With ChatGPT, Bard, and Claude’s explosion in popularity, artificial intelligence has taken center stage as the hot topic of conversation in the business world. While the applications for other industries, like personalized product suggestions for e-commerce, custom learning programs for education, and self-driving cars, have clear use cases, how will artificial intelligence in real estate evolve and how can savvy multifamily owners and operators leverage AI in their day-to-day?
What is artificial intelligence?
At a high level, artificial intelligence is a branch of computer science dedicated to simulating human intelligence in computers. It covers a wide range of functions—some that currently exist and some that only exist in science fiction.
While there are many ways the world of artificial intelligence can be divided, it can be broadly thought of in two categories: narrow and wide AI.
Narrow AI
These are the types of artificial intelligence that exist now. Reactive AI has existed for a long time. You’ve probably interacted with Reactive AI dozens of times per week without even thinking about it. They include SPAM filters for your email, recommendations on Netflix, or the chatbot on your favorite brand’s website.
Reactive AI operates based on a set of instructions but has no memory to learn from. Previous interactions cannot be referenced in future interactions. While helpful, it is limiting.
Limited Memory AI has seen the largest wave of innovations lately—predominantly with generative AI, like ChatGPT and Bard. These AIs are working with a defined historical data set. They reference that historical data to make decisions.
Limited memory AI isn’t restricted to just generative AI. This also covers self-driving cars and virtual voice assistants, like Amazon’s Alexa.
Fun Fact: The Turing Test
Alan Turing is credited with creating the first computer. He’s one of the founding fathers of computer science theory and is famous for his test, the Turing Test. In the test, a human evaluator converses with a computer and a human. If the evaluator cannot tell the difference between the computer and the human, the computer passes the test.
The goal of AI is to pass this test—and surpass more challenging tests like it in the future. It is a huge milestone in the world of computing. So far, only Google’s AI LaMDA passed.
Wide AI
Wide AI is where we begin to step into the world of science fiction. At its core, this will replicate human behavior and thinking by understanding the needs of other intelligent entities. Put plainly, it gives computers emotional intelligence or EQ. Theory of Mind AI looks to understand and remember people’s emotions and needs and adjust to make the best experience.
There are thousands of brilliant minds working to make this possible, but the way we think and react is incredibly difficult to translate to computers. The far-reaching goal of AI is to create a fully self-aware AI model, but that won’t be available for decades, according to experts.
Artificial intelligence in real estate
There are a growing number of uses for artificial intelligence in real estate. Here are some that you can use today.
3D modeling
Using as little as a text prompt, AI 3D modeling can generate an immersive experience that allows applicants to your community the ability to tour your units from anywhere in the world. These models can be generated in moments, rather than team members spending hours in modeling software to generate a similar result.
Smart homes
Use AI to improve your residents' experience, reduce work for your onsite staff, and save money, all by implementing AI-powered smart home technology.
Many operators are already using AI to adjust environmental controls. This can be customized by person and time of day, adjusting to the perfect temperature and lighting. It can track performance to schedule maintenance if the HVAC isn’t performing optimally, and can turn down the heat or AC when residents aren’t home, lower energy consumption and save you money.
Predictive analysis
AI models can absorb large amounts of data about the current market, providing you with trends and insights into your portfolio. This can give you a leg up if you’re looking for dynamic pricing models, acquiring new properties for your portfolio, or adjusting your marketing budget to attract new residents.
Be sure, when using predictive analytics, that you’re referencing data sets created specifically for multifamily real estate—or taking the results with a grain of salt.
Applicant screenings
Understanding the true risk of an applicant is difficult—and It’s more important than ever now. TheGuarantors have seen a 164% surge in denials due to fraud in the last 18 months. If fraudulent applicants become residents, they not only negatively impact your NOI, but they create a considerable amount of additional, avoidable work for your team.
