Followers of my writings on multifamily property management have probably noticed that I am in my "multifamily maintenance should work more like single-family" era. The two may be showing signs of converging, as this article will attempt to explain.
To recap themes shared recently in these pages:
- Multifamily operators are increasingly trying to centralize operations. However, most find the prospect of centralizing maintenance daunting.
- There are numerous reasons for that, and one of the bigger factors is the staffing model based on coverage. A typical property may have about three full-time maintenance associates.
- That is usually enough to keep maintenance ticking over: a dynamic that removes many of the incentives that make maintenance operations more efficient elsewhere.
- Single-family, by contrast, has no on-premise staffing and has evolved systems of triage, dispatch and analysis that, in the best cases, are superior to the equivalents in multifamily.
Those capabilities tend to be better because they need to be; every time a maintenance request comes in, a single-family operator must decide who will do the work, when they will do it, and how much it will cost. None of this is really true of multifamily, where the property-based maintenance techs simply add the work orders to their list.
The Incentives for Improvement
The most recent edition of the 20for20 annual survey noted that different objectives usually drive maintenance centralization compared to front office functions. Those centralizing property admin and leasing usually expect to reduce the number of site staff that we need at properties.
That is not the main driver of maintenance centralization. While there are some marginal ways to reduce staff workload, you simply cannot automate away enough maintenance tasks to reduce the headcount in the same way that you can with the front office. The real drivers lie in reducing unnecessary costs, improving the allocation of resources to tasks and gaining flexibility.
Two things seem to be common to companies making headway on these problems. First, they are doing things that look more like single-family maintenance, like organizing teams on a more regional than property basis. Second, significant improvements in any maintenance process usually have their roots in data, particularly in creating a source of data that supports decision-making. As I explained previously, that is a step that multifamily operators often miss.
I'm currently writing a new presentation about this topic, which I plan to give as a keynote at the MX summit in South Dakota next month. As I think about the path forward for multifamily, I've been considering what benefits, besides flexibility, multifamily companies would gain from what still appears to be a bold step into a different maintenance delivery model.
Understanding the Impact on Renewals
An interesting example has emerged in the much-discussed arena of renewals. In single-family property management, unlike in multifamily, a resident's decision not to renew often leads to investor attrition, as the property owner may decide to stop renting out the home. That makes each non-renewal much riskier than the multifamily issue of non-renewal, where investors don't typically divest properties just because someone moves out.
This situation creates a strong incentive to trace the causality of renewals. While I maintain a healthy skepticism of most claims about processes or technologies increasing renewal likelihood, I do believe maintenance influences marginal renewal decisions more than any other factor.
Observing the causality trail in a data-driven single-family maintenance model provides intriguing insights. For instance, if a region's properties are experiencing high non-renewal rates:
- The operator may first check customer satisfaction related to maintenance and find slow repair times could be driving dissatisfaction. The critical question is, why is maintenance slow?
- From there, the operator can review a number of individual performance metrics for maintenance. In this example, poor vendor performance scores emerge as a likely explanation (Single-family uses external vendors more extensively, making tracking their performance crucial.)
- Further analysis of "vendor health scores" discloses poor engagement scores for two different vendors.
- For each vendor, a single factor explained the poor health scores and why service had been slow:
- Higher costs relative to local benchmarks (slowing down approvals).
- Vendors failing to comply with the property management company's automated scheduling processes.
For multifamily maintenance centralization, the devil is very much in the details. It will require multifamily operators to establish business controls that few have today. In the above example, satisfaction suffered because of specific problems that may not have been obvious to the operator. However, drilling down through the causal path of data revealed exactly what management needed to do to fix the problems and regain customer satisfaction.
Elsewhere this year, I have described how companies solve problems like these by giving property managers clear, actionable insights through a comprehensive data platform. As companies look to centralize, that need will become more critical, as will the need for centralized platforms to enable communication across an increasingly complex network.
I believe relatively few multifamily companies have this capability today, which is why I'm looking forward to talking about it in front of an expert crowd of both multifamily and single-family experts next month.
The MX Maintenance Summit takes place in Rapid City, SD, from September 18–20. Use code: TFT100 to get a $100 discount on registration.
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