About Tricon Residential
Tricon Residential Inc. is the fourth-largest single-family rental company in the United States, with a growing portfolio of more than 36,000 single-family rental homes in the U.S. Sun Belt and multi-family apartments in Canada. As one of the country’s fastest-growing real estate companies, Tricon has gained a competitive advantage by leveraging its highly responsive, personalized customer service to create profitable long-term relationships.
As their portfolio grew, so did their IT costs, and legacy systems began to hinder their ability to operate efficiently and innovate. With rising CAPEX and OPEX due to underutilized services and legacy systems, Tricon sought a solution to streamline their cloud infrastructure and improve cost-efficiency. Effectual, an AWS Service Delivery Partner, was engaged to address these concerns, leverage AWS services optimally, and drive cost reductions.
The Challenge
Tricon was looking to enhance the system that its Revenue Management team used to oversee new and renewal lease pricing and term conditions. The revenue management system served as Tricon’s financial planning tool, designed to help the company identify a wide variety of financial metrics, including what revenue is coming in, and when; cash flows; lease payment dates; mortgage dates; and how to offset cash flows for their debt structure.
To produce the recommended baseline and variable term pricing needed to maintain optimal occupancy and maximize revenue, Tricon had historically used a complex Excel application to pull data from several disparate systems and run proprietary algorithms the company had created. This required significant manual intervention to validate, adjust, and finally export the results.
As a result, the Revenue Management team was spending substantial time and resources on troubleshooting and validation rather than on customization and innovation. The manually intensive nature of the work often resulted in it taking a week or longer to get accurate numbers for forecasting. Further, Tricon couldn’t accurately forecast more than a few months out, and its forecasts were outdated because they were based on data that was weeks, if not months, old.
Tricon needed an enterprise-scale revenue management system that:
- Leveraged real-time data to enable the company to rapidly compare lease terms to local rates/availability and suggest and set competitive rental prices for each of its homes;
- Incentivized lease term options that distributed lease expirations throughout the year to balance the workload of its employees;
- Integrated seamlessly with its other proprietary software; and
- Enabled the company to easily extend, tune and execute its custom algorithms so that its Revenue Management team could efficiently and confidently review and adjust rental prices multiple times per week.
In addition, Tricon Residential’s IT landscape slowly developed into a complex mix of legacy services and new cloud initiatives. This combination resulted in several challenges:
- High CAPEX and OPEX: Legacy systems and underutilized services increased both capital and operational expenses, impacting profitability.
- Inefficient Resource Utilization: Tricon had numerous underutilized or idle resources across their AWS environment.
- Limited Visibility: It was difficult to identifying cost-saving opportunities due to a lack of visibility into resource utilization and infrastructure expenses.
- The Solution
Effectual developed tailored recommendations to optimize Tricon Residential’s AWS environment, leveraging their expertise in AWS Service Delivery. Effectual’s approach focused on three primary areas.
Cost and Utilization Assessment:
- Effectual conducted a thorough audit of Tricon’s AWS environment, identifying unused, underutilized, and misconfigured resources.
- Aided by AWS Cost Explorer and the AWS Trusted Advisor, Tricon could pinpoint idle resources such as EC2 instances, storage volumes, and outdated database services.
Right-Sizing and Rightsourcing:
- Based on the audit, Effectual worked with Tricon to right-size their workloads and migrate suitable ones to more cost-effective services.
- Effectual restructured databases using Amazon RDS and optimized EC2 instance types, ensuring that workloads matched actual usage requirements.
Automated Scaling and Reserved Instances:
- To reduce OPEX, Effectual implemented auto-scaling for workloads with variable demand, ensuring that Tricon only paid for the capacity they needed.
- Additionally, Effectual used Reserved Instances and Savings Plans for predictable workloads, securing substantial cost savings.
Tricon teamed with Effectual to engineer a modern solution and integrate it into Tricon’s existing cloud infrastructure and applications. Effectual suggested a system that would leverage machine learning to enrich the raw data and give Tricon a predictive forecasting capability, whether for lease pricing or maintenance on its properties. This would enable Tricon to take into consideration a variety of factors—such as location, size, and amenities—to identify when specific properties might be more likely to have their leases turn over more often (such as in towns with large student populations, for example) or have a greater need for maintenance (due to weather-related issues common to the area).
