Happy Tuesday and welcome back! I trust you had a great weekend doing something rejuvenating! I don’t say relaxing because sometimes working my tail off in the yard can be very relaxing and rejuvenating all at the same time. I was feeling very thankful last Friday after getting home from a busy week in Atlanta at the NAA national conference. One of the first things I did was ask my wife if she needed anything and she asked me to take our baby girl and help her fall asleep. There’s nothing like wrapping up a long week with your little girl in your arms just looking up at you and knowing she’s safe and sound. Very blessed.
Which also reminded me that in the midst of this crazy economy, growing business, and endless pressures of life, it’s easy to get caught up in looking forward – forward to interest rates dropping, forward to finding more good people to join the team, forward to being less stressed. Constantly planning for the next big thing. I think we would all do better if we slowed down just a bit and remembered that life is short and it’s important to live it fully in the hear and now.
NAA Apartmentalize 2023
Speaking of the hear and now – we’re continuing to build operations in 2023 and my trip to NAA was very productive on that front. I wrapped up a great week last week in Atlanta at the annual National Apartment Association conference where anything and everything property management was on display. The conference also offers educational sessions that cover a myriad of relevant topics from how to lease an apartment to best practices in preventative maintenance. We are members of NAA (as well as our local apartment associations) but I’ve never visited the national conference. I typically have my managers take a couple days to build their skills at the regional/state conferences. I was very impressed with the level of expertise and relevance at the education sessions.
The event is huge – and that’s an understatement. It’s the complete opposite, in many ways, of a conference like IMN where it’s more about smaller groups and networking. The NAA Apartmentalize conference is the prime place to take your team and discuss/learn about current industry issues as well as seeing/meeting a full array of vendors. The exhibition floor was the primary focus of my visit on this trip. From Lowes/Home Depot to RESMAN to Apartments.com (and everything in between), it’s quite a site.
If you show up at Apartmentalize without a goal or primary focus, you’ll end up wandering. You absolutely cannot cover everything it has to offer. So it’s super important to have a clear goal. My focus for this trip was primarily AI. I wanted to see all of the various AI (artificial intelligence) offerings that I could find. We’ve been demoing a couple of them recently and I’m super impressed. The latest version of ChatGPT is revolutionizing many industries – and property management is one of them. Any AI system that utilizes this platform has been very impressive.
It was also hearing the different perspectives on how different companies are implementing AI into their existing work flows. No one that I spoke to was trying to remove humans from the process. Some folks wanted to augment what humans were doing. Some wanted to automate repetitive tasks with AI. And some, like myself, were focused on leveraging AI to accomplish two defined needs.
First, be a force multiplier for the onsite staff. For example, when 20 leads come in over the weekend, don’t drop 20 “to-dos” on their desk on Monday. I want a system that will vet those leads, nurture those leads, and get 20 tours setup for that week. At that point my community managers and/or leasing agents can focus on their primary value-add – face time! And while an AI bot can and will close some leases, I believe many folks will still want a person to connect with. But by having a corporate leasing success manager as part of that team (i.e. the AI system), it makes the resident feel more cared for and in control versus having to wait for the community manager to answer all their questions (along with 20 other people) on Monday.
The second goal is to augment the need for personalization and relationships by acting like a human and providing excellent, personalized customer service. We want our residents to feel like they are the sole focus of our efforts as they are looking for a home. Practically speaking it can be difficult for a manager (at a smaller property) or a leasing manager (at a larger property) to cover all those communication requests/needs in a timely manner. A really good AI system can handle these in a way that makes the resident feel like they have a personal connection with our staff. And that’s what we want.
Economic Update
The problem right now isn’t the economy. The problem is the pace at which the Fed has raised rates. Human beings aren’t machines and despite the idea that interest rates can control an entire economy in short order, it’s much more complicated than that. This rapid rise in interest rates has caused a massive re-pricing of assets and expectations. The value of a dollar of profit changes based on future expectations of value. When expectations change rapidly, the ability to re-price relatively non-liquid assets does not happen overnight. We’re in a situation where things have changed so drastically folks just don’t know what to do. It’s kind of like living in the economic twilight zone.
The Fed has raised rates at a pace that is record-breaking. The fear is a repeat of 70s/80s inflation. The reality is we’re now in a situation where fighting inflation will tank the economy because asset valuations just can’t keep up with the whiplash. We’ve literally succeeded in creating a financial crisis out of thin air. Pretty impressive. But then again, creating a worldwide economic crash was also pretty impressive. And scary.
The takeaway – regardless of your model, taking calculated risks is no match for this kind of wild economic policy. In the meantime, focus on operations, be profitable regardless of the interest rate environment, and realize that not every year is going to be a slam dunk. Play the long game and focus on value. Warren Buffett has been a great example that it works.
That’s all for now! Thanks for reading and have a great week!