Leading Apartment Firms Describe Technology Approach

Apartment owners and managers slowly embrace Web-based property management systems

• One firm’s plan
• New technology approach
• Smaller operators need expert advice
• An update on Web-based software
• Web-enabled options

For most apartment firms that still rely on DOS-based property management software, it’s a huge leap of faith to switch to Web-based systems that leading software companies have been touting over the last few years. Some are convinced that the water’s fine. Others are taking a wait-and-see approach. But one thing’s for sure, Web-based systems are slowly but surely taking up a key role in property management and operations. Many believe the transition to “Web-enabled” technology has been slow in coming because many apartment owners and managers upgraded their DOS systems rather than exporting data from DOS to a Windows-based application.

One firm’s plan

One of the largest firms to embrace the Web-based approach is Dallas-based Lincoln Property Co., which announced its commitment to a browser-accessed system in 2000. BRE Properties in San Francisco is eager to select a browser-based system and has begun testing two candidates. Charlotte, N.C.-based Summit Properties is interested in the Web products but is not in a hurry to buy.

Lincoln Property was testing Yardi’s Voyager product at five of the company’s 200 owned-and-managed and under-management properties. Voyager is a front-end Web-browser application that enables access to a centralized property management database via the Internet. Lincoln Property’s initial intent was to purchase a static Windows-based software application to replace its existing legacy DOS system. As Lincoln plans to implement it, the Yardi product isn’t a virtual 100% Web-based property management solution. Rather, the Voyager part functions as a user-access capability on the front end while the Enterprise part handles the centralized database. Enterprise is a Windows-based program that works on a Citrix network that a third-party company will host for Lincoln Property.

The time-saving and money-saving advantages will be well worth the cost, said Brian Galla, Yardi director of technology. The high-speed T-1 lines that would have been needed to tap Enterprise from a remote location without Voyager would have cost $1,200 to $1,500 per month. The high-speed DSLs (digital subscriber lines) that will be used to access Enterprise via Voyager will cost only $99 per month. “Technology is a must in order to do business in property management. It doesn’t replace our real estate [services], but it makes them more efficient,” he said.

BRE Properties began testing browser-based systems recently, with plans to switch from the DOS world to the Web as quickly as rigorous on-site testing will permit, said Lauren Donovan-Dizon, the company’s vice president of information technology. BRE Properties has been running a standalone DOS-based system from AMSI in its leasing offices for several years. That system is fully functional thanks to an aggressive Y2K effort to install year 2000-compliant upgrades provided by AMSI. BRE considered making the jump to a Windows-based system at that time, but the idea was rejected because patching the legacy system was less costly and easier than migrating to Windows, and buzz about the benefits of browser-based systems already was being heard and weighed.

Projecting a specific return on a company’s investment in new technology is all but impossible, yet Donovan-Dixon is confident that whichever new system is selected will deliver on the promise of saving time and money.

New technology approach

Charlotte, N.C.-based Summit Properties has taken yet another approach to technology. The company installed a frame-relay intranet that connects its 70 properties to the corporate headquarters. This centralized network uses AMSI’s DOS-based property management software, the Citrix operating system and minimalist end-user devices.

The benefits of migrating to the Web include lower training costs and centralized management reporting capabilities, said Alex Buris, vice president of information technology.

Like BRE Properties, Summit is skipping the standalone Windows-based generation of software altogether. The company’s original 1980s-vintage DOS system was replaced with a new current model before the Y2K switch. “We knew it was a short-term solution, but [we needed] a product that worked, and the Windows products didn’t. So we upgraded [to the second DOS system], and it was a wonderful decision, given the options,” Buris said.

Smaller operators need expert advice

Smaller apartment operations normally will require outside assistance to investigate, evaluate and test the new technologies coming onto the market for apartment management. Owners and managers who aren’t technology-savvy would do well to obtain the advice of a technology consultant prior to purchasing any expensive or mission-critical hardware or software. Industry associations and trade groups also can be good resources for smaller operators who need information about reliable and cost-effective technology.

Owners and managers also should take care to consider not only their own business needs but also the needs and wants of the on-site apartment management staff. Buris said a lot of owners and managers make the mistake of buying software that meets executive needs but is very burdensome for the employees who must use it on a daily basis.

Galla said smaller operators shouldn’t become overly hesitant about adopting new technologies that are proven reliable and are intuitive to learn and use. He said the jump to a browser-based system isn’t as daunting as it may appear. “Any change of a system has pitfalls and problems that need to be overcome,” he said, “but if you do the up-front organization and preparation, it will be fine.”

