Why Data Transparency is Vital to Multifamily Real Estate Jul 21, 2016 In personal relationships, it’s only natural to value openness and honesty. These qualities help build trust, improve communication, and limit misunderstandings and conflicts. When you translate those same positive attributes to the real estate business, it’s known as transparency. In this context, transparency means sharing data openly across your portfolio and its stakeholders. Unfortunately, very few multifamily real estate portfolios today are fully transparent. All too often, both owners and operators have limited visibility into their portfolio’s performance, not realizing how seriously this hinders growth to the bottom line. A lack of transparency can cripple an organization’s ability to make informed portfolio decisions. For example, would you rather know a few months in advance that your portfolio is on track to miss budgeted NOI, or find out you missed your numbers as the quarter closes? Of course, most smart investors and operators would prefer to know more information in advance, to make proactive changes and maximize returns. Transparently sharing data throughout an organization allows everyone involved to understand what happened last year, last month, and yesterday across your portfolio. This, in turn, helps you make better decisions tomorrow. Simply put: transparency is good for business. Fully sharing data can help real estate leaders maximize portfolio returns and avoid potential pitfalls. Learn how transparency can drive value across your entire portfolio, from investors to individual property managers. Transparency for Investors As an investor and active asset manager, your number one concern is ensuring your portfolio of properties is profitable year over year and across every stage of the asset lifecycle. Because of this, you already understand the core value of transparency. You need to know how every asset is performing in real-time, both financially and operationally. Transparency into portfolio data is the only way to fully understand performance as well as identify the opportunities for growth. However, many investors are satisfied with a minimal level of transparency into their investments. They only see an Owner’s Report or financial statement once a month or once a quarter, and really only have access to the data that is handed over by property management companies. But ask yourself: Are you sure that data is consistent and reported in a common format? How have the numbers fluctuated in the past month? How is the data trending year over year? If you don’t know the answers to those questions, your organization is not fully transparent. The value of data transparency in real estate isn’t just theoretical. The benefits are obvious and immediate, according to Matthew Goetz, SVP of Investments and Asset Management at NexPoint Residential Trust. “Transparency helps us to hold our operating partners more accountable while also enabling quicker, more informed decisions that drive bottom-line growth,” he said. Goetz is just one of many investors who have realized the power of data to drive profits and improve communication with operating partners. While not every multifamily investor has adopted this mentality yet, the trend toward transparency and active asset management is quickly gaining steam across the industry. The Value for Property Managers On the other side of the business, property management companies sometimes consider data transparency as an intrusion into day-to-day operations. Operators may think that sharing information openly is just a way for owners to micro-manage a portfolio from afar; however, delivering data directly to your ownership group may actually prevent this. Despite misconceptions, transparency enables investors to stay more informed and ask productive questions, not simply request rent rolls or traffic reports. The data won’t only reveal negative performance trends across properties — it’s also a great way to showcase positive progress. If occupancy rates are going up and revenues are increasing, property managers should want to share that information with investors immediately. And if there is a negative trend in the data, transparency can help managers intervene and make changes more quickly. Joanna Zabriski, President of BH Management, explained that transparent data enabled her team to find efficiencies across their properties. “We want to be able to see what happened yesterday on our properties, and predict what’s going to happen tomorrow so we can make the right purchasing decisions, the right staffing decisions,” she noted. Because not many property management companies think this way, transparency can also be a differentiator for your business. If you’re competing for a contract, many investors will appreciate the data transparency your company offers. Investors want to partner with a business that is using data to make smarter decisions. Transparency could be the difference between losing an opportunity to work with a top investor, and winning new business. Data Access for All Today, data is driving business decisions for firms on Wall Street as well as small family-run businesses. Many industries have adopted data-driven business practices, and are sharing company data openly from the CEO down to individual employees. The multifamily real estate industry simply can’t afford to pass by this trend in technology and ignore the massive benefits of data transparency. Data is truly only as good as the people who have access to the insights. In order for data to be actionable across your portfolio, everyone must have access to the information. Whether you’re analyzing top-line NOI or trends in occupancy rates, transparency can contribute to the success of a top level investor as well as for an individual asset manager. As industry leaders invest in more and more high-tech software like business intelligence, data will become more easily accessible and shareable. It might be hard to imagine now, but sharing data does not have to be complicated. Don’t underestimate the value of fully transparent data for your multifamily real estate portfolio. Go Recent Post Get the most accurate data to drive multifamily portfolio performance A Changing Tide: How to Calm the Waters and Drive New Technology Adoption Culture Shock: How Property Management Leaders Can Boost Employee Engagement Subscribe Tell us your email address and we'll add you to the list. Subscribe If you are human, leave this field blank.