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TC AM 007 - What Multifamily Can Learn From Carvana

Learning by watching what other B2C groups do well

Chris Arnold

Mar 18, 2023

Good Morning 👋 – Chris here.

Welcome to the Transforming Cities A.M. Edition.

A simple Saturday read in under 5 minutes.

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Transforming Cities Live Announced

On the next Transforming Cities Live, I can't wait to dive into the deep end with the insightful and witty Dakota Courville of ITEX. 🐻

We'll be swimming into a few areas of his expertise: sub-market growth, affordability (what is "affordability" today?), and how consumer demand impacts multifamily marketing.

Based in Houston, Dakota develops programs to locate strategic opportunities for ground-up build-for-rent and mid-rise developments.

Join us on March 29 at 11AM MST for a live discussion on these development topics, plus a Q&A with Dakota.

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What I'm Reading

I've been reading a chapter each morning from The Untethered Soul by Michael Singer.

It provides practical advice and exercises to help you release negative thoughts, emotions, and patterns that hinder personal growth.

He discusses the importance of staying present in the moment, acknowledging and accepting our thoughts and feelings, and letting go of attachments and inner conflicts that keep us from being truly happy.

In other words, it's been a great reminder that we're in control if we let ourselves stay in control.

Even when, like in my case, my 2-year-old has me feeling otherwise!

How does multifamily relate to Carvana?

The month after my son was born, we decided it was time to get a newer, safer, and more efficient vehicle for the little one.

I had my marching orders and began searching: low-ish miles, less than 10 years old, and deal-finding as much as possible.

Living up to a Colorado stereotype, a Subaru Outback popped up at a local Audi dealer a mile away.

It was, of course, priced too high.

Otherwise, it was in excellent condition, and it checked all the boxes. I spent the next 10 days negotiating with the rep as both I held out, and he hoped someone would walk in and take the car at the asking price.

Finally, though, we got the car.

And I thought to myself, "that was brutal."

This week, a piece by Tudor Manole keyed off of his recent experience purchasing a vehicle from Carvana. Given the story above, it caught my attention.

Like most marketers, we're always trying to discover new ways to think about and innovate within multifamily by looking outside of multifamily. It's an essential mindset for successful growth in any industry.

His article, in part, speaks to Carvana's approach to transparency*, centralization, and low-touch sales experiences can help multifamily companies reduce burdens in a few ways:

with onsite leasing teams
by increasing lead quality and conversion rates
in reducing the need for in-person showings
with flexible payment options
via better move-in experiences

However, he notes that multifamily companies rely on multiple, often siloed solutions, which can hinder the renter experience.

For all of you reading, you already know this.

To me, it's a deep well. And the "solution" will eventually involve collaboration between industry technology suppliers.

If we break this down by its parts, we can see that we're talking about a few critical barriers, like:

an easy way to scan, source, and purchase an apartment
access to updated unit-specific photos
low friction purchase ("financing") options
a move-in gameplan that reduces tension for everyone
an automatic follow-up that encourages communication

The list is overwhelming.

It screams, "there's an app for that," but otherwise, it would leave most peoples' heads spinning.

So what is the solution? What can we learn here?

My head immediately goes to segmenting the biggest wins for the renter and working my way backward.

What will move the needle for them the most?

A more seamless purchase experience? Media-rich viewing opportunities? A simple and clear move-in and welcome rollout?

When unraveled in a "parts of the sum" mindset, it becomes a little easier to chip away. But, for better or worse, it's going to remain a company-specific challenge for now.

So ask yourself, what is the biggest source of friction for residents that either grumpily sign a lease or go elsewhere?

If it's media, build better brand and web experiences. Invest in unit-level media, and plant a flag in a UX that dominates your market(s).

If it points back to your leasing team, ask yourself how to refine your team's structure to be a powerhouse in answering questions, finding solutions, and providing options.

To be fair, Carvana has been infused with cash for over a decade and has made timely and strategic purchases to improve its product.

Multifamily isn't a single entity waiting for a surplus of cash, but it can certainly look to what other B2C fixtures are doing to improve the process and reduce time to sale.

Because, after all, the ongoing aim of a more frictionless sale = increased revenue and better ROI for all involved.

*I would be remiss without mentioning that Carvana doesn't have a squeaky clean record. Numerous states have shut them out for illegal titling practices that have misled buyers. It ain't all sunshine and roses at Carvana, especially in the public markets, starting in Q4 2021.

But to use this experience as a representation, I think, goes a long way to get us critically thinking about what multifamily could be to the future renter.

"Do as I say, not as I do," may be appropriate in the tale of Carvana.

Thankfully, regarding tech and renter experience, the story of the multifamily industry is just getting started.

That's all for this Saturday.

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