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A CPM® gets real about artificial intelligence

Sam Chanin, CPM®, would like to clear up some long-standing myths about property managers and technology, especially as they relate to the mystic topic of artificial intelligence (AI).

Myth #1: Adoption is slow because property managers are tech-averse. “The industry is not averse as much as the property technology industry has been slow to serve them properly,” says the president of Orange County, California-based Maverick Realty Advisors, a year-old third-party service provider. Happily, the visionaries of property technology (proptech) are beginning to “scratch that surface and better understanding the problems of property management.” 

Myth #2: The technology, due to cost or complexity, is out of reach by smaller management concerns. On the first score, “Most young proptech companies are providing these services now at an extremely competitive price.” He adds, however, that those providers, once they prove their concept and gain market share, will begin to charge for services originally offered at a discount, such as onboarding and training. “The truth is that there will always be a Version 2.0, and young startups--properly vetted, of course--will offer their product at a discount for the sake of adoption. So smaller companies can afford it now.”

In terms of the complexity, “Software is getting easier to use,” says Chanin. Those same programmers and “proptech visionaries are designing their tech solutions specifically for those who require an easier form of interaction.” 

Chanin, whose firm currently focuses on high-net worth individuals (but with larger institutional clients clearly in his sites, “once we scale up”), emphasizes you no longer need an IT background as much as you need the proper mindset. “There’s a tech renaissance happening,” he says. “It’s here and it’s huge. An open mind is the most important qualification. Everything else follows.”

What is artificial intelligence?

But we get ahead of ourselves. What exactly are we talking about when we talk about AI, and what does it mean for property managers? Essentially, AI is a set of rules, in the form of algorithms, “that allow software to make decisions based on those parameters,” says Chanin. And while that might sound like something out of a Stanley Kubrick flick, there’s nothing sci-fi about it. “It shouldn’t be confused with intelligence that’s self-aware. It’s only as good as we can program it.”

Those rules guide the software to handle the often-repetitive tasks that can bog down a manager, freeing her or him to do more strategic thinking. “It’s designed to capture and sort data for reporting output or rudimentary decision-making,” he says.

And that includes virtually “any management decision that needs to be made,” says Chanin. For example, let’s start with the assumption that X dollars have been spent on a general ledger item or a project. “AI can determine if additional work can commence or be delayed.” Or, depending on how much rain has fallen recently, “it can determine the use of sprinklers.” Another example comes in the proper operation of a building’s energy management system and “whether a technician should be called in.”

AI can help owners and managers assess operating expenses charged back to the tenant and manage those costs by “keeping building systems running with less downtime,” says Chanin. “For landlords the effect is better tenant retention, a reduction in operating expenses and lower liability.”

What then are the implications for the property manager’s skill sets? Well, first comes those mindsets. “As the industry adapts, property managers must adapt, too,” he says. “We’re coming to a place where building systems are going to talk to tenants and vendors, where automated service providers are going to talk back to your building.”

Chanin says when that time comes--and it’s already here in rudimentary stages--if property managers have been keeping up with their own set of best practices, the battle is already half-won. “If managers are already trained in best practices, then there should be no need to train them to understand why AI is making a certain decision.” Yes, you will need a basic affinity for technology in general, and of course in the specific software, “but that’s no different from learning to use new budget software or a company’s intranet.” You’ve already been there, done that. 

Does all this sound either exciting or frightening? One way or the other, you don’t have a choice. It’s the direction the industry is going in, and your competitors may already be on board. 

“Two things are happening,” says Chanin. “First, your competitors are adopting AI suites of offerings to position themselves better to win business. They’re creating a better value proposition.” To compete, he continues, so do you, whether the adoption is of software that runs operations or engineering or can generate reports, “whatever it takes to gain the competitive edge.

“The second phenomenon is fee-compression,” he continues. “If a company cannot diversify to increase its revenues, the only way to compete is to streamline operational expenses. AI is one way to do that by capturing some of those rudimentary, repetitive tasks. These are things that can be automated to the point that we might need fewer people, or to allow the same number of people to work on larger portfolios of properties.” Either way, the application of AI is one way to increase profit margins and offset fee compression.

A word about cyber threats

Yes, your data is always under siege. “If bad actors can’t get the data, they’ll lock it and blackmail the source for money,” says Chanin. “One way or the other it can cripple a company.”

Which brings us to more bad news: Data is the lifeblood of integrated building systems and AI. “That’s why we need cyber protection,” he says, “and protecting yourself to the degree that a Fortune 500 company does isn’t so expensive or difficult anymore.” Clearly, cybersecurity should never be overlooked. But, says Chanin, “it too often is.”

Properly protected, properly gathered, that data can feed a tech strategy that will keep managers abreast, and possibly ahead, of the competition. Remember, says Chanin, AI is the tool. The real value comes in the amount and the quality of data that supports it. 

More than ever, “They who have the most, best data will win.”

CAPTION

“Your competitors are adopting AI suites of offerings to position themselves better to win business,” says Chanin. “They’re creating a better value proposition.”

Comments

Excellent article, Sam! We need to continue being open minded to new technology. I’m seeing a new wave of Prop-tech and more interest in adopting more technology. The future belongs to those daring enough to change today.

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Great to see topics like this! I would suggest that the two myths are actually complementary. I've seen this situation in many industries, especially those with established big players. The big players who have the most number of installs with the largest and most influential companies tend to be the slowest to evolve. The start-up or smaller players who are innovating can't break through because property managers don't want to take a chance. This is not much different from when I started in IT 32+ years ago and the saying was that nobody ever got fired for buying IBM. Given the closed nature of property management systems they are harder to integrate by design from the manufacturers who are milking their cash cows. So there is a bit of chicken and egg going on and breaking that requires exactly where the article ends; an innovation mindset. The term AI is very much over used in the tech industry. I would just add that people should be on guard with that term as it is certainly more sizzle than steak as the old saying goes. Some great things happening, but it tends to be over sold. PLEASE do take cyber security very seriously. These attacks are very real and they hit everyone. There are bots out their that troll the internet looking for vulnerabilities and when they find one it attacks or drops malware; all without human intervention. You need a couple of things to stay relatively safe: 1) Solid malware protection for your computers (all of them) 2) Network protection (firewall) 3) Use Multi Factor Authentication (MFA) on everything, yes everything 4) Buy good cyber insurance (please not the cheep stuff that let's you put a check on other forms) 5) If (actually when) you fall victim to a cyber attack hire specialists. Do not count on your internal IT team. They are great at managing the operations, but modern cyber attacks require specialist knowledge and approaches. Hire a firm that does this every single day. They know the tricks and can get you back in business faster and ultimately cheaper. It is a very different skill set, don't let the IT team's ego get in the way. I speak from very real experience. Great article and hope to see more!

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Thanks for the feedback - our readers appreciate your experienced insight!

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