The Future of Technology
Incorporating Technology at Every Stage Can Have Significant Benefits
By Patrick Burns
SFR is a burgeoning sector set to outpace multifamily, office, retail, storage and hospitality growth in 2022. Most sectors of real estate have been a historically local and offline business, with investors specializing in specific markets and only utilizing neighborhood providers to facilitate transactions from start to finish. This means that there is a huge opportunity to introduce centralization and scale.
Increasingly, SFR investors are not only looking to break out of local markets, but also buy multiple properties per month. This move from local to regional–or even national–brings with it a need to find a predictable, consistent, and scalable process to buy multiple properties at the same time.
We have witnessed the power of technology-driven solutions to delight customers and increase efficiency across the mortgage industry. Now, SFR investors are faced with challenges of scale, centralization, and transparency. Technology can enable a level of simplicity that has never been seen before within the industry–and the benefits are seen throughout the entire end-to-end process.
There are many ways technology can impact the real estate industry. But for now, let’s focus on the three key areas that can have a big impact in the world of SFR: sourcing, inspections, and title and closing.
Sourcing
Traditionally, sourcing meant finding an agent in each new market, and then providing that agent with parameters and a buybox for the types of properties an investor would want to acquire. While this method works to an extent, it can be laborious, as it requires the investor to commit significant relationship management with many individual agents across different markets.
Today, there are new alternatives that enable the ability to buy entire portfolios and offer key insights. For example, marketplaces like Sundae and Roofstock act as aggregate sources of available properties across the country, and give investors access to valuable data. This data includes information on current leases, tenant details, and payment history, along with things like interior/exterior photos, 3D tours, floor plans, disclosures, inspection reports, title reports, and more. Access to this type of information allows investors to make confident buying decisions in multiple markets at once. In a hot purchase environment, this ability to move quickly and accurately forecast return on investment can give investors a key competitive edge.
Inspections
Until recently, inspections have also been heavily localized. The need to coordinate hundreds of inspections each month creates not only tedious labor, but also a fractured experience instead of a seamless process.
New methods, such as those offered by Inspectify, offer a marketplace of inspections. Oftentimes, these tech-forward companies work in tandem with acquisition marketplaces. As a result, investors have access to structured, customizable data, along with a level of consistency typically unseen within the inspection process.
Tech-based solutions to inspections introduce more consistency. Inspectify, for example, offers reports via API that can directly exchange information and inputs into your transaction process and pricing models–which can take weeks off the acquisition process. They also allow their customers to build custom templates, resulting in more accurate data and less risk. The SFR sector specifically can benefit from the national scale and cost savings this new type of technology can offer.
Title and Closing
One of the biggest challenges within the ecosystem of real estate transactions is the offline and localized nature of title and closing, which can be prohibitive to efficiency and scale.
Companies like Spruce work closely with investors across model types–including rent-to-owns, sale leasebacks, and iBuyers–to centralize operations and unlock efficiency. By combining national accessibility, local expertise, and proprietary technology, Spruce empowers investors to accomplish multi-state strategies, or remote acquisitions, with a consultative approach.
A particular issue for investors who are buying 50-100+ homes per month (in multiple markets) is easily keeping track of their closing pipeline. Receiving automated, accurate updates on file status––from search to post-closing––can be a gamechanger if you are used to chasing down this information from various local providers via email (or even phones).
While real-time data is incredibly powerful, there is also the added benefit of historical reporting on how quickly deals are closing. Tech-enabled partners that offer nationwide accessibility can give your teams hyper-localized data, like title search turn times, in a particular county. For example, you generally cannot write an offer with closing in less than 21 days in Oklahoma because searches take more time there than average. Having this type of unique data at the outset allows you to forecast out your acquisition strategy and keep on top of cash management concerns.
As large-scale investors start to build their own transaction management software, or track their deals in a CRM like Salesforce, working with a title and closing provider that offers a direct API integration can rapidly unlock efficiencies at scale. Kick off the title process with the click of a button, receive automated status updates, leave comments, and automate workflows all within your own system.
2022 is bringing an increasingly crowded SFR investment environment, with everyone from major capital providers to property management companies jumping into the market. This uptick in competition is coupled with a housing market that is historically low on supply. Continuing to incorporate technology at every stage of your acquisition lifecycle can have significant benefits, including a competitive advantage and faster scale.