To allow for easy integration and rapid iteration, Effectual devised a new revenue management microservice to house all the application business logic and provide a means for fetching and storing data. The microservice, a .NET Core Web API, was containerized and deployed to Amazon ECS so that the service could be easily scaled based on CPU and memory needs to ensure the desired uptime and performance.
The data management component of the engagement was critical. AWS DynamoDB was selected for application storage for its ability to support loosely structured dynamic configurations, for tuning the algorithms, and to provide near real-time search queries of individual property prices and configurations. The goal was to transform data into a generic, reusable structure so that the application would not need to be adjusted every time new data sources were added.
Effectual then deployed a customized version of its Effectual Data Intelligence Service (EDIS), leveraging Amazon Redshift as a storage solution and custom AWS Glue for performing frequent extract, transform and load (ETL) jobs. The data aggregation process was separated from the rest of the business logic and core application functionality so that it could be adjusted and extended without needing to re-engage the application team for every change. This enabled Tricon’s data team to take ownership of the “property facts” on which the application is dependent. Additionally, the data aggregation solution establishes a maintainable foundation that can later be extended to support AI/ML-generated facts and could itself be the data source for AI/ML recommendations.
In addition to automating the manual processes, Effectual built a data lake warehouse that enables Tricon to collect and analyze near and near-real-time data. Tricon can send data that it is not actively using to lower-cost storage and then access it when needed.
The Results
Effectual’s initiatives and recommendations realize significant cost savings for Tricon Residential.
Reduction in CAPEX and OPEX:
- The restructuring and right-sizing efforts will result in a 35% reduction in CAPEX for infrastructure and a 30% reduction in OPEX through optimized cloud usage.
Improved Efficiency and Agility:
- Legacy infrastructure will be modernized and reallocated, allowing Tricon to scale resources as needed and reduce idle capacity, thus improving operational efficiency.
Increased Visibility:
- With Effectual’s ongoing support, Tricon will now have clear insights into its AWS cost structure, simplifying cost management in the future.
The new system has markedly transformed Tricon’s revenue management capabilities, giving the company the ability to leverage predictive analytics to generate insights and anticipate market trends. The system’s scalability, reliability and algorithmic sophistication enable Tricon to adjust rental prices with unprecedented efficiency and accuracy—transforming processes that often required weeks of manual reconciliation into near real-time capabilities. By significantly improving upon the functionality of the old Excel-based process, the new system lays a robust foundation for continual enhancement with advanced AI/ML capabilities set to be added in the future, ensuring Tricon’s competitive edge in revenue management.
Effectual has helped Tricon transform from a reactive, history-based company running manual reports to one that is now well-positioned to predict market and financial-fiduciary-system trends—becoming the market leader in its industry for technology enablement.
Managed Services Benefits
As a Modern Cloud Management customer, Effectual has also been able to provide ongoing cloud management and support to Tricon. Throughout our relationship with Tricon, Effectual has:
- Developed a comprehensive patching plan and schedule to ensure that systems remain up to date and secure.
- Increased the efficiency and efficacy of support services by creating and managing runbooks detailing workload owners, and ITIL change approvers, and escalation protocols.
- Audited legacy resource tags, then developed and implemented an updated tagging regime to enhance Effectual’s ability to improve Tricon’s security posture, and establish internal accountability and asset cost chargebacks.
- Identified and resolved security vulnerabilities identified using AWS Security Hub and Amazon Inspector.
- Continuously observed, analyzed, and adjusted monitoring thresholds on all AWS infrastructure to reduce email inbox noise and improve performance.
- Implemented S2S VPN monitoring for critical vendor connection.
- Developed action plans to reduce costs based on Trusted Advisor Priority reports from AWS.
- Proposed reduction of approximately $4,000 in monthly Storage costs
- Proposed reduction of approximately $16,500 monthly Compute costs
