Property Operations Technology and its Unique Benefits for Affordable Housing  

9 min read

For at least the last decade, managers of market-rate multifamily units have widely incorporated technology into their properties. From application to move-out, an entire constellation of property operations technology (often called “prop-tech”) has stepped in to make the experience more efficient. Things like online listings, virtual tours, remote applications and onboarding, smart-home technology, like digital lockboxes, online maintenance requests and digital payment platforms have revolutionized the conventional market-rate multifamily industry.

However, technology within the affordable housing sphere has generally lagged up until recently, says Scott Nelson, who serves as the senior vice president of affordable housing business development at RealPage. Prop-tech was largely “foreign to the affordable housing industry,” says Nelson, “A) Because they’ve always done it the old school way with everything being in-person, and B) Because the Department of Housing and Urban Development and various other tax credit agencies would not accept electronic signatures for most things.” This reliance on in-person “wet-signatures” meant that any interaction, which needed multiparty approval had to be done generally offline and on paper.

This all changed during the COVID-19 pandemic when the necessity of virtual interaction accelerated digitization and caused HUD to permanently allow electronic signatures for most things in May 2020. Since then, Nelson says that prop-tech has rapidly transformed both new and legacy affordable housing properties, providing “the same advantages and the same benefits that conventional properties have been able to do for years.”

Now, a host of approaches exist aimed at shepherding technology’s fundamental impact on the affordable housing world. Below are three companies leading the charge to make sure that transformation stays equitable and true to the mission of providing quality housing regardless of income.

RealPage’s primary mission, says Nelson, is to utilize prop-tech to “benefit the entire ecosystem of managing—and living at—a property, both to the resident and to the operator.” They accomplish this with holistic digital solutions—such as their flagship tenant portal, ActiveBuilding—that not only solve problems but engage residents intuitively. “With the market and government evolving, residents are more comfortable with computers than they were 15 years ago. The technology has to be there to enable staff at a property to be more efficient and to help service the residents so that we can make a better experience for them.”

Incorporating such technology seamlessly within a community that has functioned without it for years can be a challenge for a property management company. “Fifteen to 20 years ago, the first challenge was computerizing affordable housing. If you go back to the mid-’90s, it was mostly paper, most of the time.” Now, with technology being widely adopted within the affordable housing market, “an issue for the affordable housing market is truly digitizing the resident experience, allowing the residents and the property staff to interact virtually… in a way that’s intuitive, and makes operational sense.”

The goal is to use technology to enhance the already powerful missions of these affordable housing communities, and not to throw everything potentially beneficial at a property manager and ask them to figure it out.

“These are real estate companies, and property management professionals,” Nelson says. “Technology is not what they need to understand. They need to understand the resident experience.” Thus, prop-tech providers, like RealPage, need to “design a tool for them that is going to enhance the resident experience, but not make it so complicated that nobody can figure it out, or it’s unintuitive.”

One tool that Nelson says RealPage has had some success with is helping address some of the post pandemic issues multifamily is having, such as staff recruiting and retention. Nelson says that RealPage has worked to leverage its experience as a leading technology provider and its scale as a service provider to provide lower costs for services, such as accounting, information technology services or utility management. Despite having to pay to outsource the service, the scale and ease offered by a prop-tech provider, like RealPage, lowers the total cost to ownership. Further, Nelson says, virtual management services can be benchmarked and tracked, providing longer-term benefits to customers.

ION Water
Unlike more conventional prop-tech, which generally mirrors market-rate technology already in use and adapts it to fit the affordable housing sphere, ION Water took an affordable-centric issue—the difficulty of managing multifamily water utilities—and created a specific solution.

Traditionally, multifamily buildings’ water consumption is monitored by one meter, or multiple meters, throughout the property, says Orlando Valdes, ION’s vice president of business development. The issue for owners is that these meters never get down to a granular tenant-by-tenant level, meaning that “if you see a spike in meter consumption, you have no idea what is causing that.” Building managers then must expend valuable resources (time, personnel and capital) trying to figure out where the spike comes from, and what is causing it.

