Building the Real Estate App Store (Newsletter #313)

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WRITTEN BY: Brad Hargreaves

[Adapted from Building the Real Estate App Store.]

Tech fatigue is real, and multifamily tech is at an inflection point. With hundreds of technology tools at their fingertips, multifamily owners and operators are increasingly hesitant to embrace yet another point solution with yet another login and password, annual fee, data stream, and training requirement. An unprecedented amount of money—mostly venture capital—has flowed into the ecosystem over the past 10 years. This has fueled the development of hundreds of individual point solutions designed to solve a specific problem for real estate operators.

While solutions have been built for all the major asset classes, multifamily has seen the bulk of the new tools: The apartment sector is big, familiar, and relatively easy to access from a customer-discovery standpoint.

In many cases, these tools’ functionality already exists in out-of-the-box property management systems (PMS) such as Yardi, Entrata, AppFolio, and RealPage. Companies building point solutions claim—often truthfully—that their software, built by a team laser-focused on one problem with no legacy technical considerations, is better at solving that single problem than whatever comes with the owner’s PMS. In some cases, such as renter screening, owners have found the marginal benefit added by the point solution to be worth the switch. In other cases, built-in PMS tools have largely maintained their market share.

But for many owners, the annual fee isn’t even the biggest cost of going with a point solution. Integration—seamlessly moving data between a third-party point solution and a PMS, the source of truth for key information like rent roll, account balances, and units—can be a serious challenge.

And the big PMS companies have held varying attitudes toward the question of openness. Some have taken a more open approach, whereas others have seen third-party tools as little more than revenue centers at best and competitive threats at worst.

The end result has been messiness and confusion—and tech fatigue from many real estate owners and operators, particularly those who don’t have in-house technology teams.

However, in recent years, solutions have emerged to make it easier for real estate owners to find—and integrate—technology. In general, these solutions have fallen into three categories: the PMS app stores, vendor management platforms, and integration hubs.