HappyCo’s CEO, Jindou Lee, chats with the Co-Founder and Principal at Standard Communities, Scott Alter, about his priorities as a multifamily owner. Standard Communities is an owner and developer of affordable, senior, and workforce housing with nearly 19,000 units and $4 billion+ in assets under management. They are committed to providing high-quality, healthy, and sustainable housing.
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Why did you start Standard Communities?
Before I started Standard, I was interested in the housing crisis in the U.S. I see multifamily housing as a vital part of our community and country, so I worked with my partner Jeff Jaeger to create a company dedicated to providing clean, safe, and affordable housing to those who need it.
What made you choose the name “Standard”?
We named ourselves after Standard Oil, actually. We founded Standard in 2008, when the country was in the thick of a financial recession. We wanted to emulate one of the most impressive American companies in history and set the real estate “standard” of being good housing operators and owners.
What does your current operating model look like?
We work with ten different property management companies (PMCs)—our largest partner manages over 50 percent of the properties that we own, and the rest are spread across the country. We don’t do any of our own property management—our 90 employees consist of asset managers, construction managers, acquisitions, accounting, in-house compliance, and in-house REAC (real estate assessment center) teams.
What do you look for when choosing a PMC to partner with?
Good systems, good software, and good data. If we choose to work with one over another, it’s because of the data they provide to us. The best PMCs can give us clean, quick data via connected systems.
What can a PMC do to lose your business?
If we’re not getting the data we need quickly or the property management company isn’t being responsive, we’re going to be very scrutinous. Oftentimes, when the data isn’t correct, it means they’re not watching the properties the way that we would watch them. We really believe our PMCs are extensions of ourselves, and we want to be well-represented at all of our communities.
There’s also the added complexity of the government being involved in a lot of our properties. There are important compliance metrics that we need to hit—we typically duplicate that information gathering with our in-house compliance and maintenance teams, not because we don’t trust our PMCs, but because we want to work alongside them.
Why is data so important to you?
We don’t manage our properties, and we’re not there on a day-to-day basis, so the quicker we can get the data, the quicker we can make important decisions that affect our residents’ lives. If we don’t have real-time data, we’re essentially operating in the past.
We need both granular and high-level data so we can analyze particular properties at a group or individual level, identify patterns, and take any necessary actions.
How do you identify new software that’s worth implementing?
Sometimes, our PMCs come to us and say, “We think this is a really important piece of technology that you could use to get the data you want.” Other times, there are technologies that we send to management companies that we see as valuable and ask them to put those in place.
Systems are a big focus for Standard in 2024—we want to make sure we have the right systems in place to get the right data so we can make the best decisions for our communities, the people that work at them, and the residents that live there.
Currently, we spend so much time aggregating data across properties and questioning the data—we want to focus on investing in systems and software that can provide transparency across our portfolio.
What are some of the strategies you’ve implemented in 2023 that you think the rest of the multifamily industry could benefit from?
We really focus a lot on our employees. We set company-wide goals and then find ways for each person, at each level, to help us reach our north star—50,000 units under management by 2030. We’re also focused on leadership training, professional development, and putting the right people in the right seats to succeed.
We recently created a career development guide that shows how each employee can get promoted to the next level of the organization. That individual level of clarity has really helped differentiate us in the “war for talent” that’s been ongoing since the pandemic.
As an affordable housing provider, your properties undergo random REAC inspections, HUD’s physical inspection standard. How does HappyCo help you stay prepared for those?
We never know exactly when a REAC is going to happen, so the way I look at it, we’re always in a pre-REAC situation. We’re always keeping our properties up to the high standard we want to see. If we have HappyCo data to show that a particular property was struggling during a pre-REAC, we can send appropriate team members to oversee that and help improve the situation.
Have you experimented with centralization to make your processes more efficient?
We have an in-house data management team that centralizes all of our data across all of our different platforms and partnerships. We’re very much focused on centralizing our information in one place so we can disseminate it to our offices across the country. If the data isn’t in the right place at the right time, it’s a huge hassle.
What metrics matter the most to you?
I always start at the cash flow level, but from there I’ll get pretty granular. I’m often looking at occupancy—it’s a supply, not a demand, issue at our properties. So, I’m concerned with turn time—how long does the average unit sit vacant? How long does it take to gather the necessary paperwork?
What are your predictions for the multifamily industry?
I think we’ll see a consolidation of the different housing sub-markets, specifically affordable housing. There’s an affordability crisis in the country right now that starts with a lack of supply and high interest rates, and consolidating housing can help tackle that by lowering the cost of capital across the board.
Ever since she was a kid, Ebby has always loved reading, writing, and storytelling. After graduating from College of Charleston in 2018, Ebby started a career in marketing for start-ups and scale-ups and never looked back. She's thrilled that she now gets to share HappyCo's stories across formats and channels for a living.