The Multifamily Tech Stack - Part 2

Thanks to all for the feedback to my first post on technology in multifamily real estate. The topic has also been popular among others, so I want to point you to a great recent post by Brad Hargreaves of Common on their ecosystem as well as an article from Nine Four Ventures.

The first post covered mostly hardware and hardware-enabled SaaS products used in multifamily real estate. That's just the beginning. Well, for many multifamily operators it is actually the end, or the last area of technology that they implement due to the difficulty of perfecting specifications, integration, installation and maintenance of physical components. Some are scared at the simple prospect of changing batteries for smart locks (if that's you, email me).

Where most multifamily operators start is with software. There are so many software categories even in the niche of proptech that I am sure I have left some out. With all of the products that are out there, we must discuss the integration between them. It is very easy to choose one software for rent payment, another for credit checks, etc. etc. Soon enough you end up under a mountain of softwares that makes the tenant experience confusing and your management staff groan at the thought of entering new tenant information into 10 separate systems.

Multifamily operators need a technology strategy that seeks to unify operations today and sustain them well into the future. Technology obsolescence is inevitable. A thoughtful strategy will allow operators to remain flexible and bet on companies that continue to innovate.

Property Management System

Winner: Tie: AppFolio, Buildium

Runner-Up: ResMan

As discussed before, the property management system is the unifier of all other systems. It is the hub of the wheel. The single source of truth. It is also the most difficult system to replace with the highest switching costs. Replacing the PMS requires retraining staff and sometimes tenants as well (depending on whether or not tenants were interacting with the old system for features such as rent payment or messaging). The core of the PMS is property accounting. Most PMS platforms are built around the accounting module. AppFolio, Buildium (acquired by Realpage) and ResMan are all cloud-based systems that offer similar products with some variation. They have all kept up with the pace of cloud software platforms and in our mind are all great solutions. Most importantly -- they realize that 95% of multifamily properties in the US are fewer than 25 units. They cater to all sizes of operators and are able to flex with the size of any operation.

Note that many of these platforms offer services that may be covered as standalone categories below. That may be a result of a combination of building and buying (acquiring) said functionality. This results in a range of seamlessness -- from complete lack thereof to full experience integration. I won't dive into each of the functions of every property management system here.

Property Management - The Big 4

Winner: Entrata

Runner-Up: Yardi (Voyager), RealPage (OneSite)

Choosing a property management system becomes a completely different conversation if you own or manage more than 250 units (+/-). Now you have access to the largest four PMS platforms: Yardi, RealPage, Entrata and MRI. While I understand why these companies prefer to not cater to the long tail of the apartment supply, I wish they would. After all, Salesforce, the largest SaaS platform in the world has. While Yardi and Realpage have certainly kept pace in this category as market leaders, I have chosen Entrata because I believe it is the most digitally-native, Web 2.0, API-driven and least legacy-burdened platform on the market. From a software development perspective, it is easiest to integrate with the Entrata API (although to accelerate sales, many software platforms choose to integrate with Yardi or Realpage first). The Entrata API is the only API of the three to have their API documentation publicly available without having to join a partner program, create an account or pay a fee.

Standalone Tenant App

Winner: Carson

Runner-Up: Homebase (This one, not this one), Livly

This category is slightly amorphous. This is my attempt to capture the platforms that can serve as the tenant-facing communications app if the property management system app doesn't exist or isn't sufficient. In reality, many of these platforms have grown to also incorporate components of a property management system but without the accounting module (a core component of any PMS). In some cases this is helpful but in others it could be badly duplicative. Carson brings a niche to the table in addressing smaller properties through a tenant-facing app that caters to package management and building access and integrates rent payment through ClickPay. I imagine that all three of these companies and even more in this category will soon resemble full property management systems or apps to compete in the multifamily smart home category in my last article.

Rent Payment

Winner: Tie: Zego (Powered by PayLease), ClickPay

After PayLease bought Zego and assumed the name, the top two rent payment platforms (ClickPay and Zego) are two platforms that are tied for the win. Through the acquisition, Zego now brings a more updated look with additional features such as a partnership with CheckFreePay cash payments and reporting to LevelCredit to help tenants build credit when paying rent. Both can handle online payments and offer paper check management. Rent payment can get complicated for owners who manage regulated units, which I believe both platforms can handle.

Zego is also trying to extend its feature set into smart units (which was Zego's prior business), property WiFi and work order management, although it is not (yet) a full-fledged PMS. ClickPay seems to have a more robust API with more integrations and can be found within other platforms. While the other features of Zego are nice, rent payment is usually a feature that you will want within a tenant facing app that does other things, so ClickPay may have made the right decision to double down on being the go-to rent payment service of choice for other apps.

Insurance

Winner: Jetty (S,R)

Runner-Up: The Guarantors (S,G), Rhino (S), and Lemonade (R)

3rd Place: HelloRented (S), Deposify (S)

This is probably the most crowded category in multifamily proptech. Welcome to the proptech / insurtech / fintech nexus. A third tier of notable names has been added because of how many companies are in this category. Each company also offers a different combination of products including security deposit replacement (S), renters insurance (R) and rent guarantee replacement (G). Jetty offers the best combination of these products along with the best interface and user experience. If they add a guarantee replacement product on top of their current offering, they will have hit the trifecta. The ideal user experience would be a lease signup process through the applicant-facing CRM module of the PMS that would bring the applicant to a single integrated signup page allowing them to sign up for all three services at once immediately upon lease approval. Here is my generalized ideal prospect / leasing management workflow:

I am sure I have left some steps out. Most of these steps can be handled by the property management system CRM modules. However, the experience is still not always as seamless for the prospect / tenant as it could be. They should have one account that keeps bringing them back to the same dashboard / application process without having to visit any third-party websites. Many of the insurance options offer white-labeled websites, but that is still not a fully integrated experience.

Other Categories

There are many other categories to cover in the SaaS world of multifamily proptech. Below are some additional categories that also fall within the operational multifamily tech stack. Some of the categories below (unit inspections, self-touring, CRM) are offered by companies with larger product sets. Depending on existing systems and processes, some companies may be better suited to use these as bolt-on additions. Below are my picks for winners in each of these additional categories.

Financial Reporting: Juniper Square, Covercy

Inspections: Happy

Listings/Marketing/CRM: Funnel (f/k/a Nestio) (This Funnel. Not this Funnel)

Self Tour: Tour24, Knock (This Knock. Not this Knock)

Valuation: Bowery

Flex Management: Mews