Last modified on July 30th, 2021
By Megan Eales Monroe

Smart home devices are growing in popularity all around, but recently, their incredible benefit to the property management industry has become clear. Although so far their use has been largely limited to new construction or luxury apartments, recent forces have sped up their adoption across many different types of real estate portfolios.

Aiming to appeal to today’s tech-savvy residents, developers and operators are using more smart home systems to deliver greater value to prospects. Both the remote work movement and tangible cost savings are also driving this trend. Self-guided tours, smart parking and remote control access – which facilitates more efficient move-ins, move-outs and fulfillment of maintenance requests – are just a few hallmarks of the new smart home and apartment. And tech-savvy renters are willing to pay a premium for these conveniences.

Staff at property management companies also benefit from smart home systems. Remote access allows teams to manage properties from afar and reduce time spent on site, while automation reduces excess costs, such those associated with double data entry. Eliminating mundane, repetitive tasks positions teams to work the job they want. Workers gain enhanced flexibility and are better able to focus on interesting tasks and produce creative solutions, such as those creating team and community building, boosting overall resident acquisition and retention. Join us on the Top Floor as we discuss how smart home technology is facilitating human-centered change within the property management office, apartment and home.

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Meet our guests:

Mitch Karren

Mitch is a co-founder and currently serves as the Chief Product Officer at SmartRent. He leads the product vision, long-term strategy and day-to-day platform development and delivery. His teams are responsible for empathizing with our customers, solving problems and launching high-value outcomes and experiences.

Prior to SmartRent, he led product development at Colony Starwood Homes where he designed their custom end to end software platform and directed the first ever large scale deployment of 25,000 smart home systems in the rental industry. Earlier in his career, he worked in real estate development, residential brokerage, property management and has built several mobile applications. He holds a BS in Housing and Community Development from Arizona State University and is a Licensed Real Estate Broker in Arizona.

Cyrus Claffey

Cyrus Claffey is the Founder of ButterflyMX — a property technology company focused on making property access simple. After business school, Cyrus began his career in M&A banking in the tech sector. It was from this perch where he first became interested in the proptech industry. Upon noticing that the entryway of many multi-tenant buildings restricted access for building staff, residents, and visitors, he created ButterflyMX to simplify property access by enabling people to use their smartphones to open and manage doors & gates at the property. Cyrus received his MBA from The University of Chicago Booth School of Business and his undergraduate degree from Macalester College. Cyrus lives in Brooklyn, New York.

Episode transcript

Megan: Quick question before we dive into today’s episode. When was the first smart home device created?

Did you guess the mid-nineteen-sixties? A few sources say the first smart device was the ECHO Four, an enormous, heavy kitchen gadget built in 1966 – but never made it to market. Not to be confused with Amazon’s Echo, the 1960s invention was reported to control a home’s temperature and turn appliances on and off – features that are pretty basic compared to today’s smart devices.

Today’s modern iteration of smart home devices have been around for nearly a decade. They’re growing in popularity all around, and now, their incredible benefit to the property management industry is clear. Although so far their use has been largely limited to new construction or luxury apartments, recent forces have sped up their adoption across many different types of real estate portfolios.

What is influencing this growing interest in smart home technology? What can today’s smart home systems offer? And, how does smart home technology change property management workflows to make life better for onsite teams such as maintenance and leasing, while also improving the resident experience — essentially, creating space for more human-centered changes?

Helping us answer these questions are two founders who have each started smart home technology companies that are now major players of the industry: SmartRent and ButterflyMX. Up first is Mitch Karren.

Mitch Karren: My name is Mitch Karren, I’m a co-founder and currently serve as a chief product officer at SmartRent. And SmartRent is an enterprise home automation and smart building platform purpose-built for the residential housing industry.

