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Artificial Intelligence and Machine Learning in Multifamily Real Estate 

Author: Kasee Godwin
Date: 01.16.2024

Artificial Intelligence and Machine Learning in Multifamily Real Estate 

Integrating Artificial Intelligence and Machine Learning in the multifamily real estate sector is transforming the industry’s landscape. These advanced technologies are reshaping the dynamics for property managers, investors, and renters. 

This article explores the profound impact of AI and ML on the multifamily sector, providing specific examples and highlighting key players leading these changes.

Enhancing Property Management Efficiency

AI and ML streamline property management tasks, creating operational efficiencies. For example, at Qira, we utilize AI to automate rent collection, maintenance scheduling, and resident communications, dramatically reducing administrative workload. 

Property management software companies like Yardi use AI to streamline inventory management and provide pricing suggestions based on submarket data. And companies like Radix leverage ML and AI to laser-focus on asset management and offer high-level suggestions to owners and operators. Allowing AI to scrape analytics from thousands of sources, package those data points, and provide suggestions enables users to make informed, data-driven solutions. 

Smart building technologies, like those from Honeywell and Siemens, leverage AI to optimize building operations, including energy management and predictive maintenance. These innovations are not only about enhancing efficiency but also about tangible cost savings. A study by the American Council for an Energy-Efficient Economy (ACEEE) revealed that such technologies could lead to an average reduction in energy consumption by about 8-18% in multifamily buildings. This reduction in energy use directly translates into significant cost savings for property owners, contributing to enhanced tenant comfort and environmental sustainability.

Predictive Analytics for Investment and Development

In investment and development, predictive analytics are pivotal. Tools like CoStar, CBRE, and JLL offer AI-driven market insights, enabling investors to forecast demand and identify promising development locations. These platforms analyze diverse datasets, from economic indicators to local market trends, guiding investment decisions and development strategies in the multifamily space.

Before even breaking ground on a new apartment community, these datasets are integral to underwriting the deal’s financing. How many one-bedroom vs. two-bedroom floorplans should be included in the mix? Does this market indicate the need for more studios? How can data help developers understand and budget for the correct amenity package? What do concessions look like in this sub-market? What about short-term rental trends? The amount of data needed to make these decisions would be overwhelming should it be one person’s job to collect and synthesize it all. Luckily, AI and ML solutions exist to inform more thoughtful choices. 

Personalized Renting Experiences

AI is increasingly shaping how renters experience property hunting, making it more personalized and intuitive. Recent advancements by leading companies in this space, such as Zillow and Redfin, have significantly enhanced how potential renters search for and visualize properties.

Zillow’s AI-Powered Natural-Language Search 

Zillow has revolutionized property search with its AI-powered natural-language search feature. Launched in early 2023, this tool allows users to search for homes using phrases they would typically use in conversation, like “$700K homes in Charlotte with a backyard” or “open house near me with four bedrooms.” This feature, first in the real estate industry, simplifies the search process by accommodating more intuitive, human-like queries. It is currently available on the Zillow app for iOS users and is expected to roll out soon to Android devices and the Zillow website.

Redfin Redesign 

Redfin has introduced an innovative AI tool, Redfin Redesign, that transforms how users view home interiors. This AI-powered feature allows prospective renters and buyers to modify the appearance of walls, floors, and countertops in home photos. Developed in partnership with Roomvo, a leader in home visualization technology, Redfin Redesign aids users in visualizing their future homes, helping them decide which properties they might want to tour or purchase. It’s an excellent tool for exploring different design aesthetics and visualizing potential changes to a property.

These developments represent a significant leap in personalizing the rental experience. By leveraging AI, companies like Zillow and Redfin are making property searches more efficient and user-friendly and allowing renters to visualize and connect with potential homes in a previously impossible way. This trend towards AI-enhanced personalization is set to redefine the rental journey, offering renters more tailored and engaging experiences.

