Veritas reaps the benefits of a ‘Residents First’ approach that is the framework for its entire business.
As San Francisco’s premier operator of apartments and urban retail, Veritas creates value on the asset side by focusing on positive relationships with its residents, as well as by creating a sense of community in each of its buildings. In support of this, the entire organization is infused with a commitment to technology that improves the lives of its residents first, and as a result makes ownership and property management efficient and more effective. This approach is summed up in “Residents First” (R1), a comprehensive resident-focused initiative that recognizes that real estate is fundamentally about people, not buildings, and making residents’ well-being the company’s number one priority.
Founded in 2007, Veritas is a real estate investment firm with over 200 apartment buildings in the city of San Francisco alone, primarily properties with approximately 25 units. Today, Veritas operates and manages real estate assets in San Francisco, the East Bay and Southern California.
We sat down with the CEO of Veritas, Yat-Pang Au, to explore how and why the company arrived at the R1 initiative.
How did your general approach regarding putting Residents First originate?
Back in 2003, I acquired my first apartment building in San Francisco. I quickly realized that increasing the value of the asset rested in creating positive relationships and fostering community within a building. In that little six-unit building in the Mission District, I wasn’t just the building owner to my tenants — I was also their neighbor and friend. I realized that real estate isn’t about units and buildings, but about homes and people.
Four years later, I created Veritas, rooting it in the notion that residents matter most and buildings are communities. That was just before the great financial crisis, and with investment from friends and family, as well as institutional investors, we acquired a large number of rent-controlled apartment buildings, many requiring immediate care. Within a few years, Veritas grew from a handful of people and a handful of assets to hundreds of buildings and several hundred team members.
What’s been your guiding philosophy along that path, and how has that influenced your business decisions along the way?
Veritas is focused on creating great experiences and community within our buildings. Our investor base isn’t focused on extracting the maximum value in the shortest amount of time, but rather on investing in our customers’ experience in the buildings that we own (and in the neighborhoods they’re located in). It’s about delighting our customers over the long term.
After outsourcing property management in the early years, we realized that we could provide a better resident experience by taking management and leasing in-house. As we grew and continued to create relationships and build community, we realized that we could leverage technology to support that ethos.
From Day 1, we’ve approached ownership and management in a very different, granular way compared to other multi-family owner/operators, and we know from experience that technology can help, but can’t alone provide a delightful customer experience. Ultimately, we arrived at R1, which fuses technology (including Aptly) with our overarching commitment to connecting and engaging with our residents.
How does this philosophy ultimately affect traditional ‘customer service’ and metrics?
As is the case in any situation, human relationships are complicated and take work. It’s no different when you manage someone’s home, but in that situation, when you commit to working on the relationship, the results show up with happier customers and a better bottom line.
In real estate, the pain points in terms of customer service often originate in a lack of communication. As the CEO, I’d occasionally hear about concerns from our team members along the lines of “we’ve got this issue with this resident.” Once we investigated, it frequently came down to a breakdown in communication: residents were in touch with multiple people on our team, and internally we weren’t always collaborating and following through to resolve the matter. I’ve found it’s much better to tell a resident that we’re working on something, even if it takes a few weeks to resolve. This approach can be better than fixing it in a day with no communication at all.
Pain points like that inspired us — we knew we needed to do a better job and operate with more focus on the resident perspective. Taking a page from Silicon Valley, once we started measuring and tracking, things automatically improved.
Initially, we didn’t have good metrics and data to understand how responsive we were to incoming emails and calls, much less whether our residents were satisfied or not with each interaction. Yelp reviews and posts on other social media sites were our only trackable source of data on customer satisfaction.
With Aptly, we can measure customer satisfaction and happiness with every single interaction. Residents know they are being heard, and we have a real-time happiness score that reflects the status of an individual relationship with a resident, building, or our entire portfolio.
And keeping people in your buildings happy is one of the ultimate positive metrics.
How exactly have you delivered a game-changing, welcoming experience for your residents?
The relationship between owners and residents can sometimes be challenging or even contentious, and our mission is to eliminate situations where that may occur and transform our relationship into one of delight.
That starts with recognizing that the owner-resident relationship doesn’t start with signing a lease and end with moving in. It’s an ongoing experience, and conversations are at the heart of it. Sure, the relationship between an owner and a resident can be characterized as transactional in nature, but it’s also intimate because we are the stewards of the environment they call “home.” Conversations about your home are intimate, while providing the vital feedback we need to understand how we are doing.
Aptly makes it easy to build relationships with individual residents and be proactive, plus it provides a simple system for tracking, prioritizing, and solving resident issues. Residents can email, text, or call us whether they are reporting an issue with rent, plumbing, or a neighbor. Then we respond quickly, before the problem escalates. On our end, we also have the data to track our performance with respect to the resident experience.
What exactly is the Residents First (R1) approach and what are its advantages?
The basic idea behind R1 is that we commit to our residents’ well-being above all else, and that means solid and timely communication between residents and property managers. It means putting ourselves in the shoes of the residents and asking the question, “What would I appreciate or not appreciate if I were a resident of one of our buildings,” over and over again.
Since we put R1 in place, we’ve been able to turn our residents into advocates, so reactions of ‘You are disrupting our lives with this construction’ has, in many cases, been transformed into ‘Thank you for explaining the need for the seismic retrofit and the time it will take to do it. We understand that you are making the building safer and better for all of us.”
Often, it’s simply about goodwill capital, to the point where we have a goodwill line item in our budgets, and then we track whether or not team members are deploying that goodwill capital and measure the responses and feedback.
We thought long and hard before we deployed R1, and in retrospect I think we successfully propagated it throughout the organization because it served as a rallying cry, as a simple articulation of how we work to better house our residents’ lives.
How do you create a corporate culture where employees embrace resident-centered service, technology, and goodwill?
Start with understanding both the owner’s and the residents’ mindset. Without that foundation, you will fail. Secondly, the resident-centered attitude needs to come from the top, from the CEO, not from, say, just the COO. The final piece is getting buy-in and engagement from all team members, especially those who are the frontline who are serving residents day-in and day-out.
Monetary incentives also help. At Veritas, we have a program called the Veritas Incentive Program (VIP) which sets aside a share of profit that is distributed in the form of units to every member of the team, from the CEO to those interacting with residents on a daily basis. This aligns the entire organization to work together to deliver the resident experience that we are committed to achieve. Other real estate investment firms reserve profit sharing for only the top executives.
How do you evaluate technology?
Needless to say, technology is incredibly important to us given the fragmented nature of our portfolio, our proximity to Silicon Valley, and our own investment in startups.
We have an internal committee that evaluates technology solutions and ensures that whatever we choose, it delivers high impact to our residents and our business and that using it on the frontlines aligns with our goals. Given our commitment to serving our residents, we’re most drawn to technology that mirrors that commitment.
Some needs are so specific, such as the need to synchronize data from multiple sources, that we’ve built our own solutions and branded them as ‘Veritas Drive.’ Finally, we’re so driven by the mandate to advance technology that Veritas itself is set up to function as a real-world laboratory for companies we invest in. Through that laboratory-like setting, our startups can test, get feedback, and then scale properly — this is a truly unique structure and offering.
Aptly ticked all the boxes for us: its team worked closely with our team to arrive at solutions that really worked in terms of customer service and data generation, and it focuses on resident experience, and it integrates beautifully with our Drive platform.