INDUSTRY VOICES
TECHNOLOGY & REAL ESTATE
IT’S ALL IN THE DETAILS: REAL ESTATE DATA IS A TOUGH BUSINESS A ccording toMashable, Google postedmore than 100 billion searches eachmonth in 2015. Given that four in every five people say that they conduct online research before making a big decision (like one related to where they might live, for example), it’s easy to see that those 100 billion searches likely hold a lot of valuable information for real estate investors. However, as youmight imagine, the process of sifting through those searches is complicated. A good source of this type of in- dustry data must be consistent, mean- ing that all offices must use the same software applications and charts. That might sound simple, but remember that those software applications and charts must be customized to hold the right data and filter out the data that is irrelevant, flawed, or immaterial. These systems must also have checks in place to guarantee data integrity. To give you an example of how painstaking this process can be: My company has more than 300 offices in North America and has been refining data collection processes for years. We analyze every piece of data as it relates to howmuch every sale costs us, which sales tactics are the most effective, and what we could be doing better. Making this process successful has been a labor of more than two years. Was the investment of time (and money) worth it? We believe so, because we believe that this type of data is crucial to our continued relevance and solid returns in this industry. Our goal is to develop true business intelligence that provides our offices an undeniable competi- tive advantage, and better service to our investors and residents.
The Truth about Real Estate’s TechnologyWars THE TECH WAR IN OUR INDUSTRY IS JUST BEGINNING.
its exist only because the manager has cut marketing, hired only the cheapest (and probably least qualified) staff, or delayed investments in other aspects of the business, then while there may be profit, it is not necessarily a reasonable amount of profit. No growth means stagnation and eventually, failure. Furthermore, property managers who make a reasonable profit provide better service to clients on both sides of the equation, leading to lower tenant turn- over and associated costs.
marking data. Only by comparing revenue with peers can one know if the revenue per property is reasonable. This data cannot be obtained from trade associations such as the National Associ- ation of Residential Property Managers (NARPM) because of potential violations of FTC rules. In fact, at most meetings NARPM specifically warns members not to discuss pricing with each other for fear of violating federal laws. SOWHERE DO YOU GET THIS TYPE OF INFORMATION? Fortunately, our industry boasts a number of national organizations that are large enough to have their own “peer groups” within them. Just imagine if you could compare your business’ performance to dozens of similar operations in comparable markets. You could evaluate your revenue, expenses, marketing spending, lead volume, and a host of other perfor- mance measures. Think you might just do this on your own and save some money? Think again. Many of these large corporations implement complicat- ed, often expensive systems in order to collect this data. It is not for the faint of heart! Every office must use identical accounting rules and charts of accounts. Revenue streams and expenses must always be posted to the correct accounting ledgers. Fail in this, and you will find yourself comparing “apples to oranges” and your results will be far from accurate. Should you opt to invest in purchasing access to this type of data, keep in mind not all informa- tion collection systems and technologies
by Robert Pifke
here is a technology war waging in the property management industry, and most practitioners are oblivious to it. T
tion that may then be used to enhance decision-making about business tactics. The companies with the best informa- tion will make the best decisions, there- by “winning” against competitors. For example, a property management office might want to know if it is gen- erating a reasonable amount of revenue per property. This sounds like an easy
question to answer. Most office manag- ers would think if all operating costs are covered and some profit is left on the bottom line, they probably are generat- ing acceptable levels of revenue. However, the real question is this: Does the profit left on the bottom line permit adequate staffing and marketing support so the office can grow? If prof-
THE TRUTH IS IN THE BENCHMARKS
THEWAR IS OVER DATA. The companies that master data col- lection can turn that data into informa-
To answer the question of reasonable revenue accurately, you need bench-
BENCHMARKING: The practice of comparing
one’s business processes and performance metrics to other companies in the same industry and to established industry standards and norms. BENCHMARK DATA: Benchmark data is collected from industry sources to determine how businesses are performing. Typically, the most valuable data of this type comes from the highest-performing businesses.
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Robert Pifke is the chief marketing officer for Real Property Management. He may be reached at rpifke@realpropertymgt.com.
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