CEO and Co-Founder of Mashvisor, a real estate data analytics company which helps even beginners make profitable investments in minutes.
The real estate industry is rather traditional, historically dominated by a few large corporate stakeholders, imposing major barriers to the entry of smaller, individual players.
However, even the biggest skeptics cannot refute the fact that this reality has recently changed in major ways, and this change has been one-sidedly driven by technology.
Technology has disrupted not only home buying and selling but also investing in real estate. On the investment side, disruption was largely introduced by the establishment of Airbnb in 2008. The quick success of this simple—yet genius—business idea demonstrated that technology can flip the face of the short-term rental industry almost overnight and inspired thousands of innovative individuals to disrupt other segments of real estate in an attempt to become the next Brian Chesky, Joe Gebbia or Nathan Blecharczyk.
Here are five ways in which technology has revolutionized real estate investments since then:
1. AI And Big Data
Any real estate investor can testify to the time and effort it takes to collect and analyze the data necessary to make an informed, smart and profitable investment.
My personal experience shows that a beginner investor needs about three months of research and analysis to find a lucrative opportunity. In today’s dynamic market, an investor does not have three months as another more advanced and experienced investor will snatch all worthy opportunities.
MORE FROMFORBES ADVISOR
This reality inspired me to found my company and inspired many others to search for ways to implement artificial intelligence (AI) and computize big data analysis in the process. Now, there are various online marketplaces and platforms which automate the analysis of real estate opportunities, disrupting the nature of real estate investing.
AI paved the way for the entry of beginner, individual, part-time investors and placed them on an equal footing with those who have spent their lifetime analyzing deals and trading properties.
While AI facilitates the real estate investment process, investors should keep in mind that technology cannot replace the human touch. For optimal investment decisions, technology should be used to sift through opportunities and select a few optimal ones, after which an investor still needs to do some of their own investigation and analysis.
2. Using Technology In The Real Estate Buying Process
Making a profitable investment does not end with identifying the right property. Buying real estate is just as complicated and traditionally dominated by a few large players. Recent decades have witnessed a boom in proptech startups, helping both homeowners and real estate investors optimize and streamline the process.
Everything from viewing properties for sale to being approved for a mortgage to signing a contract has been simplified and reorganized for the benefit of small-scale buyers in a user-friendly and accessible way. Investors do not require advanced technology skills to buy properties, which is one of the ways that technology contributes to the democratization of real estate.
3. Real Estate Crowdfunding
While rental properties offer lucrative opportunities, not everyone is interested in owning and managing entire properties. Not every investor is coined for a landlord.
Technology advancements, including the expansion of social media, have propagated real estate crowdfunding, as the crowdfunding market reached $12.27 billion in value in 2020.
This modern-day alternative to traditional real estate investment trust (REITs) has facilitated and democratized pulling the financial resources of multiple investors to own shared properties by eliminating the requirement for investors to be qualified and bringing down the minimum required investment.
Thus, even more than AI-based analytics, crowdfunding platforms have allowed individuals with just a few thousand dollars to participate in real estate investments and reap the benefits.
When an investor decides to opt for this strategy, they should remember not only the positives but also the pitfalls of taking part, such as illiquidity and giving up control. Do due diligence and make sure you feel comfortable with the platform and the way it manages investments before you engage.
4. Technology And Rental Property Management
Returning to rental property investing, traditionally becoming a landlord was associated with a full-time job and mostly reserved for those with multiple properties. Managing a rental property requires a multitude of skills and tasks, such as screening tenants, collecting rent, handling expenses and accounting.
The influx of part-time investors facilitated by the introduction of AI and big data necessitated the automation of the rental property management process, too, and technology was fast to provide solutions. Numerous tech startups now offer one-stop-shops for landlords and Airbnb hosts to accommodate the needs and requirements of those investing in long-term and short-term rentals.
As property owners embrace technology, they should not forget about the human aspect. Successful landlords interact efficiently and build relationships with tenants to optimize their experiences and retain them in the long-term.
5. Investing In Virtual Real Estate
Last but not least, virtual real estate has to be mentioned. While, for many, putting their money in virtual real estate parcels represented by pixels remains incomprehensible, others are already investing millions in the metaverse, racing to be pioneers in establishing and owning a parallel universe of real estate assets.
The very idea of being able to make money from virtual real estate became possible only when technology reached the necessary level.
Nevertheless, virtual real estate eliminates a main advantage of real estate as an investment strategy, namely that it is a physical asset and cannot be lost overnight. If the metaverse collapses, investors risk losing everything. Thus, until the virtual space gets proper regulation and security and until it becomes more predictable, investors should consider this new strategy as a way to diversify their portfolio and not as their sole investment source.
Technology: The Future of Real Estate Investing
Seeing how quick and pervasive the adoption of technology has been in the real estate investing industry, I can only predict for this trend to accelerate and expand in the coming years. Technology will continue disrupting real estate, and one should embrace this reality to have a place in the future of this multi-million dollar industry.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
As the CEO and Co-Founder of Mashvisor, a real estate data analytics company, my firsthand experience in the real estate industry has provided me with a deep understanding of the transformative impact that technology has had on real estate investments. My journey in this field began with recognizing the challenges faced by beginners in making profitable investments, which led to the establishment of my company. This experience positions me as an expert with practical insights into the evolving landscape of real estate.
Now, let's delve into the key concepts presented in the article:
Technological Disruption in Real Estate:
- The real estate industry, historically dominated by large corporations, has experienced a one-sided transformation driven by technology.
- The article suggests that technology has disrupted not only home buying and selling but also real estate investments.
Role of Airbnb in Real Estate Investment:
- Airbnb, established in 2008, is credited with introducing significant disruption to the short-term rental industry, inspiring innovators to explore technology-driven solutions in various real estate segments.
AI and Big Data in Real Estate Investment:
- The article emphasizes the time and effort required for data collection and analysis in real estate investing.
- AI and big data have played a crucial role in automating the analysis of real estate opportunities, allowing even beginner, individual, and part-time investors to participate.
Technology in the Real Estate Buying Process:
- Proptech startups have simplified and reorganized the real estate buying process, making it user-friendly and accessible to small-scale buyers.
- The democratization of real estate is highlighted as technology optimizes and streamlines processes, reducing the reliance on advanced technology skills for property acquisition.
Real Estate Crowdfunding:
- The rise of real estate crowdfunding, facilitated by technology and social media, is discussed.
- Crowdfunding platforms have democratized real estate investment by allowing individuals with limited funds to participate in shared property ownership.
Technology and Rental Property Management:
- Automation of rental property management processes is attributed to the influx of part-time investors facilitated by AI and big data.
- Tech startups now offer comprehensive solutions for landlords and Airbnb hosts, streamlining tasks such as tenant screening, rent collection, and expense management.
Investing in Virtual Real Estate:
- The article introduces the concept of investing in virtual real estate within the metaverse.
- Virtual real estate is considered a new strategy for diversifying investment portfolios, but caution is advised due to the lack of regulation, security, and predictability.
Future of Real Estate Investing:
- The conclusion suggests that the adoption of technology in real estate will continue to accelerate and expand in the future.
- The article encourages individuals to embrace technology as a fundamental aspect of the future of the real estate industry.
By providing these insights, I aim to showcase my expertise in the realm of real estate technology and its transformative impact on investment strategies.