AI in apartment market is taking over work orders, lease renewals and more

A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.

The days of landlords knocking on doors for monthly rent checks, or tenants going after landlords to fix a leaky toilet are slowly coming to an end. Technology has been stepping in to address the needs of tenants, landlords and large multifamily operators, and now artificial intelligence is turning that slow progress into a rental revolution.

Work orders, lease renewals, tours and even investor due diligence are being taken over by software and AI. As with the start of any technology, it has been largely fragmented among a multitude of vendors. The integration of all that technology is a huge opportunity for startups and the venture capitalists backing them.

One of the more mature categories for AI in the apartment space is virtual agents talking to prospective residents. This is where agentic AI comes in — meaning AI that can act autonomously and make its own decisions depending on what the consumer asks. There are still, however, just a handful of companies using that advanced level of machine learning.

AI is also proving useful on the investment side of the multifamily business, specifically underwriting and acquisitions. For example, investors looking to purchase a large property have to go through all the leases and load those into a rent roll.

“If you’re buying a property that hasn’t been professionally managed, where those aren’t all loaded into some market-leading software product, somebody may have to manually go through all those leases and capture all the information. Well, AI is great for that, right?” said John Helm, founder and partner at RET Ventures, a fund focusing on AI in both real estate and rent tech.

Instead, according to Helm, you can feed leases into an AI model, and it will spit out a summary of all the data the investor needs. They can then load that directly into an underwriting model and value the property.

RET Ventures said it doesn’t rely on endowments or pension funds for its capital, but instead the consumers of the products of the companies they invest in — so-called strategic limited partners.

“We have 60 multifamily operators that have about over 3 million units in our fund,” he said.

AI can also help with property development and accounts payable. Multifamily developers will often have multiple vendors, from landscaping to plumbing to heating. Many still use paper invoices.

One of RET’s portfolio companies is PredictAP. It takes all those invoices, reads them and then repopulates all the necessary data into the company’s payables system to make the process and payments more efficient. None of it needs to be manually coded by a human. 

Tyler Christiansen likens the multifamily industry to car dealerships. Every renter interaction was siloed to an individual property. As CEO of Funnel, which is backed by RET Ventures, his aim is to streamline the apartment marketing and leasing process, “enabling multifamily professionals to generate more profits, efficiency, and insight across their portfolios,” according to the company website.

Funnel works with large apartment real estate investment trusts such as Camden Property Trust, MAA and Essex Property Trust, as well as Cortland, which owns 90,000 apartments. Christiansen said that rather than the renter’s relationship being with the community, the renter’s relationship is really with the brand. He calls that “centralization” in the industry.

“And then AI, what makes it unique within Funnel is that rather than automating interactions simply at a community level, we’re really opening up automations across the portfolio,” said Christiansen.

One example would be if a tenant is not renewing a lease at one community because they are moving to a different market, Funnel’s AI system would open up the possibility of cross-selling that person into another client community.

Despite the progress, the technology is still in its infancy, and it’s expensive. Apartment operators and investors are in the experimental phase. It remains to be seen how much they will invest.

Plus, the multifamily industry is highly fragmented. There are close to 50 million rental units in the U.S., the majority owned by small, often mom-and-pop landlords. The largest apartment REITs own roughly between 50,000 and 100,000 units each, with a few larger private operators, like Blackstone and Greystar.

“I guess the challenge is going to be, probably in the next several years, really sifting through everything and understanding where there are real businesses that could grow into this. You’re still seeing a lot of these tools just starting to get deployed,” said Helm.