How to Pitch Your Startup Tech to Property Management
The single best strategy to sell your real estate tech.
In a renter’s market, landlords might be more open to innovations that could draw in tenants; but in the current market with low vacancy and sky-high rent, property management is already making money perfectly well. How can you convince them that they need your tech?
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Cheryl Foil wrote a great series back in October on the importance of NOI. I wanted to follow up and add my thoughts on why increasing NOI is such a crucial value proposition for real estate tech startups pitching their tech to property management.
The real estate industry, and in particular property management, is notorious for being slow to adopt new technologies. The traditional buying or leasing process, involving brokers, tours, long negotiations, and significant amounts of of paperwork, is grueling for all parties involved. Given the current transformation of other industries by tech, it may seem strange that this particular process has remained unchanged for decades.
To understand why, it pays to look at the problem from the perspective of the landlord. Most of the time, property managers are reluctant to adopt new technology because they simply don’t need it. In a high-vacancy, low-rent environment where landlords would have to compete to draw in tenants, it might be a different story. But in a real estate capital like NYC, where price per square foot is at a record high and vacancy rates are < 3%, there is no urgent reason for anyone on the selling side to change their process.
To me that says one thing: if you have a new real estate technology, you need to be able to prove above all else that you save your customers and clients money. You need to be able to demonstrate how much the product/platform/service will cost, how much money it will save, and over what time span it will save that money.
If you can’t show that, it makes it very difficult to sell to people in the industry. In another market, cutting edge technology — like VR, for example — might warrant high sales simply because of its modernity; but that just doesn’t play in real estate, a market built on technology-less relationships and networks. A successful property manager may not want to fundamentally change their business approach, but he/she would be hard pressed to not give serious consideration to a technology that can indisputably decrease their OpEx and make them more money. Plain and simple, startups have to prove they increase the bottom line.
There’s a lot of room for new ideas in real estate. Entrepreneurs and industry veterans alike are eager to break down the barriers and make all aspects of the industry more efficient. You just have to pitch your product the right way to get in the door.
— David Wiesenfeld, Analyst