Mitch Karren: About a little over a decade ago … prior to getting into technology, I actually sold real estate as a real estate agent and I actually sold and leased condominiums, right after the market crash of 2008. It was a very busy time in Phoenix … I came across a lot of condominium buildings that were starting to become rentals. And at any point in time, 25% or more of the units in the building, were actually on the market either for sale or for lease. And so there is actually times when I would try to show apartments or condos, and in the building there was a designated area for lockboxes. Everybody is pretty familiar with what a real estate lockbox looks like.
And so you can just imagine in a building of four or 500 units over a hundred lockboxes can get very difficult to try to find the right one number one, and also ensure that the key is actually in the lockbox … Just getting those keys alone, not only took me upwards of 15 minutes to a half an hour to try to find the right lock boxes, but it was a 50/50% chance that the key would actually be in there. And I could actually show my client the unit.
It was around then when I started just thinking about, how can I make this better? There’s got to be a better way to do this. I think it was like the next year, both Yale Lock Manufacturer came out with their first keypad smart lock, that could be remotely controlled through a gateway and by your phone. So you could actually remotely grant access. And it was at that point in time, I was like, okay, this has got to be the future. There’s no way lockboxes can survive. There’s got to be a better way.

Megan: Smart home systems, like access control and smart parking are just a few of the tech solutions offered by SmartRent. As the industry grows and “smart home” comes to describe more and more tech, I asked Mitch: what does the term actually mean today?

Mitch Karren: It’s a great starting question, because there is a bit of nuance throughout our industry. I don’t think there is a standard definition fully, yet, that’s been adopted by the industry. But I’m happy to share mine, and mine is a home – and this can be a single family home or an apartment in an MDU setting obviously – that’s equipped with several components, smart devices, such as locks, thermostats, lighting controls and sensors that are all connected to the internet, online and can be remotely controlled by a phone, a computer, obviously, as well as voice controls.

Megan: As we said at the top of the episode: at this stage, smart home systems – so the internet-connected door locks, thermostats and other home fixtures Mitch mentioned – are mostly found in higher-end buildings. Mitch wants to change that; an industry-wide, human-centered shift he calls “democratizing smart homes for renters.”

Mitch Karren: For a lot of renters out there, there may be various reasons why you can’t get a smart home system. They might be too complicated for you to deal with. They might be too much of an upfront investment, especially if you’re not renting for a long period of time. Renters aren’t in their residence permanently.
And so anytime the renter is expected to make an upgrade, they’re not going to necessarily have that same mindset of investing like a homeowner would. So just starting off the bat, the fact that we’re offering this all to renters, anytime you move into a property that has smart enabled is a huge win.

Megan: A huge part of SmartRent’s business is D-F-Y, or “done for you,” the more user-friendly cousin of D-I-Y. Under this philosophy, SmartRent performs a majority of the upfront leg work, so that renters aren’t required to set up their own smart home systems, and property management staff don’t have to deal with complex installation and set up. When renters move into a SmartRent enabled building, they’re turning the key on their own, personal smart home environment, which is waiting for them to arrive.

Mitch Karren: So, from the onboarding experience of a resident, moving into one of our communities, the minute that they move in, they don’t have to do any device set up themselves. The minute that they move in, they get access to their building. They get access to their apartment unit all digitally, and they can start using their devices without ever having to actually touch anything. So with this DFY concept done for you is a huge benefit for renters.

Jumping into the more obvious functionality, the day-to-day functionality, access control is just absolutely paramount. And by far the most popular functionality in our system. Being able to not have to deal with keys as a resident anymore, is absolutely tremendously helpful.

Mitch Karren: Being able to grant guest access, so if your friends or family, or your dog walker, or a cleaning service need to get access, you don’t have to leave a key outside your apartment unit or home anymore. And lastly, being able to monitor remotely. So if you left your door unlocked and you went to work, or you went to the grocery store, you can have a peace of mind because you can lock it remotely and know at any given time the status of your door lock.

Moving beyond access, from the climate and HVAC perspective, there’s great benefits …

Mitch Karren: Number one, you can create energy efficient schedules. If you’re leaving for work or you’re leaving for the weekend, you can make sure that your thermostat is at an optimal level. And second to that, you can also opt into energy savings programs. So most utility companies out there offer a variety of rebates. So if you opt into a demand response program, during the middle of the summer or the middle of the winter, you can actually not only save money, but you can help reduce your carbon footprint and stabilize the grid.

Now there’s … other benefits such as lighting controls, shades, plug controls and voice assistance.

Cyrus Claffey: Look, to really frame everything you kind of need to step back a little bit.

