritas Investments
Sure, that’s a great question. We use Carson living as the method for accessing our buildings and our units. I wanted to add something as well in terms of centralization means also standardization, which means it’s brand consistency. You are one shop, one team, one dream. It means that in terms of branding, you are much more consistent, because it’s the same team that is handling all your market, all your assets, and they are very experienced, as we explained. So to me, centralization is very important to not forget that it’s also helping your brand and your online reputation.
Audience question
I have a question about the maintenance side of things as we are on our journey as well toward centralization. And you know, you hear people say, ‘Oh, we’ve eliminated XYZ number of bodies,’ but I also know that the contract services that turned vendors the borders all of that we’ve just moved to Yales basically right. Because the buildings still have to be cared for. So I’m wondering if any of you could elaborate on successes that you’ve had with centralization on the maintenance functions? How are you doing that? How do they go from building to building? Are they kind of podded, and they go around, maybe you can elaborate a little bit on the maintenance side?
Stephanie Versin, Veritas Investments
Sure, I’d be happy to do that. So we, in San Francisco, in the Bay Area, we have about 310 buildings. And we have a centralized maintenance team. We have 80 technicians that could be deployed at any time, for any tickets, so your resident, fills out a work for them. And it goes directly to the dispatcher, who is using AI from Salesforce to dispatch, the maintenance person that is: available, skilled at whatever needs to be repaired, and geographically close to the building. So in some ways, a bunch of our tickets are closed within less than three days. And most of them actually closed the same day. Because we have that technology, again, to dispatch smarter, and faster.
Sunny Juneja, Canopy Analytics
Yeah, I also wanted to give a shout-out to one of our customers, they’re in the same market as them, and they all kind of work together in similar ways. So one of the things they found out when they centralize their maintenance function is that it wasn’t really about reducing the number of maintenance technicians per unit. It was really about specializing their skill set, so instead of having a ton of maintenance technicians, which are all really general purpose. They were able to kind of split their workforce into one that focuses specifically on specific terms and there. The end result for them was that it really brought down the average cost per work order for certain categories much lower, because instead of vending it out, they focus it on trying to building the competence internally.
Stephanie Versin, Veritas Investments
And he kept turn time basically, because instead of calling, you know, one technician, that is the opposite of where it should be, we know exactly who to deploy at the right time at the right place for that type of work order. They are employees. So we have actually a big the biggest technician maintenance team in San Francisco, is our team for that type of buildings I mean. And so we are so technology-driven that now while doing also third-party maintenance. Which means that we’re reaching, we’re reaching out to other owners and landlords that don’t have a team and we say, ‘Sure, we can do it, you have the same type of buildings, please like we can onboard you as a client.’ So we are also growing internally this way, by doing third-party maintenance, we’re also doing third-party leasing. Because we can also onboard your vacant unit on our platform. And our leasing agent will tour you, we don’t have to manage your unit, we just tour and lease and grow this way. Because nowadays there is not a lot of acquisition happening. So this year, the growth will come from third party.
Sunny Juneja, Canopy Analytics
Other questions from folks? Just raise your hand?
Audience question
Besides the PMAs, what were your biggest pinch points in rolling this out?
Heather Wallace, Bozzuto
I would say from the very beginning, it was our team’s perception of us reducing the people working on the properties. So, in these pods that we have set up, we already had open positions that we just shuffled around. So actually three or four people were promoted to new roles, where they were able to leverage our skill sets and some work from home more often. They wanted the flexibility. But I would say the initial pinch point was really how our employees were responding to being part of this pilot. It was pretty scary. So that was, I would say probably a week or two of hands-on one-on-one communications about how we were going to go about structuring the team and what it meant for everyone. And what positions we were hoping to open up and then they were able to either apply for those positions and stay in their roles if they were excited about it, and we didn’t lose anyone. Thank goodness.
Sunny Juneja, Canopy Analytics
Any other questions for folks?
Audience question
I just want to check in the verification did you say you have 40 in just the San Francisco market?
Stephanie Versin, Veritas Investments
80 in the Bay Area. Yeah.
