Do more with less.

This is quickly becoming the multifamily's theme in 2023 as the economic reality of falling rents, decreased occupancies, and cratering consumer confidence materializes.

According to online rental marketplace Zumper, three-quarters of renters already think we're in a recession. They're making their housing decisions accordingly by doubling up, moving back home, or choosing to lease a more affordable apartment over staying in place.

While this isn't exactly a cause for celebration for property managers, the outlook also isn't as dire as it would have been in previous economic downturns. The reason is the increased use of technology in the multifamily sector and how it has changed how we rent, especially since the pandemic.

New tools are helping property management teams do more with less in the face of lower rents, higher expenses, and falling NOI in a more challenging market. But the evolution of tech and the continued digitization of the rental process also introduces new challenges, particularly when it comes to fraud and gaming the apartment application process.

Call it the good, bad, and ugly of multifamily technology in 2023.

The good

One aspect of multifamily that makes it a preferred asset class is the ability to multiply gains over the number of units you have in a portfolio. If you do something good once, you can make it 200 times better simply by replicating it with each signed lease.

But the downside of that happy math is that there's a lot of legwork involved that's repetitive, time-consuming, and stressful for staff.

Ask any leasing agent what happens when they advertise an available unit and they'll tell you the result is a deluge of incoming phone calls, texts, and chat messages. Most inquire about information that's already in the ad, like whether the unit comes with parking or if pets are allowed.

This is where onsite prop-tech and leveraging AI can help via bots that remove that mundanity from staff's plates.

One popular example will answer incoming calls in a personable voice, explaining she can't come to the phone at the moment, but will follow up with a text.

The subsequent automated response then opens a dialogue with the prospect, asking questions about the unit. The bot happily responds when the prospect requests information already in the ad.

Aside from saving staff from answering the same calls daily, these bots can push leads farther down the sales funnel before leasing agents get involved.

Take the case of calls for advertised units already filled. Following the same workflow described above, these bots respond to say the unit is already rented but go one step further by suggesting similar units are still available in the same area.

By the time the prospect interacts with an actual, live agent on that unit, they are that much closer to signing a lease.

Smart locks and self-tours

Self-tours, made possible when buildings' smart locks are tied back to an online leasing management system, allow prospects to look at an apartment without the presence of a sales rep – an approach that's actually preferred by an increasing cohort of renters.

They simultaneously free up time for leasing agents to pursue additional leads while allowing the prospect to come to them when they're ready. That effectively helps agents sell multiple prospects at the same time.

An AI-fueled sales funnel

Other, even more sophisticated AI applications can help narrow the sales funnel at the front end, so agents respond first to the hottest leads – those prospects who are most likely to lease, based on results from a predictive algorithm.

For example, one property manager pairs down his leads based on a prospect's behavior upfront.

For example, someone who fills out the optional phone number field on a guest card is much more likely to lease a unit than someone who leaves it blank. Potential renters who inquire between 9 a.m. and 5 p.m. are more likely to rent than those looking after hours.

Based on those types of criteria, the property manager has been able to target the 22% of prospects who rent 68% of the firm's apartments and route those leads to their human leasing consultants first to close the deal.

Applying this type of automation and AI-enabled tech not only helps property managers increase lead-to-lease conversions but also provides more affirmation for leasing agents by boosting their chances of hearing "Yes" at the end of the sales process.

The bad

While technology is helping leasing agents to be more efficient higher up in the sales funnel, it's also fueled a steep rise in apartment application fraud later on during the screening process.

During the pandemic, property managers reported that fraudulent lease applications doubled, with 85% of landlords saying they were victims of application fraud.

Enabled by the wide availability of fake financial documents online – think bogus paystubs and bank statements – leasing agents often have to play detective to determine if an applicant's supporting paperwork is legit.

But these documents are hard to spot with the naked eye – staff ends up doing Google and Facebook searches to confirm if an applicant is legitimate.

The good news is that tech can help combat this trend more efficiently.

Fraud detection software, for example, can look at the digital DNA of financial statements to confirm their veracity and takes that detective work off leasing agents' plates. It either accepts or rejects the application, saving leasing agents time and giving them an easy, non-confrontational out when there's an issue.

Perhaps even more importantly, from an efficiency perspective, it helps qualify the lead even further, ensuring that leasing agents move forward only with legitimate residents who won't waste their time.

The ugly

This focus on efficiency and doing more with less when preventing fraud will be even more critical in 2023.

That's because fraud rates tend to increase during tough economic times, a correlation that the Association of Certified Fraud Examiners documented at the beginning of the Great Recession.

Compared to then, the fact that there's even more digitization today is likely to exacerbate the issue further.

Just consider that monetary losses from digital fraud during the short-lived recession of 2020, early in the pandemic, were 7.5 times higher than in 2009, according to the 2022 Global Recession Fraud report issued by online fraud prevention platform SEON.

While tech has changed the way we rent and is an essential tool to help leasing agents do more with less during tough economic times, it has also increased the likelihood of fraud.

Giving leasing agents the same tools to be efficient in the application vetting process as they have at the top of the sales funnel will be essential to ensure that things don't get ugly once those prospects are inside your community's doors.