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A lot of apartment owners would agree with AvalonBay Communities, Inc., that 2003 was a tough year for rental housing. Those owners would probably be eager to find out how AvalonBay nonetheless increased its 2003 ancillary income by more than $1 million.
The name of the game in property management software is to track the entire resident life cycle and bring together all information related to a property’s operation. Programs such as MRI Residential from Intuit, Inc.; OneSite from RealPage, Inc.; Realeum from First Advantage Corp. and Voyager from Yardi Systems, Inc., aim to capture as much information as possible from the business processes to let property managers track revenue events, find problems, and plan for future spending.
AvalonBay targeted nonresidential assets on its 140 properties, such as storage spaces, garages and parking slots, looking for areas where it had unrealized revenue potential. It deployed Realeum, Inc.’s property management software in 2002 to track and automate the revenue collection from these and other assets.
Realeum was acquired in May 2004 by First Advantage Corp., a risk-management solutions provider that also owns Registry-SafeRent. Realeum`s new owner retained its leaders and promised continued development of the product.
Today, Realeum’s Foundation software tracks and manages all of AvalonBay’s on-site operations from a revenue standpoint, covering occupancy, billing and receivables, said Mona Stahling, AvalonBay’s senior director of operations. “It manages our customer workflow from the day they move into the community to the day they move out.”
“Historically, [property management] software has managed just the apartments,” said Thomas Sargeant, chief financial officer of AvalonBay. There was no automated accountability before, so if leasing consultants wanted to give a garage space as a concession, management wouldn’t know about it. With the new system, they can still give away a space, but the giveaway is recorded and tracked.
In addition to hard assets such as parking spaces, AvalonBay uses Realeum to track items such as month-to-month leases. The system will automatically bill tenants for the appropriate premium when they do not sign a new lease.
What assets can be turned into new revenue sources will vary from company to company. “It depends on which problems [companies] want to focus on,” said Socrates Verses, Realeum’s president. “AvalonBay received a lot of value on month-to-month leases. Should I actually renew people? Am I forcing these month-to-month fees? Am I generating the upfront fees to be able to do this?”
After implementing Realeum, Avalon decreased the percentage of its leases that were month-to-month from 7.6% of all leases to 4.6%, while the average premium that the company was able to collect increased by 43%.
Another area of focus was corrections, or the volume of fees that are waived. “Before, a fee could be waived and there was no ability to track potential lost revenue,” said Sargeant. “The ability to track this information has helped improve revenue retention.”
The system gives AvalonBay the ability to look at the details behind corrections. Realeum automatically bills certain fees (such as for applications, terminations, month-to-month leases, late rents, etc.).
Managers can still waive fees, but they have to enter their reasons for any changes into the system. In the first two quarters of 2004, the company said it reduced its fee corrections by 10%.
Avalon was the beta customer for Realeum. It took five months to put its entire property portfolio into the system. Realeum runs on a server hosted by an outside party.
It costs between $1,200 and $1,700 per property, plus fees for data conversion setup, training, and upfront consultation. Support is included. Realeum is aimed at portfolios with at least 2,000 units.
Tech News Update
RealPage, Inc., acquired RE-Opt, LLC, producer of revenue-optimization systems for the multifamily market. RE-Opt will extend the product offerings of RealPage subsidiary M/PF Research. The company said that the resulting revenue-optimization system offered by M/PF will interface with popular property management systems such as AMSI, MRI, OneSite, RentRoll and Yardi. RealPage also has teamed up with SureDeposit to offer leasing agents a surety-bond alternative to security deposits. The alliance will include a single-step process for the agent to offer the SureDeposit option to applicants during the leasing process.
RealtyTrac launched its new web site this past summer, providing investors and consumers with pre-foreclosure and foreclosure data on more than 500,000 properties of many types, including apartments. The new site, located at www.realtytrac.com, includes improved user tools and deeper data offerings.
LeasingDesk.com, an Internet-based financial services provider, has introduced the Military Housing ProtectionPlus insurance program for privatized military housing. The program provides blanket coverage for all on-base privatized households.
Noment Networks and Distributed Management Information Systems, Inc., providers of broadband Internet services to multifamily properties and planned communities, have merged to form Fusion Broadband. Fusion’s leaders said that the combination will allow them to offer more support hours and greater local representation in customer markets.
Geac Computer Corp., Ltd., launched its eFinancials product, a Web-based property management accounting solution. eFinancials’ features include support for simultaneous cash and accrual-based accounting, partnerships and other business relationships, customizable reports, and a global vendor file shared across multiple organizations.
RentNet, an online apartment listing service and resource, announced new programs to serve property owners and managers. The Occupancy Booster Program, Occupancy Booster Plus Program, Rapid Lease-Up Program, and Renovation Optimization Program offer help in creating online marketing strategies.
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