Sunny Juneja, Canopy Analytics
Any other questions? Cool. Um So we’ll wrap up this panel, I’d love to hear predictions from our panelists on what they think is going to be different about centralization in five years, and then we’ll close to his panel. So, Stephanie, do you want to start?
Stephanie Versin, Veritas Investments
I hate that question. I really think that we need to think of it yesterday. I really think that other industries have adopted that centralization model a long time ago, like look at the hospitality industry, for example. So while it’s a bit late in the game, thanks to COVID, while trying to adopt it as much as possible, but it’s here to stay. That’s my prediction. And in five years, I think a lot of us around this room will have make the jump and some ways have done centralization in one way or another.
Heather Wallace, Bozzuto
I would agree. And I just wanted to ask everyone that’s in the audience today. Thank you so much for coming today. But I think we can continue to have this conversation. So any of you that are currently working on centralization, or you’ve been tasked with working on centralization or specialization at your firm, if you want to come up after the session and give us your names, it’d be good for us to create a group where we can share best practices. And then in five years, when we come back, this will look like revenue management.
Tyler Christiansen, Funnel Leasing
Minus the lawsuits. The too soon?
Heather Wallace, Bozzuto
I’m not allowed to comment.
Tyler Christiansen, Funnel Leasing
So I obviously agree that we’re gonna go there. I think a huge thing, one of the reasons that Stephanie is such a thought leader on this, and Heather and Bozzuto have done a great job as they both believe in brand. Stephanie was in the hospitality industry, I think brand is going to play a bigger and bigger part in this. And that doesn’t mean that smaller operators won’t play a role in that. Right? When you travel, you may stay at a boutique hotel, but it’s still under the Marriott-Bonvoy brand. I do think though, the number one thing to your point, I am happy to be a contrarian on this. But I understand as not running a third-party management company that it’s easier for me to say than to do. But you know, it is happening with third-party management already. And one of the things that was different early on when the REITs do something you hear about it because they have to talk on their earnings call and they want to talk about it because they want the share to go up. The third-party managers are not talking about it, and I am very grateful that we have a great example of Bozzuto leading the way on this. But the same reasons exist in the automobile industry. Why not direct sales to consumers? And it was while they had dealerships, Ford had contracts with dealerships that prohibited them from selling vehicles directly to the consumer. Tesla came along, busted up that model said there are no more dealerships we have showrooms. If you want to buy a car, you buy it online. You can go look in the showroom. But now Ford and GM, they’re having to figure out how do we deal with these dealerships, we have to work around them. So the consumer wins, the consumer is going to win, the consumer wants a better experience, and capital markets want more efficient property management. So the third-party management industry, if you’re a third-party manager, be ahead of the curve. Embrace it. Test it. Because when there are leasing agents making 50% more down the street, when there are REITs, saying they’re saving $4-5 million a year. The results are there. So your asset managers are gonna be asking for those results in the technologies available today. So my prediction is five years from now, we won’t be talking about centralization, because we’ll it’ll be the operating model. Just like you don’t say ‘cloud software’ it used to be ‘cloud software.’ Now software is just on the cloud.
Sunny Juneja, Canopy Analytics
I agree with all of our panels so far that it’s gonna have a really massive impact. I think something that should be kind of thought it was a second-order impact of this is that centralization is really about unbundling the services from property management. And I think that’s gonna really change the property management industry. Like one thing I’ve noticed is that there are much more leasing brokers and markets that we operate in that there were ever previously. And I think that there’s gonna be a lot of competitive pressure for property management companies to either specialize, or reduce their fees, or to focus more on a value-add service. And I think one thing that’s really telling about this is if you look at these big startups that are raising these massive valuations, a lot of them are doing — you know, like Flow Placemaker, these kinds of companies — they’re really focusing on adding a unique sort of branded service and attaching it to the property. And I think that you can see that happening with maintenance, you can see it with leasing. And so I just think it’s gonna have a really massive change in how management companies operate. Cool, but I just want to thank all of our panelists, they’ve worked really hard to make this happen and they’ve worked really hard for companies to make it happen centralization happen at their companies so let’s give a round of applause.
Tyler Christiansen, Funnel Leasing
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