This is a unique challenge within affordable housing. In a market-rate space, a direct cost incentive exists for tenants to reduce their utility consumption. However, Valdes explains that in affordable, “a vast majority of the time, owners and operators are paying for the water utility expense.” This translates to what Valdes says is over 200 billion gallons of wasted water every year (and 500,000 tons of excess CO2 emissions on transporting that water), which rolls up to an excess of $3 billion in lost operating income annually. These losses only become more acute year over year, as water utility costs continue to outpace inflation, according to a 2019 survey released by the American Water Works Association.

Such an enormous challenge, however, creates an opportunity to lower utility usage building-wide in ways that market-rate buildings rarely can, deepening the income and environmental impact of ION’s technology.

Specifically, ION’s solution is to install unit-level hardware building-wide and provide users a platform that essentially multiplies the optics and data surrounding water usage to the granularity that building managers need to make water usage as efficient as possible. “What we provide is a hardware component, which has sensors, and those sensors are installed in every single unit. Those sensors are tracking every single water event that’s occurring in those units – every flush of a toilet, every shower, every load of laundry.” Then, ION’s software kicks in and analyzes the data, determining whether those events are normal consumption, over-consumption or a leak. Such radical transparency of a building’s water usage could never have been possible even 15 years ago when the kind of technology that allows for ION’s process simply did not exist.

ION’s platform can only go so far on its own, and like RealPage, ION relies on the user to make the new systems as effective as they can be. “Technology is a big part. But it’s also the culture,” says Valdes. “I’ve been in energy and sustainability, and specifically utility cost reduction for much of my career, but being a part of ION and really focusing on the affordable industry is extremely rewarding because of the impact that I know we’re having with the smart, creative and mission-driven companies and people in this industry. And I think it’s because we have this shared mission that we have the traction that we have. It resonates.” (Learn more about ION Water in New Technology Advances Utility Management and Case Study: The Montage in San Antonio.)

One specific need of low-income tenants—beyond physical amenities—is access to financial literacy and means to improve their long-term personal and intergenerational wealth. Esusu, a unique prop-tech company whose primary mission is to improve renters’ ability to build credit, was founded in 2018 to fill a much-needed gap in servicing that particular need of those living in affordable housing today.

“We like to say that Esusu acts as the plumbing between the existing property management software that collects rent and the major credit bureaus,” says Alexis Sofyanos, Esusu’s vice president of revenue and business development. “Historically, credit reports haven’t included rent payments because rent isn’t considered debt; the only time rent payments would show up on your credit report is for late or missing payments. In 2010, rental payments became eligible for inclusion on credit reports but still relied on landlords reporting on-time payments to the bureaus.”

This reliance on landlords meant that renters were missing out on a fundamental ability to improve their credit, with few other means to do so. By implementing their technologically based automated approach, Esusu “lightens the workload for landlords, making it easier for them to implement rent reporting at scale,” says Sofyanos.

Esusu works directly with property managers to build those pipelines of reporting. “On average, we generally find that a resident’s credit score can improve by 30 to 50 points using our platform,” says Sofyanos. Residents who were previously credit-invisible—a major target of Esusu’s work—have been able to establish an average score of 667. Further, Esusu’s platform allows property managers to identify “important Environmental Social Governance (ESG) metrics and build social impact reports,” improving their housing community’s overall health and longevity.

Sofyanos says that the major challenges to Esusu’s work have been the lingering cross-sector impacts of the COVID-19 pandemic combined with the lack of federally mandatory rent reporting for landlords. However, she says that those challenges have allowed Esusu to adapt and provide more wide-reaching options to renters to improve their financial health beyond credit building. For example, last year Esusu launched a renter-focused financial wellness platform, called Renter’s Marketplace, which offers “educational tools, as well as products from our partners. Most recently, we worked with Sure to expand the Marketplace, now providing renters insurance to the tens of millions of Americans who are shut out of the financial system.” As well, Esusu set up a zero percent stability program, which meant Esusu was “able to make sure landlords were still getting paid while renters had a chance to get back on their feet.”

Abram Mamet is a freelance writer based in Washington, DC, whose work focuses primarily on the social histories of the community. He currently works as the assistant editor for CapitalBop.