Tool of the trade

The growing impact of artificial intelligence (AI) on the real estate industry is undeniable. In fact, generative AI could create $110 billion to $180 billion in value for the real estate industry, according to data from the McKinsey Global Institute. The report states that some companies have gained “10% or more in net operating income through more efficient operating models, tenant retention, stronger customer experience, smarter asset selection, and new revenue streams.”

Despite real estate’s traditional slow pace in embracing new technology, tools like ChatGPT are accelerating change. “Real estate has been slow to adopt new tech, but AI’s rapid advancement is pushing the industry to adapt more quickly than ever before,” says James Scott, IREM Innovator-in-Residence.

While the larger companies who began implementing AI long before ChatGPT are in the strongest positions, there are simple ways that any property manager can begin to reap the benefits of AI’s practical applications. From rent collection to qualifying leads to predicting water leaks, AI is taking menial tasks off the plates of property managers so they can focus more on invaluable client and tenant relations.

Here are three practical ways property managers are using AI to optimize operations.

1. Predictive maintenance and security

How much money and stress could property managers save if they were notified about a maintenance problem before it happened? Predictive maintenance is one real-world application of AI, providing early detection before equipment fails or a problem causes significant damage. Karen Key, CPM^®, division president at Asset Living, AMO^®, says her teams have had great success implementing predictive maintenance. One version they utilize monitors HVAC performance. If an A/C unit is running too often or too long, the AI system sends an alert to the property manager so it can be fixed before it affects the resident or the repair becomes more costly.

Key’s teams also use leak detectors, which use AI to analyze data from sensors and detect anomalies that suggest a leak.

“If you put detectors in your high-moisture areas, such as under your sinks or near your water heater, you will get an alert that moisture is detected prior to the resident coming home and seeing a flooded living room or—heaven forbid—the resident below arriving home to water coming through their ceiling,” says Key.

She emphasizes that the compounding effects of predictive maintenance go far beyond proactive repairs. “Yes, you can reduce your repair and maintenance costs, but you are now also anticipating your residents’ needs and getting better resident engagement,” Key says. “This results in better renewals, less turnover, and higher rent because you were able to tell them, ‘I see this issue, and we can take care of it for you before you’re uncomfortable.’ It’s a no-brainer.”

Predictive functions of AI can also uncover security vulnerabilities by monitoring surveillance systems in real time. When AI identifies a potential issue, it can alert a property manager to the threat. Using analytics, AI can also predict high-risk periods for a particular property using trends or historical data. With this information, property managers may employ extra security or surveillance during these predetermined times.

AI can also enhance cybersecurity by monitoring networks and alerting property managers to malware infections, unauthorized access, or anomalies in network traffic. In addition, AI can scan a system and identify weak areas that need attention.

“The risk of buildings being compromised could certainly be minimized by using AI,” says Maria Aiello, vice president of marketing and operations for Clarity Building Controls, an AI IOT company.  “By leveraging the predictive benefits of AI, you’re adding a layer of intelligence that enables the owners, operators, and landlords to realize greater operational efficiencies for the building.”

2. Rent collection

Another significant property management task that AI can assist with is managing rent collections and delinquencies. AI systems can send automated reminders to tenants as rent collection draws near, when it’s due, and after it’s late.

“Using AI for these reminders means your team isn’t spending time doing it anymore,” Key says. “They can instead focus on your residents, prospects, and customer service.”

Key says implementing AI for rent delinquencies has not only decreased the number of delinquencies, but it has also instigated earlier payments.

“Some of our properties using AI have seen rents come in 35% sooner than before,” Key says. “Maybe their average collection date was the 13th, and now it’s the 8th—it’s been a tremendous jump for some properties.”=

AI tracks this data and its engagement with tenants so property managers can review it at a glance and follow up personally, if necessary.

3. Chatbots

Having proven their worth during the pandemic, chatbots remain an important part of tenant and prospect communications, beneficial to both property manager and customer. “A high percentage of prospective tenants choose to engage with AI assistants over human interaction because of the quick responsiveness and the ability to respond at any time of the day,” Scott says.

