I was pleased to take part in a panel on the subject of tech and back-office essentials for real estate companies and emerging managers at the recent Information Management Network’s Real Estate CFO & COO Forum (East) in New York.
The panel offered a fascinating, broad-ranging discussion on a number of issues and solutions regarding this topic.
Selecting the right technology, setting an appropriate yet realistic timeline for implementation, leveraging technologies effectively to improve financial operations and grow ROI, and using technologies to make funds more attractive to investors are just some of the key challenges currently facing professionals in this space.
The other panelists were Patrice Muller of Crowe LLP, Dirk Hrobsky of Cushman & Wakefield, Scott Meyer of PTM Partners, Divya Tandon of SJI Properties, and Sean Judge of Vic.ai. In this post, I’ll be sharing our main learnings from the panel.
Identifying the Right Solutions to the Most Pressing Problems
In the real estate space, the overall value of the industry’s assets can rise into the trillions of dollars, and the lifetime of any individual asset (such as a building) may span decades or even centuries. This means that, compared to other industries, transactions tend to be of higher individual value but fewer of them are taking place. Therefore, when companies set up automations or use technologies to improve processes, this relatively low transactional volume means that a different approach is required.
In this complex industry, the first challenge in adopting technology is choosing the right solutions to the right problems.
Back-office essentials in the real estate industry tend to be focused in areas such as accounting, fund administration, lease administration, and other aspects of the day-to-day management of real estate. You will need to identify which processes and solutions are most critical to your business and choose the right technology partners to help you improve, streamline, and grow in those areas.
Staying Aware of the Uses and Limitations of AI
Robotic Process Automation (RPA) and artificial intelligence (AI) have made, and continue to make, significant changes to the ways that businesses are managed and processes carried out within the real estate industry.
Smart automation, sometimes called “pragmatic AI,” typically has a limited use case but robust capabilities. One example might be a bot that evaluates incoming invoices and pulls out important information such as the amount, vendor’s name, and invoice type.
Some common use cases of RPA and AI in real estate include automated bank reconciliations, client/investor reporting packages, payment processing, and client background checks. We have seen significant opportunities in these areas to speed up operations, improve accuracy, reduce risk, and free up human team members to focus on other things.
It is just as vital, however, to understand AI’s limitations. ChatGPT, for example, is an incredible tool but has also been shown to give incorrect answers to questions. It is important that we do not treat AI tools as infallible and that we remain aware, critical, and vigilant when utilizing them.
Managing Expectations and Working With the Technology
As leaders in real estate technologies and RPA at REdirect, we manage expectations around what these technologies can and cannot do. By understanding the various tasks that these functionalities can perform, clients can identify use cases that are realistic to implement and will lead to a positive return on investment.
In many ways, these technologies are still in their early stages and will continue to expand and improve over the coming years. We must all be prepared for a steep learning curve as we integrate them into our business practices.
These technologies also require clean data in order to work effectively. We often see clients receiving incorrect or incomplete reports from tools like MRI Software or Yardi and assuming this points to a problem with the technology. Almost inevitably, it actually points to a problem with the data. For example, crucial details may have been omitted or entered incorrectly (or inconsistently across the portfolio). Automations will expose gaps in your data and inconsistencies in your manual processes, which will likely then require human intervention to address. Such tools also do not possess human attributes such as instinct and common sense, which can be tremendously valuable in the world of business.
The key is to work with the technology, not to expect it to run everything for you without external human input.
Ensuring a Smooth Implementation Process
Once you have selected the right technological solutions for your needs, it is vital that you create a robust implementation process to ensure that you can start getting the most out of them as soon as possible.
Begin by setting a timeline. What do you need to have in place and by when? Ensure that this is realistic and achievable. Next, define the resources—both financial and non-financial—that will be required for this implementation to run smoothly. Partnering with an expert consultancy firm such as REdirect can help you, as we have an expansive understanding of the technological and professional services implementation issues that are faced by businesses like yours.
You will need buy-in from key stakeholders, and it may be helpful to appoint internal ambassadors. Some of your team members may be resistant to the change initially. This is normal, and it can be overcome with strong change management practices.
Finally, remember to budget the time and resources for training your staff. These technologies can save you tremendous amounts of time and significantly boost your ROI, but only if they are utilized correctly. By empowering your people to use the tools to their full potential, you will maximize the return on your technology investment.
Start Your Journey Today
If you are ready to get started with real estate technologies and back-office essentials, or if you just need a little more advice, the team at REdirect is here to support you.
If you would like to learn more about anything we have discussed in this post, or to discuss ways that we can work together, please contact us today. We look forward to helping you take your real estate business to the next level with the right cutting-edge technologies for your needs.