In January, tech-driven hospitality startup The Guild acquired CREA Management, the property management division of Cypress Real Estate Advisors, which operates 5,000 units in four major markets. Then, in March, proptech provider Alfred reeled in Charlotte, N.C.–based RKW Residential and its 30,000 units across nine markets in the Southeast.

These two deals likely won't be the last marriages between proptech and apartment management companies. For many reasons, these unions make sense: The tech provider gains access to properties and the manager gets an injection of capital and expertise in what is becoming a proptech arms race for the best technology to attract residents and operate their assets more efficiently.

But despite the upsides, there could be a potential hiccup lurking for proptech providers that buy apartment management companies. 

"It can make sense in terms of having systems to be able to increase on-site productivity, but it also has a huge downside," said Jay Lybik, national director of Multifamily Analytics for CoStar Group. "Other property management companies could see you as competition and not buy your products."

Nevertheless, Austin, Texas-based The Guild is actively identifying property management acquisition targets, according to co-founder and CEO Brian Carrico — particularly companies with urban portfolios that already incorporate short-term stays.

"We're specifically looking for other companies that do have a real commitment to service and resident experience but perhaps don't have the tech-enablement component or the access to capital to do tech enablement," Carrico said.

Alfred is also open to other acquisitions, according to Marcela Sapone, the New York City-based company's co-founder and CEO. "This [RKW acquisition] is an important move that allows us to expand both footprint and offerings," Sapone said. "We're going to learn a lot in the coming months."

A clean fit

Owning an apartment management company allows for broader adoption of a tech innovator's products, which range from apps that allow operators to manage resident communication, on-site operations and maintenance to programs around payments and amenities and allowing residents to book apartments and request services.

By buying RKW, Alfred sped up the integration of its operating system and also expanded the company's footprint in surging Southeastern markets. 

"By owning a management company platform, Alfred can learn, innovate and elevate the rental experience for all – owners, operators and residents," Sapone said. "This will inform ongoing investments in AOS [Alfred Operating System] and other services that benefit the entire ecosystem around rentals."

The coronavirus pandemic accelerated the integration of proptech in multifamily, including those that allowed residents to lease virtually. For Carrico, this was evidence of a broader demand for the tech products that power his company's short-term rental platform. 

By incorporating The Guild's technologies, his bet is that he can increase efficiencies, like potentially reducing headcount and streamlining technology systems, and squeeze more profit from existing properties.

"More and more we became convinced that it was the same set of challenges whether someone was staying for a day, a month or a year, and that we were uniquely positioned to solve those challenges," Carrico said.

An enticing strategy

For property managers, an acquisition by a proptech company can provide a top-of-the-market exit ramp, capital to fuel more growth and an instant technology upgrade. 

"I see property management companies starting to see the writing on the wall," Carrico said. "They're going to have to become truly tech-enabled, tech-first businesses over the course of the next five years or it's going to be hard for them to compete."

After RKW amassed 30,000 units under its management umbrella in just seven years, it began seeking out fuel for more growth. In 2021, the organization began searching for a strategic partner that would enable RKW to accelerate growth further, said RKW president Marcie Williams. 

"When we met with the Alfred team, there were instant synergies. The most intriguing was their stand on building deep human connections through the use of technology," she told Multifamily Dive.

The marriage with Alfred provides another advantage for RKW: Traditionally, technology adoption in multifamily has trailed other sectors. But consumer demands are changing. 

"Increasingly renters expect a seamless experience fueled by technology that matches the rest of their lives," Williams said.

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