Megan: Cyrus Claffey is the founder of ButterflyMX, which makes property access software and video intercom devices, or what Cyrus calls “smart intercom.”

Cyrus Claffey: There are really kind of three big trends I think driving a lot of what’s going on with prop tech, at least in that again, the physical and the digital world, because prop tech is kind of a vast category … and then there are companies like ourselves which are dealing with this interaction between the physical asset and kind of the digital and how people kind of interact with the physical assets from their smartphones today.

So when you step back there are three macro trends, as I said. So first is … it’s really the adoption of smartphones by residents, by property managers, really everybody, and essentially what does that mean? It means we have a computer in our pocket that’s connected to the internet. Wow. That really opens up kind of a whole world of possibilities, and that’s what we’ve seen. You can basically do everything from this, listen to music, do your banking, buy a plane ticket, date, as well as control doors in a building. So that’s kind of the first thing.

Second thing is we live in this on demand lifestyle. We want everything now. No, not now, we want it yesterday, right? It’s like we’re so well trained for that …

So that’s kind of the second thing, it’s like this really on demand lifestyle that we’ve really become accustomed to and all this infrastructure has now been built out to accommodate that …
So really what it is is through the smartphone people have the means to order services. There’s all these companies creating a supply of services, and then there’s a tremendous demand for all of this functionality now that it exists. The only way a building or really the entire economic ecosystem can deal with this is through technology platforms. That’s the only thing that’s scalable enough, or in our case bridges that physical world divide of I need to get that package into the building from this digital service that I’ve ordered, and I can use my smartphone to facilitate that.

Megan: As Cyrus points out, while the economy is primed for smart devices, actually creating something that residents want to use is another challenge entirely.

Cyrus Claffey: Once you actually developed a functionality that you think the residents or the property managers may want, or you’re delivering that functionality in a way that’s user friendly, is it a good user experience meaning is it easy to use? Is it easy to navigate? Or does it become kind of a pain to actually use this functionality? If it is, forget about it. That’s a lesson I learned years and years ago doing whole building infrastructure design. We would create these amazing amenity spaces which were great for the lease walkthrough, but nobody actually ever used it once they moved in because they were overly complicated.
So I think one of the really cool things you’re seeing in today’s world is really how all the market participants I think have that as part of their DNA. They’re really focused on a good user experience because they know if that’s the case, you’re going to use the platform.
So in terms of residents, I think when you step back and kind of think about today’s consumer profile or resident profile, there’s a lot of millennials in the mix, obviously today, they kind of seem to be driving the bus in terms of how people think about what they want to develop in terms of platforms and so forth. But when you look at them, it’s like look, millennials don’t want to feel controlled, they want to do it when they want to do it, on their terms. They don’t want to be constrained in terms of how they live their lives, don’t tell me, I’ll tell you. So they don’t want to be waiting in their apartments for the delivery guy to show up, for the dog walker to show up, or back in the day it was like you’ve got to wait for the cable guy to show up if you want your internet services. They’ll have none of that.

Megan: Alright, so to summarize: several trends are converging around smart devices and driving their popularity. Not the least of these trends: younger generations’ preferences, and smartphones, which empower residents to access greater and greater services. Property managers too are empowered by these devices and development. So how can smart home technology improve the lives of on-site staff?

Cyrus Claffey: My on site staff is spending all that time dealing with handing out the key. Same thing with package delivery. We’ve all heard those stories, we’re just way more aware of that. As well, why, because the building was trying to accommodate the needs of their renters. So the whole thing I think about cloud based, smartphone based access platforms is that you can get rid of all that. You can basically free up the on site team’s time to do the more higher value add things. What everybody is trying to think about whether you’re an operator or a technology company like ourselves is what are these processes that are recurring, because if it’s recurring I can automate it, that take up the on site staff’s time, or take up the resident’s time. And so these are the things people key in on and go, listen, when it comes to electronic access or smartphone based access platforms, this is a perfect opportunity to kind of automate that process, give back the property management team their time, and actually do it in a way more secure, efficient manner as well because everything is documented.
Okay, the person came, they got the key, I know that. They went up into the apartment, I get an alert that they came into the apartment, they walked the dog, they come back to the apartment and they drop off the key. I get alerts kind of each step of the way so there’s actually way more of an audit trail than you would typically have than if everything was just being done with people like, “Hey, hi, nice to see you, can I get the key again?” So there’s a much higher level of security around that.
I think the other thing is when you start to look at people’s time, giving back that time, what does that allow the on site staff to do? Obviously they can focus on the more higher value add activities which are going to drive retention. And if you can do anything to reduce retention which I think is anywhere from 30 to 50% in a year, that means 50% of the current residents are going to be moving out, anything to reduce that number you’ve really hit a home run. So give back the on site team their time so they can focus on higher value add things like retention, and everybody’s going to be happy, it’s going to be a win-win-win situation, right?