Because AI chatbots that utilize large language models, like ChatGPT, are designed to understand and respond like a human, these interactions are much more realistic. In some cases, people may not even notice they’re engaging with a bot.

However, Scott says that this isn’t the only valuable capability of an AI chatbot.

“There are many very high-end, very capable AI assistants for property managers that facilitate lead generation as well as create more efficient scheduling and showing of units,” Scott says. “The data extraction in the ‘funnelization’ of prospective leads is just as important as the efficiency that they create.” For example, if you have 200 applicants for only 50 units, you can see the applicants’ rental preferences and refer them to your other nearby properties that meet those needs.

For property managers ready to implement artificial intelligence, Key says focusing on lead nurturing with an AI chatbot agent is an easy place to start. “It’s easy to roll out and doesn’t require a lot of oversight or a heavy lift on the back end,” she says. To get started, she recommends reaching out to your property management system (PMS) partner and seeing if they offer an AI service. “See what they have in their suite of services because it’s going to be the easiest to tie in without having to build an integration bridge, and you won’t be creating double work for your on-site team.” If your PMS partner doesn’t have that service, ask who their preferred partner is.

While chatbots offer instant communication, Aiello emphasizes that they must be supervised and continuously refined. “On the one hand, having the chatbot means that tenants will receive immediate responses, but we are also finding that templated responses can frustrate tenants,” says Aiello, who serves on advisory groups for both IREM and BOMA. “As long as we have a strategy to use chatbots in a way that optimizes our service to tenants and strengthens that relationship, chatbots can represent a great opportunity to scale building operations and improve tenant services.”

The human touch

Scott, Key, and Aiello reassure property managers that AI won’t make property managers redundant or put them out of work.

“The purpose of AI is not to replace people or reduce your overall staff,” Key says. “It’s to be that co-pilot—that supplement to the human element.”

AI should be viewed as a powerful tool for property managers that enhances human capabilities, Scott says. “While AI has perception, it doesn’t have cognition—it’s not thinking like a human. Although it can automate and streamline processes, it cannot replace the nuanced decisions made by humans.”

Aiello says it should be seen as a way to reduce the load of mundane tasks so that property managers have more time for their irreplicable face-to-face tasks. “Let’s think of it as human augmentation that can help to differentiate our organizations,” she says.

Adds Scott, “The responsibility [of humans] becomes even more imperative because they are responsible for the information that the AI generates,” Scott says. “It’s the due diligence in combination with the humanistic capabilities and oversight that is the most important aspect of all this.”

Getting the most out of AI

As AI rapidly evolves, property managers can expect to encounter more sophisticated uses that are more accessible to everyone in the industry. Scott predicts that AI will continue to make a significant impact in areas like tenant interaction, predictive maintenance, and operational efficiency.

“The reality is that it will take a number of years for these tools and functions to become mainstream across the entire property management industry. But the benefits are plain to see for those who are in a position to adopt faster than others,” Scott says.

As this AI revolution unfolds, experts agree that property managers should concentrate on educating themselves on the current and potential use cases.

“It’s about educating yourself, embracing the tool, and finding ways that it can assist with your most time-consuming tasks,” Scott says. “Nine out of 10 times there is a solution and a better way to do it.”

Because the potential uses are vast, Aiello recommends that property managers create an AI strategy “so you don’t get swept away.” To formulate the strategy, ask, “How can we use it to help streamline, improve, and bring us closer to our tenants?” Aiello says. “What does that look like for you? It won’t be one-size-fits-all, but companies must have an

AI strategy in place that translates to value, occupancy, and retention.”

She encourages managers to “bring their employees on the AI journey,” to reassure them that AI will not replace them.

“These strategies are really exciting, so try to get your teams along to learn and embrace the opportunities,” Aiello says. “Because doing nothing is not an option.”