Elizabeth Francisco, president of ResMan, offers expansive insights from being a woman in business to the rapid advancement of property management technology.
What is the largest challenge you’ve faced as a woman in business?
Simply put, the most challenging part of my professional journey has been pushing through both conscious and unconscious biases that I encountered along the way. Bias showed itself as I came up through the multifamily industry and then in technology with investors, peers, competitors, and prospective customers. The bias I had to overcome when we launched ResMan was the most difficult because of its impact on the company overall. At the time we were looking to raise capital (between 2011 and 2013), businesses with women on the executive team received only 7 percent of the venture funding. The external bias we faced when pitching to investors was thinly veiled, if at all. As a result of funding challenges, we ended up bootstrapping the company longer than expected, negatively impacting our employees and our ability to scale. We were very fortunate to have so many people who believed in our mission who gave heroic efforts for years.
The bias faced internally with senior leaders who have come and gone proved to be equally challenging at times. I know for sure that whatever the mold is for SaaS executives, I don’t fit in it, but that does not equate to a lack of ability or competency. From my own experience, women have to work twice as hard to establish their credibility, whereas our male counterparts are deemed credible right from the start. Of course, I can’t speak for all women, but I can share that the perceived lack of credibility often contributed to my own self-doubt and lack of confidence. I have talked to many other female entrepreneurs and leaders who faced similar challenges. Maybe it was because I had so much on the line, but knowing I had to do the right thing for the business overshadowed my self-doubt and provided the fuel to overcome any challenge.
What is the key difference between building “communities” and building “complexes?” How does this affect resident engagement and satisfaction?
What a great question. There is a big difference in my mind when someone refers to an asset as their apartment community or a complex, just as there is a big difference between someone who serves residents of the community versus someone who manages tenants. There is nothing more personal than someone’s home, and simply put, our work environment is our residents’ home environment. Operators who are respectful of their residents’ home environment prioritize the overall quality of life for their renters in a way that goes beyond simply being responsive to service requests or contractual obligations.
Residents in a community are welcomed members, and interactions with the management team and fellow residents are encouraged. Community managers look for creative ways to add qualitative value for their residents through events and activities that benefit the entire family. Things like cooking classes, resume writing, afterschool programs, and social events can enhance your residents’ experience in the community.
In addition, a good operator appreciates the role pets play in our lives and embraces them as part of their community through pet-specific programs and adopting pet-friendly amenities. When a sense of community is a priority, management policies are consistent and fair across the board, providing stability for everyone. From my decades as an operator, I can attest that when the onsite staff and the residents collectively value their community, the property will benefit from higher renewal percentages that exceed the industry average of 52 percent. Multifamily property management is in its simplest form about providing housing, and this should never be taken lightly.
How were you able to navigate the vast differences between property management and running a technology company?
The two business models couldn’t be more different. In multifamily, you build the community, complete the lease, and then fall into stabilized management mode for several years. Continued investment into the asset is minimal until you reach a point where capital improvements are needed to maintain quality living environments or are needed to achieve NOI goals. Technology is very different. As a start-up, you must tackle me-too functionality, the essential must-haves that would prevent a business from being able to operate effectively. The me-too functionality is often the result of years of progress in the space. Since the advancement of technology never stands still, we had to tackle developing major capabilities in a disruptive way while the proverbial clock was ticking. In addition, the operational challenges we faced at ResMan were vastly different than the property management model I knew so well. Understanding that we could not run ResMan the same way we ran our management company was key to our progress.
Early on, I set out on a mission to find and meet with people from successful SaaS businesses to better understand the nuances of our space. Beyond just building a great software solution, I learned that to build a technology business, it’s critical to figure out how to navigate explosive growth and the need to scale. This will make or break you. I became an obsessive study of all things SaaS. I educated myself on SaaS metrics and benchmarks, customer support models, sales techniques, marketing, and even pitching to investors. I even took classes on how to be a better product manager, which unbeknownst to me, was the role I had been filling for years.
Simply put, I sacrificed my time, went without sleep, became a dedicated student, and expanded my network to the best of my ability to learn from others in the space. I could not afford to acknowledge the magnitude of what we were trying to do; I did not have the mental bandwidth to waste. I had to stay focused because we had a company to run with employees and customers counting on us.
What gap in the market did you think property management technologies missed before ResMan?
From my perspective as an operator, one consistent aspect of the available software was that the needs of the property staff seemed to be more of an afterthought, which I found ironic since the front line is where every transaction begins. Site-level teams struggle to this day to find time for all the quantitative and qualitative tasks they need to complete to maximize revenue potential and maintain the highest quality housing for their renters.
On top of frontline challenges, regional managers and accounting staff oversee and support several assets at a time. Without transparency and real-time visibility into each property’s KPIs, regional managers are handicapped when deciding how to allocate their time effectively, resulting in underperforming assets not getting the appropriate attention to course correct when needed. We designed ResMan to complement the natural workflows of each role onsite — regional management, corporate office, and leadership team. ResMan reduces workflows down to as few as three clicks, something our users tell us is incredibly valuable as it can give up to four hours of capacity back to each team member each week. Even with the added capacity, time is precious, and users need to recognize threats to their bottom line quickly.