Mitch Karren: A lot of them coincide with what I said on the resident benefits perspective.

Megan: Mitch Karren again.

Mitch Karren: But really when you think about the user journey of property managers, it really touches virtually every day-to-day process operationally and really helps streamline almost everything that they do day in day out and not just leasing but maintenance as well.
From the property management perspective, access control again is just absolutely paramount. Getting rid of your keys on property, if you think about having to manage hundreds or thousands of physical brass keys, that just becomes a lot to manage, not just for your own staff, but giving out keys to vendors, or giving out keys to guests and whatnot. It is a very difficult thing. So being able to digitize that entire management of access, from the leasing perspective, from the maintenance perspective is just absolutely paramount.
Work orders and automatically generating access codes for work orders is extremely beneficial to the maintenance staff. Historically, the maintenance staff drives around a golf carts or is running up and down the elevator hundreds of times a day, checking keys out, grabbing keys, making sure vendors have keys.
And then, moving into the vertical, urban high rises … I would say the biggest benefit, the more vertical you’re getting, is in the asset protection … and any time a piece of equipment in a high rise asset has an issue, whether it’s an appliance leaking, a sink leaking or an HVAC system having an issue, the potential catastrophic that that can cause is far greater than obviously a garden style property. And obviously a single family homes.

If you’ve got a leak on the 10th floor and it goes unnoticed for hours or days, just think about the pandemic in New York City. Lots of people left their buildings to go to go to different places. New York city had a temporary exodus, and there was leaks in these buildings and some of them went unnoticed for six months. And the more floors that that impacts. We’re talking millions and millions of dollars worth of damage.

On the climate perspective, very similar benefits are given to property managers, not just for their common areas of being able to control schedules on common areas, as well as, opt in to energy rebates and common areas, but automatically put vacant units in a special setting that optimizes energy management while the unit is vacant. So the minute that the resident moves out, we have logic that can set the thermostat into this eco mode or an auto mode. So instead of having to actually physically go to the thermostat to make sure that it’s on the right mode, it’s automatically done for them. So there’s a huge amount of benefits on the HVAC side as well.

Megan: SmartRent’s story begins with this very familiar scene. Because not that long ago, Mitch too, was hustling keys up and down flights of stairs.

Mitch Karren: About a little over a decade ago … prior to getting into technology, I actually sold real estate as a real estate agent and I actually sold and leased condominiums, right after the market crash of 2008. It was a very busy time in Phoenix … I came across a lot of condominium buildings that were starting to become rentals. And at any point in time, 25% or more of the units in the building, were actually on the market either for sale or for lease. And so there is actually times when I would try to show apartments or condos, and in the building there was a designated area for lockboxes. Everybody is pretty familiar with what a real estate lockbox looks like.
And so you can just imagine in a building of four or 500 units over a hundred lockboxes can get very difficult to try to find the right one number one, and also ensure that the key is actually in the lockbox … Just getting those keys alone, not only took me upwards of 15 minutes to a half an hour to try to find the right lock boxes, but it was a 50/50% chance that the key would actually be in there. And I could actually show my client the unit.
It was around then when I started just thinking about, how can I make this better? There’s got to be a better way to do this. I think it was like the next year, both Yale Lock Manufacturer came out with their first keypad smart lock, that could be remotely controlled through a gateway and by your phone. So you could actually remotely grant access. And it was at that point in time, I was like, okay, this has got to be the future. There’s no way lockboxes can survive. There’s got to be a better way.
Our niche starts with our story. And the story is that myself and the rest of our founding team aren’t just technologists … Our COO, his first job out of college was a leasing agent. He worked his way up to an executive at a property management company. Our CEO owned a property management company himself. And so we’ve all sat on the other side of the table. We’ve all actually been operators ourselves. And so when we think about building the products, deploying the products, whether it’s hardware, software installation services, the level of empathy that we have is just higher. It’s on a whole new level, than our competitors. When you think of empathy, it’s about solving problems for customers. Simply put, we solve the problems for people faster, and we anticipate people’s needs for what they want next.

