DALLAS, TX - The use of predictive analytics (complex mathematics to determine or forecast probability outcomes) is hardly new to multifamily operations. For operators and property managers who have implemented revenue management systems, or have relied on credit scoring during applicant screening, predictive analytics is already built into the operational platforms and technologies used to help qualify residents and help set optimum rent terms.
“Predictive analytics is and always has been a component of revenue management, and the same for credit screening, and they’ve both been tremendously successful technologies in our industry,” says Rich Hughes, vice president of strategic revenue systems for YieldStar & MPF Research, divisions of Carrolton, Tex. based RealPage. “While it’s only been in our lexicon for a short time, predictive analytics is basically using our understanding of the past to make actionable management decisions about the future.”
And while systems including revenue management and credit screening rely heavily on renter and rental market data, there are hopes that macro data sets external to multifamily might soon help to optimize operational processes and technologies even further. Job market data, housing data, even seasonality data could feasibly be used within complex system algorithms to better forecast absorption, renter demand, and propensity to pay.
“Those types of macro data sets are ultimately likely to have more of a strategic impact than serving as data inputs to help tactical tools,” says Amar Duggasani, executive vice president, strategy and business development for Alpharetta, Ga. -based Rainmaker LRO. “Particularly as they have a larger impact and longer horizon as compared to transactional microeconomic rental data. Where they could have an interesting impact is at the local level, and how localized data on employment and other macro trends can be used to help demand forecasting remains an exciting proposition.”
Predictive analytics might also hybridize multifamily job functions and operations by combining, say, marketing data and rent velocity with energy usage patterns to help save on operational costs while increasing resident satisfaction. “That could evolve to an idea where we’re not simply optimizing rent now,” says Hughes. “We’re optimizing the lifetime value of a consumer, which is a really cool idea.”
Interested in learning more about the impact of predictive analytics to multifamily technologies and operations? Hear Duggasani and Hughes as well as Lead-to-Lease Senior Research Engineer Shishir Bashyal speak on the Predictive Analytics and Business Intelligence panel at the 2012 Apartment Revenue Management Conference, Oct. 15-17 at the Omni Hotel Dallas. Click here for full registration and program information.