In addition, ResMan provides users with current and future views of key performance metrics. We used our software before taking it to market. The ability to identify threats to our budgets in advance allowed us to operate proactively instead of reactively. Operationally, we focused on daily activity that would secure performance six months out instead of spinning our wheels today for what could have been avoided six months earlier. ResMan empowered our property management professionals to do their best work. When the right technology empowers your employees to succeed, everybody wins — the employees, the residents, the management company, and the investors of the assets.
What is the one amenity that every property manager should be investing in this year?
As an operator for many years, I believe there are three types of amenity investments to consider in 2022, depending on the needs of various property classes and the amount of capital available to invest back into the community. They are improving WiFi access and internet speed, pet-focused amenities, and smart home upgrades.
Renters are increasingly reliant on their internet services. Connectivity is not enough for today’s renters, and they need adequate bandwidth for telecommuting, online learning, and even shopping for food and other necessities. Asset classes do not limit the need for better connectivity. Students all over the country and from all demographics found themselves dependent on online learning due to the pandemic. Providing WiFi in common areas and individual buildings benefits both the renters and the property owner/operator. Lack of internet access can restrict a renter’s ability to find employment or for children to participate or benefit from online learning. Renters are willing to pay for this amenity which pays for the upfront installation expense.
Pets live in a large percentage of rental units, whether owners realize it or not. The American Pet Products Association estimates that 90.5 million households, or 67 percent of all households, own a pet. In addition, 73 percent of Millennials, who represent one of the largest renter demographics, own at least one pet. Yes, some pets indeed cause damage, but to be honest, so do some residents. Embrace pet ownership for what it is — an opportunity to improve resident satisfaction and improve the bottom line. With minimal investment, owners can add pet parks, paw spas, and offer training and education classes to enhance the experience for people with pets. Spending on pets has more than doubled over the last 10 years according to the American Pet Products Association. For property management companies, this is a good indicator that pet upgrades can be resident funded.
Lastly, smart home technology, which is not really cutting edge at this point, is something our industry has been relatively slow to adopt compared to other industries like hospitality. Beyond touting your community is innovative or hip on technology, there are actual cost savings for renters in the long run. Smart home tech has value for both the renter and the owner; better utility management, for example, leads to happier residents, which pays off for both the renter and the property owner. Smart home technology and automation increase renters’ awareness of usage, and the data collected can enhance efficiency for building and vacant unit operations management.
What is the biggest trend you have seen in the rental industry during the pandemic?
Depending on your relationship to the industry, there are many different trends that could be considered the biggest. As a technology partner, we witnessed an industry that had long been considered behind in technology adoption rise to the challenge and leverage technology to move in-person activities to virtual/online very rapidly. From tours to applications, leasing, and rent payments, the way property management companies and renters interact has taken a huge step forward, saving time and creating efficiencies for everyone.
This is true across the industry, including in affordable housing, with HUD now fully embracing electronic signatures and electronic document storage. Gains in staff capacity brought about by technology can now be allocated to more qualitative actions to better serve the community and its tenants or residents. For operators, online payments in particular have a huge impact, allowing them to better meet financial obligations. Data collected as part of NMHC’s Rent Payment Tracker Project demonstrated that, on average, less than 80 percent of rent is collected in the first week of the month. When delinquent rents are 20 percent or higher in the first half of the month, operators often struggle to pay mortgage, interest, taxes, property utility expenses, or payroll.
Depending on the sophistication level of a management company, the size of the portfolio, the asset class, or the markets operated in, there can be a vast difference in technology utilization and adoption. The further down-market you go, you see older technology or no technology at all. Prior to the pandemic, e-commerce shopping experiences were already influencing how most property managers thought about their online leasing process.
The pandemic accelerated the upward trajectory of leasing automation overall. The combination of self-service leasing and leasing automation has improved efficiency for the management team and improved the experience for renters. There was quite a bit of speculation early on as to whether or not self-service leasing would replace the need for leasing staff and offices. At least in the short term, this is not what we are seeing across the industry. Instead, technology is augmenting the traditional leasing process. Gains in staff capacity can now be allocated to more qualitative actions to better the community and residents.
As we adapted to the pandemic, there were many property managers who had to shift overnight, abandoning all aspects of in-person leasing. Apartment owners still using hardcopy leasing documents or who did not have online payment options found themselves stuck between a rock and a hard place. The urgent need did not allow time to evaluate which technologies were available or the best fit for their unique needs, often resulting in a disjointed renter experience.
Renters and apartment staff resisted in-person interactions, such as signing a lease contract, forcing the transition to online applications and lease signing. Affordable housing operators advocated for years for HUD to allow for the use of electronic forms. Finally, in May of 2020, HUD posted long-awaited guidance on electronic signatures and document transmissions due in part to the pandemic. The increased efficiency gained for the renter and the management was significant.