“Kit” by Funnel

​​RKW Residential, a top-tier third-party manager with over 35,000 units, embraced Funnel’s AI virtual leasing agent, “Kit,” to provide renters with a personalized, 24/7 self-service experience. This AI tool effectively communicates with prospects, converting them and scheduling property tours, aligning leasing office operations with the times renters actively search, often during nights and weekends​​.

A case study comparing two sister properties highlighted the significant impact of “Kit” on lead nurturing. In the first 90 days of implementing Funnel’s AI, 100% of prospects received immediate responses, even outside of regular office hours, and 70-72% of tours were scheduled after hours by the AI assistant​​. This renter-centric approach, facilitated by AI, drives efficiency and enhances the renting experience, avoiding the time wastage associated with traditional property-centric technology.

Enhancing Tenant Screening and Fraud Detection

The multifamily industry is increasingly adopting advanced AI and ML algorithms to revolutionize tenant screening and combat fraud. These technologies are crucial for verifying tenant identities and preventing rental fraud, ensuring safer and more reliable tenant selection.

Recognizing the growing sophistication of fraudulent activities in property management, MRI Software has developed advanced fraud detection methods. Their CheckpointID team observed a notable increase in fraudulent activities, with the average number of bad actors per organization rising from one in 2021 to 2.6 in 2022. To address this, MRI Software suggests using ID verification software equipped with image comparison capabilities. 

This AI-driven solution compares a government-issued ID image with a selfie photo submitted by the applicant, effectively identifying matches or exposing identity misrepresentation attempts. This technology represents a significant step forward in fraud prevention for the multifamily sector, helping property managers avoid bad debt and maintain the integrity of their tenant base​​.

Integrating these advanced AI and ML technologies in tenant screening and fraud detection underscores a pivotal shift in the multifamily industry. By utilizing these tools, property managers can significantly enhance the safety and reliability of their tenant screening processes, ensuring a higher quality of tenant selection and reducing the risks associated with rental fraud.

Challenges and Ethical Considerations: The Essential Role of Human Judgment

While the benefits of AI and ML in multifamily real estate are significant, their adoption also introduces critical challenges that necessitate a balanced approach. Key among these is the irreplaceable role of human judgment in synthesizing data and making informed decisions.

Data Synthesis and Human Insight

The influx of data from AI and ML tools offers unparalleled insights, but the human ability to interpret and synthesize this information drives truly effective decision-making. Professionals in the multifamily sector must use these tools as supplements to, rather than replacements for, their expertise and judgment. This human touch is crucial in contextualizing data within the broader market landscape and aligning it with organizational goals and values.

Navigating Data Privacy and Ethical Concerns

As AI and ML technologies become more pervasive, concerns around data privacy and the ethical use of information come to the forefront. It’s essential for human oversight to ensure these technologies are used responsibly. Professionals must comply with data protection regulations and consider the broader ethical implications of gathering, using, and sharing data.

Mitigating Algorithmic Bias

AI and ML systems are only as unbiased as the data they’re trained on and the designers who create them. Human intervention is needed to review and adjust algorithms, ensuring they don’t perpetuate existing biases or create new ones. This requires continuous evaluation and refinement, where human judgment is crucial in identifying and correcting biases that AI might overlook.

Navigating the AI and ML Evolution in Multifamily Real Estate

The advent of artificial intelligence and machine learning in multifamily marks a transformative era, heralding enhanced efficiency, personalization, and data-driven decision-making. These technologies are reshaping property management, investment approaches, and tenant experiences, presenting vast opportunities for the industry.

However, the journey towards integrating these innovations demands a balanced approach. Professionals in the multifamily sector must adopt these technologies responsibly, ensuring ethical practices and maintaining the essential human element in decision-making. As we navigate this evolving landscape, blending technological advancement with human insight will be the cornerstone of success and competitiveness in the multifamily real estate market.

kasee-godwin-80x80

Kasee Godwin

Position: Director of Marketing
Social Networks

Kasee is the Director of Marketing for Qira. She has nearly 15 years of experience in the real estate marketing industry, including 10 years on the client side. In her spare time, she enjoys reading science fiction, exploring new wineries, and fostering Golden Retrievers.

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