Real Estate Technology Today
Using the Power of Technology from Acquisition Through Disposition
By Adam Stern
There is a widely accepted principle called Moore’s law that states the speed of technology will double every two years, so to say technology is advancing at a meteoric pace is cliché. Technology is the backbone of turning a small business into a scalable enterprise and making processes and access to data easier and quicker.
When talking about real estate and technology, it almost sounds like an oxymoron. Real estate by its very nature is slow. The development of real estate, whether you are talking about commercial, residential, industrial, or agricultural, is time intensive. Even as you move further up the value chain to building and transacting, real estate is an asset that does not move, literally and figuratively.
Real estate technology, however, is an extremely interesting and captivating idea. It is in our DNA to want the pace and ease of the things that we do today to be faster and easier tomorrow. Think about the first computer. It was 50 ft long, weighed 5 tons, and required a team of engineers to operate. Today, we carry one in our pocket that is easy enough for a toddler to use and exponentially more powerful. Looking at real estate technology from a historical perspective helps us to better understand how both real estate and the utility of various asset classes have evolved over time.
In lieu of making this short article a 10-volume dissertation, I will focus on technology in the residential housing sector. It is a substantial area that has seen tremendous innovation over the last decade, both on the retail “homeownership” side and even more so on the investment side. I can bifurcate this analysis across two segments; viewing a home as a place to live or as a vehicle to put capital to work.
The Evolution of Technology
Tech platforms have been around for a long time, and as peoples’ need to gain access to real estate information increased, so have their choices. Not too long ago, to get access to real estate data that was localized to a town or city, you would have to go to a real estate agent who had a book where the information resided. With the proliferation of the internet in the late 90s, websites such as Zillow, Trulia, Yahoo! Real Estate, Redfin and Realtor.com took the power of data and put it into the hands of consumers. This allowed anyone with internet access to search for real estate with ever increasing specificity.
While real estate investing is not a new phenomenon, the popularity and accessibility of real estate investing platforms has allowed a larger swath of US investors to gain access to the asset class. In 2018, 6.7% of individual tax filers (about 10.3 million) reported owning rental properties.
Platforms such as LoopNet, Crexi and Ten-X provide access to commercial real estate opportunities and deliver data in a more consumable way. The launch of these platforms has allowed investors to search for and find opportunities. Previously, locating investment opportunities took more time and research, and required having a network of connections to find off-market opportunities. Investing in larger, more complex real estate deals was relegated to professional investors and investment firms.
Technology Lowers the Barriers to Entry
As an off shoot from real estate search sites that democratized access to real estate data, co-investment sites have furthered the investability of real estate to investors with smaller sums of available capital. Websites like Propstream make it possible for private residential investors with comparatively small capital reserves to have access to extremely high-quality data which helps in both finding and analyzing potential investment properties. Websites such as Roofstock provide access to individual investment properties while also offering operational services beyond just the locating and transacting of homes. Other platforms such as Fundrise solve the capital constraint roadblock by allowing multiple investors to invest in a single property which is managed by a 3rd party.
Along with services for the largest segment of investors in the residential housing market, which are individual investors that own just one property, tech solutions are being developed in higher numbers and in more nuanced ways, thus lowering the barrier of entry for many investors.
Technology in Property Management
In terms of property management, firms like Renters Warehouse and HomeRiver allow investors to manage properties through one firm across multiple markets, enabling investors to scale their real estate portfolios. New-age property management solutions such as Mynd have integrated mobile technology into property management solutions, making it possible to manage the marketing of a rental property, the scheduling of property visits and even the analysis of potential rental income available through a mobile application.
More than any other facet of rental and investment property ownership, new tech addresses the “time and headache” factor of finding and implementing property management solutions, making it faster and more streamlined. Tech services such as Latchel are a bit different and more centered around tenant experience, allowing tenants to order services such as maintenance requests from their landlord, house cleaning and even furniture assembly services.
Transactional solutions for the logistical challenges of closing on real estate have come a long way as well. Applications such as Spruce, which is a neutral third party that helps coordinate transactions between homeowners and their lender or real estate institution, have gained steam as the number of investors selling investment properties to institutional investors have become more commonplace. Document signing solutions such as Docusign and Dotloop are now a mainstay in current real estate closings, enabling investors and homeowners to sign documents from the comfort of their smartphones.
Technology has enabled more people to intelligently choose markets, locate property, and close on homes in less time. Homeowners moving into their first or move-up home can now use sites to solve lifestyle-focused concerns such as school quality, proximity to restaurants, and availability of day care. Smaller real estate investors are now leveraging tech to gain access to data to help make smarter and more informed decisions that will affect the bottom line returns on a real estate investment. The options available today are more numerous than what they were a decade ago and the quality and optionality is sure to increase in the years to come.