Successfully uncovering fraudulent applications can take more than the standard W2s and credit checks. Overcorrecting might mean missing out on prospective residents who are an excellent match for your community.
Vendors that rely on AI models to evaluate applicants can help you find those who might not meet traditional criteria, but could still be a great addition to your community. They can also help you uncover unlikely or unexpected fraud and remove candidates who are likely to default on their rent.
TheGuarantors relies on artificial intelligence to power its risk model. The latest risk model was built based on 2,000+ predictive variables and can predict the likelihood of renter default with an 89% accuracy rate.*
What should I look for?
If you’re ready to look for an AI service to make your job easier without losing the human touch—how should you think about evaluating a partner?
1. Define the problem
Implementing artificial intelligence for the sake of participating in the trend is a recipe for disaster, especially in real estate. Multifamily real estate is a people-first business. While AI is great for mathematical, logical, or repetitive tasks, the high EQ needed to provide great service to applicants and residents is best left to people.
One of the biggest challenges facing the industry today is employee retention. “Boreout” is a huge driver behind the growing trend of quiet quitters. Employee boredom can largely be tied back to the need to do tedious, repetitive tasks—exactly what AI is best at.
Create a better experience for your team by letting AI handle the tedious, routine tasks like crafting customized welcome notes or organizing data into easy-to-use formats. By taking the tasks they hate off of their plate and allowing them to focus on challenging, interesting projects, you’re more likely to retain talent. Best of all, by doing this you’ll let your team shine where no computer can come close—in face-to-face interactions.
Before you make a laundry list of items you’d like to outsource to artificial intelligence, just remember: there’s no one-size-fits-all tool. You’ll likely need to mix and match.
2. What is the ROI?
While artificial intelligence in real estate is meant to make things easier, it will still take time, and sometimes money, to implement.
Look for quick wins. The tools you pick should be easy to set up and maintain. Prioritize services that are either provided at no cost to you or have a significant, clear impact on your NOI. Ideally, you’ll find the unicorn that can do both.
3. Evaluate your partner
Picking the right partner can make or break your experience with AI. There are three main elements to review when making your evaluation.
Great data
Artificial intelligence is only as good as the information that powers it and how it’s trained to interpret that information. No matter how good the AI is, it’s always best to go with a specialist, with a model trained to your industry's specific needs. You wouldn’t ask your doctor to repair your car, right?
Compatibility
The first question in compatibility is: how well does this service blend with my current business? You’ll want to partner with a company that can work with your existing technology.
That being said, the world of multifamily real estate doesn’t stand still. You’ll want to make sure this partner can customize your experience to your preferences today, as well as flex to work with you through any change your company, or the industry, might experience.
Ease of use
Artificial intelligence in real estate should ultimately make your team’s lives easier. This means the service you select should be intuitive with very little work needed to get started. It should also be easy to maintain.
Great support
There is no productivity killer worse than running into an issue, needing help, and your partner is nowhere to be found. Find services that support you—and your residents—seven days a week. That support should be available to you via email and phone.
4. Use artificial intelligence wisely
While artificial intelligence as it stands today has made huge strides, we are still in the era of narrow AI. Generative AI, like ChatGPT, can’t be used blindly. Think of the copy created by ChatGPT as a first draft. Your team should always review for accuracy and tone—you still want to sound human!
You’ll also want to make sure your team knows how to use the artificial intelligence you’ve implemented. The difference between a mediocre prompt and a great prompt can mean a few tweaks or hours of rewrites.
Most importantly, if your team is using AI, make sure they’re communicating how and when it’s being implemented.
Wrapping up
The broad use of artificial intelligence is just beginning. It’s likely to change and grow exponentially as time goes on. While it might not be crucial today, it is highly unlikely that the working world will turn away from this any time soon.
If you’re curious about implementing artificial intelligence for your applicant screening process, we’re always happy to answer any questions you have. Contact our team to talk at any time.
*Source: TheGuarantors