An update on Web-based software

Web-based property management software systems are gaining wider acceptance as more companies complete the testing phase and prepare to go online. Companies like Lincoln Property Co., Pinnacle Realty Management Co. and Village Green Cos. have tested various Web-based products and plan to embrace new updates and features.

Web-based property management software allows managers access to real-time information about their properties; lease administration functions, including resident screening; trend and market analyses; accounting functionality; and tools that streamline workflow operations. The software facilitates management by reducing the different management products that individual communities use on-site.

But some property managers are still reluctant to entrust the Internet with such important property information. Uncertainty about the security of the data and the technological know-how that are required with the Web-based products are keeping a lot of people out of the market. Dot-com layoffs and bankruptcy of technology firms have not inspired confidence.

“My paramount concern is the financial viability of the host companies in light of the recent closures,” said Mark Berezin, president of Infinity Real Estate Group in Holyoke, Mass. “You read about all these off-site backup storage facilities that go bankrupt, and what if they don’t even have the money to give you back your data?”

The cost of the technology is also a factor. Web-based systems often will charge a monthly rate based on the number of units or users on the system per month, and there may be additional conversion or upgrading costs. Also, varying levels of tech support can be included in the monthly fee.

Web-based property management systems like ResidentDirect, Realeum and Yardi’s Enterprise Voyager are comprehensive management systems designed to help with accounting, leasing and administrative duties. These products facilitate management for the larger companies with more communities in multiple locations. But for smaller firms the financial investment and cost-benefit ratios are less evident. Property management systems like SS&C’s Skyline II Multifamily are Web-enabled, rather than Web-based, and are used on individual sites that report back to a central office.

ResidentDirect was being tested by Village Green Cos., based in Farmington Hills, Mich., in mid-2001. The apartment management firm manages more than 26,000 units in 86 communities across the Midwest. George Quay, COO of Village Green Cos., said the additional functionality in Web-based software was the motivation for looking beyond the company’s own proprietary system.

“We chose to look at a Web-based software for the ability to generate real-time data and the ability to assemble it. By going to Web-based we can organize by property, portfolio or by owner,” Quay said. “Also, the customized reports that we can generate allows us to be flexible with the variety of owners that we’re reporting to.”

Realm is a property management product that was created by a consortium of multifamily firms that includes United Dominion Realty Trust, Post Properties and AvalonBay Communities. It was scheduled to come online in late summer 2001, with more than 200,000 units pre-subscribed by the member firms.

“We wanted to be able to integrate all the leading-edge software solutions for the multifamily industry with a way to enforce policy standards and consistency across different communities in the portfolio,” said George Fandos, CEO of Realeum. Also, tapping into the “digital marketplace” is a huge benefit for apartment firms using Web-based software.

The Realeum system allows users to streamline day-to-day operations, reduce the administration load and increase the ability to recover lost revenue, according to Fandos. Like other property management software systems, Realeum is scalable so it adjusts to portfolios of any size.

Another Web-based property management system is Yardi’s Enterprise Voyager. The Yardi Enterprise system is a comprehensive suite of management products, while the Enterprise Voyager makes the system browser-based. Both Lincoln Property Co. and Pinnacle Realty Management Co. use Yardi Systems.

Voyager offers the array of property management functions that streamline on-site operations, and is really programmed for site managers. “The system does all the accounting and reports, maintenance and work orders, and it also works with Sec. 8 housing and tax credit properties, which is a growing area,” said Bryant Shoemaker, executive vice president of marketing at Yardi.

Voyager is available with Yardi as the ASP, or application service provider, which means that Yardi holds the centralized database and users connect to the system over the Internet, rather than hosting the program on their own servers. “It frees up the company’s time and allows them to focus on their real business,” Shoemaker said.

Web-enabled options

For companies that are concerned about entrusting their “mission-critical” data over to Web-based systems there remains the option of Web-enabled software, like SS&C’s Skyline II Multifamily.

“A Web-based property management software is not a good solution for 90% of the apartment owners in the country,” said Robert Cummings, senior director of Internet Strategies at SS&C. “For smaller companies looking at the ASP model, the question is, ‘Where is my data?’ You pay monthly fees for ASP, and you’re hostage to their database.”

SS&C’s Web-enabled software provides users with a database on every site and the speed and connectivity of the Internet. “It’s the best of both worlds, there’s internal control and security of the information, and the flexibility to analyze and gather your own information,” Cummings said. The SS&C software allows for a segregation of duties between the on-site leasing and portfolio management.

Two programs are required. The Skyline II product is installed at the main office, which offers the accounting and trend analysis features for portfolio management, and Skyline II Multifamily is the on-site solution for property managers.

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