Property management is an important part of developing and maintaining communities. Whether you are in the Division of Homes and Community Renewal (DHCR) or a Real Estate Investment Trust (REIT) for other properties, your goal is to maximize rent. Or, in other words, maximize shareholder gains. As a result, you need to do a lot of planning. Software is key to the process, but it must be easy to use and offer feasibility, integration, and security.
Geography and demographics influence the property business model more than anything else (except the weather). Therefore, you can’t leave them out of your property management planning. If you want to get the best view of your current operations, I recommend using a suite of cloud services and APIs from IBM. With this suite, you can analyze a combination of your proprietary data with territory data.
To help you visualize your decisions for faster discovery, I propose looking at “a month in the life” of the property management cycle. At the beginning of my career in Finance, I was able to manage five multi-million dollar commercial properties in South Florida. So, I’m going to use my story as part of my explanation of how IBM Analytics solutions can help with property management throughout the month.
1st of the month in the property management cycle
Every day, we cross-check the weather with our “To-Do” list. Weather data can help you plan your maintenance ordering and scheduling. In property management, there’s outside and inside maintenance. And, planning around weather patterns helps keep your ROI balanced. For example, checking roofs in the rainy season in South Florida will wear a person down and out rapidly. And, a lot of systematic painting is done in the summer time.
Back in the day, there was a map on the wall, on a cork board, with the bay drawn out to visualize the vacancy rate. Now, we can use Watson Analytics to ask data questions about tenant mix and other things. Moreover and more importantly, Watson Analytics can provide us with the answers.
We have to know our cost per square foot. Plus, we have to know what the market is suggesting. This is the driver for Common Area Maintenance. The more vacancies, the lower the operation margin for the REIT becomes. We can ask Watson Analytics for cost per square foot.
Before you can move a tenant in, you need to quickly know the surrounding tenants. A good mix of tenants helps assure customer lifetime value, which will help you retain profitability. By contrast, similar businesses too close to one another will cannibalize your revenue.
Cognos Analytics can help you forecast the customer lifetime value. The lifetime value is simply calculated as a three-year or five-year lease agreement. Based on the claims analytics for a particular business, we can decide if we’re going to offer the space “AS-IS” with the tenant responsible for all the work.
DHCR properties: 5-day grace period
Watson Analytics is a diagnostic analytics service for smart data discovery. A flat file of our rent roll allows us to push it to any service on IBM XaaS. So, after the 5th of the month, which is when most rent payments have been processed, we have enough data for us to analyze.
Some of the questions we can ask Watson Analytics are:
- Of the leases that are near maturity, how many (expressed as a percentage) have been realized?
- How are monthly rents and past-due amounts associated?
- What is the predictive trend of businesses paying late?
- What percentage of revenue do we collect in the first 5 days?
- How much Common Area Maintenance did we collect?
And, here’s what one answer to the question of rent and past-due amounts looks like:
These questions help us prepare the administrative paperwork and begin due process.
Due process is how fair value is protected and helps keep the property occupied. This helps us set up our follow-up through the month. We want to work with our tenants to keep them in the space.
Visualizing DHCR data: 15th of the month
In this part of the month in the life, Cognos Analytics plays a big role.
IBM Cognos Analytics for DHCR discoveries and trends
Expense visualization is an important issue. Patching a roof is always cheaper than buying a new one. You can never run out of patches. However, we need to know how much time is expended on each property for roofing. Based on your geographical location, you may want to do all roofing beginning at sun up to 11 AM.
In addition, you should visualize new tenant build-outs and tracking data. There’s a series of activities that involve vendors, architects, painters, carpenters, and permit approvals that happen before a new tenant can move in. The faster you can measure your expenses, the easier it is to make discoveries—and decisions.
We can also visualize our documentation flow of any administrative processes. It’s possible to store data as JSON and skip the spreadsheet process. This accelerates your data discoveries and gets you into a position of action instead of “wait and see.”
Marketing DHCR Real Estate Investment Trusts
Cognos Analytics 11.06 will allow mapping at the city level. This allows you to visualize certain aspects of your rent roll. And based on your high performing tenants, you can do more with a marketing strategy than hanging the roadside property signage. A combination of traditional REIT ads, and a highly targeted marketing strategy for high performing business characteristics, can be derived through data visualization and discovery.
20th of the month: Visualization and IBM Planning Analytics
Perhaps you have a multi property maintenance project. Even though the work is the same, you need to quickly understand why one property is draining resources versus another. Time and labor rates are ROI creepers in REIT business. Fortunately, visualizations can help you get to the bottom of the problem. Here, Cognos Analytics describes the data by total monthly revenue and by property, including which properties are running behind.
But, that’s not all that’s happening on day 20. Properties on mortgage require detailed financial reporting to the bank. Financial instruments make the world go round. And using Planning Analytics is a great way to get an expense plan together. With Planning Analytics you can forecast:
- Production planning for tenant build outs
- Profitability and cost analysis
For more information, watch this introduction to Planning Analytics and what it can do:
All month long: Bluemix for sales surveys
We can do amazing things with surveys. What’s more, the IBM and Salesforce partnership in the coming year will offer even greater options. Nevertheless, most surveys do not include the advanced statistical analytics that IBM Analytics can provide. This is a different breed of survey that can help the overall health of the REIT and keep occupancy rates high.
Moreover, surveys are a great way to begin using prescriptive analytics in lieu of social listening research. And, if you’d like to learn more, then IBM CPLEX is a fantastic starting point if you’re looking to REIT.
No matter where you are in the month, you can try IBM Analytics products
Trying the IBM suite of analytics products is free. Here’s where you can go to sign up for trials:
Are you already using IBM Analytics in an interesting way? If so, drop me a comment and let me know.