Real-Time Tension
Given such scenarios, third-party managers and software vendors are questioning the value of providing data in real time, especially given the increased workload and high cost of doing so.
“From a third-party perspective, we see clients that want data all the time. We go through a very laborious process to feed it to them, but then you never know what they actually do with it,” says John Gallagher, senior vice president of property management at Chevy Chase, Md.-based Polinger Shannon & Luchs Co., an owner and third-party manager of approximately 6,000 units.
Hard-dollar costs for such efforts are difficult to ascertain, but experts estimate providing true, up-to-the- minute data can cost anywhere from five to 10 times as much–or more–as feeding it on a daily or weekly basis. That’s particularly true in a Web-based setting. “The cost can become fairly significant, especially when you’ve got 50 or 100 properties and everybody’s banging on the system to get information at the same time,” says Nevel DeHart, executive vice president at First Advantage SafeRent, a Rockville, Md.-based provider of multifamily screening and risk management software. “The horsepower you need to drive that engine gets magnified geometrically.”
More fundamentally, software vendors and third-party managers question how useful up-to-the-minute (and ever-changing) information is for investors when making longer-term, strategic investment decisions. The benefits of real-time data for managing a property are undisputed; accurate delinquency data and vacancy rates, after all, can help a manager collect rent more effectively or launch a timely marketing campaign. But there is such a thing as too much information. “You can get so mired in the details, you don’t do anything. It can lead to paralysis,” Gallagher says.
At Richmond, Va.-based REIT United Dominion Realty Trust, which owns and operates more than 74,000 units nationally, chief information officer Patrick S. Gregory says the application of real-time data in the apartment industry is fundamentally different than in other businesses.
“This isn’t Wal-Mart,” Gregory says. “Our inventory doesn’t turn over daily. In fact, it might only turn over one or two times per year. The clear trend toward Internet sales and leasing makes it desirable to have apartment inventory and pricing information available on a real-time basis, or on a daily basis at worst. For other information, I think you’ve got to figure out what the cost, and value, of the real-time data is.”