And when we started Smart Rent, we knew from the beginning, number one, we just had to be very flexible about what hardware we supported. We couldn’t just support one door lock. We couldn’t just support one thermostat. And from a connectivity standpoint, we also had to be very flexible. It couldn’t just be one internet cellular carrier. It couldn’t just be cellular. We had to also support wifi and ethernet because every building has something different. So it was a hyper focus initially on just platform flexibility. That was the biggest number one for us.

Number two, was serving every property, doing a very, very in-depth survey of the door locks, the thermostats, the wiring, the building networking systems. A lot of our competitors, just they don’t survey property as well. And you just run into issues and I can’t emphasize enough how much that’s helped us. There’s still surprises that do come up every time. Every construction project is always a surprise, but we’re able to minimize that. And that’s allowed us to deploy at scale because we’ve surveyed properties and we’ve been upfront in terms of our flexibility.

Megan: On top of doing more detailed property surveys, which allows SmartRent to be nimble and better prepared to respond to obstacles, their system is cloud-based.

Mitch Karren: And one of the biggest benefits to a system being fully cloud-based is you can make updates to the system regularly, whether that’s mostly on software, but also on device firmware, things are constantly updated and constantly getting upgraded.

Megan: Within their corner of the industry, Cyrus and the team at ButterflyMX also have their sights set on the future and are pushing the boundaries of smart home systems.

Cyrus Claffey: So we’ve been undergoing this kind of build out process and we’re releasing all these new products like self guided touring, like a keypad for the amenity spaces. We’ve also integrated with door locks now to provide this end-to-end solution, because that really allows people to get the full benefit of the value prop, which is if you can control every aspect of the doors in this building, what kind of cool services could you build on top of it that are going to make life more convenient, give you more control, not have you sit in your apartment, but be able to be wherever you want to be but still available yourself of all these different services and the value they provide you as a consumer. So that’s really the mission that we’ve been on really from day one, because for us the intercom was the starting point, but it was really in the back of our minds we had this eye on the future which is eventually you’re going to want deliveries into your apartment, you’re going to want things in your apartment.

Megan: Of course, no discussion of smart devices is complete without addressing user privacy. So how does SmartRent tackle what’s often a sensitive issue?

Mitch Karren: It’s a great question. And we think of it as, if there’s activity and there’s events happening inside the actual home or apartment unit, most of that is off limits. We do track it obviously and display it for the resident, but it’s not stuff that we share. We’re not sharing every time you unlock and lock your apartment door. We don’t necessarily care about that, property managers don’t care about that. If there is an issue related to maintenance, devices’ batteries are low, the thermostat reports a very high or low temperature, or the leak detector obviously reports a leak. Those are issues, and those are data and events that happen inside the unit that we will share with the property manager, because that’s related to asset protection.

Mitch Karren: Again, our system is not only designed to make residents be happier with a smart home system, but it’s to also protect the property too. If a leak gets detected or a unit is too cold or too hot, we’re going to alert the property staff of that issue.

Megan: Human-centered change is a team effort. Which is why SmartRent and ButterflyMX have partnered with AppFolio Property Manager Plus to build integrations that will benefit property management companies, their staff and – of course – their residents.