I mentioned above how e-commerce impacted multifamily from a leasing and transaction standpoint, and it has also exacerbated their package management challenges. For example, as renters commute back to work, they are not home to accept their packages. In addition, apartment offices, package rooms, and package locker systems were not designed with today’s volume in mind. As a former property manager, I recall how our team dreaded the holidays due to the additional workload from managing packages; I cannot even imagine what it will be like this year.
On another note, we saw a complete disruption to historical leasing patterns as the pandemic progressed. While leasing volume picked back up in 2021 and leases are renewing at pre-pandemic levels, understanding the significance of remote working in multifamily is a work in progress.
How has technology helped empower the modern-day property manager to most effectively find, validate, and keep long-term tenants?
As a property manager, you have a fiduciary responsibility to your investors, employees, and even residents. To meet this obligation, you need to attract and retain residents. Property managers must have online tools to engage with their renters and meet them where they are. When done well, residents will be able to effortlessly look, lease, live, and ultimately love their apartment community.
With the changes brought about by the pandemic, the effectiveness of a property’s website moved front and center. Websites need to have the information renters expect to see as they narrow down their list to a few serious contenders. This includes virtual tours, neighborhood maps, interactive site maps, unit-specific floor plans, and of course, availability and pricing. Renters and prospective renters also value the ability to conduct business virtually with their apartment management team. The leasing process needs to be digital, and renters need to be able to pay online using their preferred payment method. Online communication tools that allow residents to submit and track service requests, check account balances, and text back and forth with their community representatives are key to retention. Amenities such as high speed internet, touchless entry, and smart-home packages play an important role in attracting and retaining residents as well.
The days of referring to the apartment industry as a lagger in technology adoption are over. The pandemic became a forcing function pulling property management companies of all sizes forward into digital transformation. In today’s market, if you are not utilizing technology in all aspects of the resident life cycle, you will not compete effectively. Interactions with e-commerce brands outside of our industry, like Amazon or Netflix, set expectations for our consumers. The way you measure up to these expectations impacts your management’s brand credibility.
Websites once thought of as merely a destination or landing place for would-be renters are outdated logic. When most of the industry closed their offices, the effectiveness of a property’s website moved front and center. Your property website is as vital as the monument sign at your entrance or landscaping you invest in annually. An effective website has to attract and convert prospects if you expect to increase online leasing. Getting your website to this point does not happen overnight. Suppose your company chose not to invest in upgrading your marketing websites. In that case, you are not only well behind your competition, but you also have a costly uphill climb ahead of you.
Renters value the ability to conduct business virtually with their apartment management team. The leasing process needs to be digital. Gathering community information, touring virtually, scheduling site visits, making a unit selection, applying, and paying online are now table stakes.
The use of technology goes well beyond capturing renters to retaining them, as renewals are one of the most significant factors to financial success for the operator. Operators are adjusting in real-time to the shifting demands of renters who have different priorities now as they work, live, play, entertain, and relax all from their apartment home. The conveniences afforded through technology have become more valuable due to the increased amount of time residents have spent in their apartments and community common areas over the last 24 months. Amenities like access to high-speed internet, touchless entry, and smart-home packages have gained value among renters. However, I suggest that having online communication tools that allow you to engage with renters more effectively is even more important. Technology allowing residents to self-serve service requests, check account balances, or text management provides a platform for communicating consistently and effectively and is key to resident retention.
What is the most common risk property owners face from tenants when renting out their property, and how can this be avoided?
Fraud has increasingly become a risk that is front and center in the multifamily industry. Fraud in multifamily includes an individual’s attempt to deceive management about their ability to pay rent, sometimes using a stolen identity to secure an apartment with no intent to pay and no intent to vacate without forced legal action. Before the pandemic, there was growing concern about fraud among property managers. Since the onset of the pandemic, property managers have reported a 48 percent increase in fraudulent incidents according to a Trans Union report. Almost half of the companies included in the report indicated that they did not detect the fraudulent information before the person moved in.
When fraud is uncovered after move-in, eviction is usually the only recourse. Before the pandemic, eviction proceedings were taking two to five months. With the pandemic-related eviction moratorium, many owners have been left holding the bag, facing significant losses in revenue when you consider the average monthly rent in the United States is about $1,600 per month and four to five months of back owed rent was the norm for evictions before the pandemic. The key to combatting fraud is to catch it during the rental application process. Having a best-in-class screening solution that validates applicant identity pays for itself in helping to avoid moving in a bad actor.
Simply put, bad actors increase the risks for property owners when it comes to renting out their property. Recently, Experian reported consumer fraud rose to $3.3 billion in 2020, up from $1.8 billion in 2019, and could cost U.S. financial institutions $3.5 billion by year-end. As a result, there is a material impact to businesses across the country, including multifamily, which has a higher cost associated with the monthly rental amount versus a one-time purchase.
Many in the industry attribute the fraud increase in part to the rapid increase in technology in our industry. Unfortunately, the move to self-service leasing came with inherent and possibly underestimated risks associated with it. Unlike home buying or even single-family rentals, the apartment industry is in its infancy regarding self-guided tours and how to mitigate the risk associated with them.