Cyrus Claffey: So this is really the future I think in terms of what we’re doing right in the space. It’s like merging in and integrating with all these other platforms that people are using to facilitate that good outcome at the end of the whole workflow. And in terms of AppFolio, so we’re really excited that we’ve completed this integration with AppFolio, and what it means is we’re giving time back to all the buildings that are using AppFolio and ButterflyMX. The reason for that is before this integration, if you had AppFolio as your property management system, and you had ButterflyMX at your building, every time somebody moved in or moved out, you would have to go into ButterflyMX and add or delete that resident, depending on whether they moved in or out. Now with the integration between our two companies, whenever you’re adding somebody into AppFolio, into the rent roll, you include their move in date and their move out date, and so that automatically gets ported over into ButterflyMX so that the building directory on the touchscreen at the front of the building is automatically updated without the property manager needing to do anything. When you think about that time savings, kind of gives back time to them so they can do these other, more higher value add things that keep the residents happier.

Mitch Karren: Smart Rent and AppFolio, we’re here to make our customers better people at what they do.

Megan: Back to Mitch at SmartRent.

Mitch Karren: And to get into specifics, we integrate several different datasets with the property management systems. And I’ll speak specifically for AppFolio. And the first dataset we pull is the property and unit data. And so when we’re essentially and starting to install our smart home systems, we upload all that property data and that unit data into our system. So it essentially builds the architecture, that core infrastructure layer of that property.

Mitch Karren: Second, we pull in the resident data, which is paramount for not having to do double data entry and worry about duplicate data and poor data entry. So we pull in the resident data, we sync that and we sync all of this data in nearly real time. And then the magic really happens when we actually do a move in, and a move out. And so the move in workflow is complicated logic, but it does a lot of amazing things. So when you actually move somebody in the AppFolio system, it triggers our workflow in Smart Rent to do several things. It essentially gives the resident immediate access to the building.

So if they’ve got a credential for their perimeter gate or the lobby door, the elevator, the common area doors, whatever doors you want to give them to it immediately gives them a credential for that. It gives them access to their apartment units. So it gives them access to the smart door lock in their apartment unit or home, and then it gives them access to their smart home system.

Again, this is all automated through that workflow. And so from an onboarding perspective … you can do the remote work, you can do the remote move ins now. And the resident gets all the stuff, all the functionality immediately when you click that button and no additional button has to be pressed in our system. On the inverse side, when you go to move somebody out, the opposite happens. All the resident credentials get removed. You don’t have to worry about lingering fobs or lingering credentials, all that’s automatically wiped from the system. So they don’t have access to the unit. They don’t have access to the building there. Their smart home account is also deactivated. So they can’t keep controlling the thermostat, or lights or whatever. And the unit also goes immediately back into a vacant state. And you can create your customized vacant state. So your thermostat can be set to a specific automation or schedule, your lights can be also scheduled or are automated based on whatever setting you want, your staff immediately regains access as well. So as soon as you move that person out AppFolio, the staff immediately gets their access, and the unit goes into vacant mode and no one actually has to touch any devices. It’s completely all automated on the software side.

So again, you can really just start to visualize and imagine how much this actually benefits the operational workflow. Let’s talk about work orders for a minute. We also sync in all the work orders, whether it’s created by the property staff, for things like a routine inspection, whether the resident submits it or our system obviously creates the work order. And we automatically give access, temporary access for those work orders for the staff. So the staff doesn’t have to go into our system or anywhere to create the code. It’s automatically granted to them based on that work order happening.

So again, when you’re thinking about maintenance technicians and everything from a routine work order to an emergency work order that comes up, they don’t have to maneuver all these different software systems. They’re just getting access codes as soon as the issues arise, and they don’t have to go back to key track. They don’t have to go back and get their keys and whatnot. Everything is completely streamlined from that instance … So we’re really hitting several major points. We’re hitting leasing, we’re hitting resident move-ins and move-outs, we’re hitting work orders. There’s just a ton of benefits. And again, it all comes back to solving problems and making our customers better at what they do.

Megan: This idea – streamlining property management workflows to improve both the on site staff experience and the resident experience, is something that we bring up all the time on the Top Floor. Smart home technology, when coupled with the power of a comprehensive property management system, is another great example of how technology really “opens the door” for human-centered change – pun intended.

Special thanks to Mitch Karren of SmartRent and Cyrus Claffey of ButterflyMX. We at AppFolio are thrilled to have partnered with these two companies on the forefront of smart home innovation. We’ll link to their websites in the show notes. And thank you for joining us on The Top Floor. We’ll see you next month with a new episode.