Nov 21, 2019 - by Erik Carrier
Advances in PropTech are rocking the real estate investment world by making investing, record-keeping, property maintenance, and a slew of other tasks easier to do, while also lowering costs.
As you probably already know, as an asset class, real estate contributes $3.5 trillion to United States GDP (about 13% of total GDP) annually. Globally, real estate is still typically the largest investment portfolio item, exceeding the total worth of both stocks and bonds combined. According to a recent article in Forbes, in the residential real estate market alone, about $1.3 trillion worth of home value is transacted (buying and selling) each year, generating nearly $66 billion in broker commissions. So how is the real estate industry keeping up with all this buying and selling? The answer is, because they’re now using the new state-of-the-art technology in property management.
For those new to real estate investing, property management has become much more user-friendly due to the many of the new technology tools that have become available over the past decade. Ironically, even though the real estate industry is an important sector of our economy, for years it was slow to embrace new technologies that could help increase efficiency and profitability. But that tech-phobia is rapidly melting away, thanks to new advances in PropTech.
What is PropTech?
PropTech is short for “real estate technology”. As we all know, generic analytics software (such as Lotus and Excel) has been around now for a long time. These platforms eventually led to closed-form enterprise systems, such as Autodesk, CoStar, and Argus, which are still being used 35 years later. But by the 21st century, online portals, such as Zillow and Trulia, were staking claims in the marketplace due to the sites’ huge databases and ease of use.
With the emergence of Web 2.0, property management innovation software grew by leaps and bounds. Sites such as WeWork, Airbnb, and Opendoor have been revolutionizing residential real estate tech by radically enriching user experiences for renting, buying, and selling building property. But these PropTech 2.0 vertically integrated platforms have been setting the stage for the next wave of property management software to come.
What is the Next Wave in Property Management Innovation?
Even though most of the following platforms are still just getting their sea legs, these new PropTech 3.0 products have the potential to revolutionize the real estate industry. The next wave of innovative property management platforms and products include:
- Built – A software that simplifies and digitizes the loan management process for banks. Lenders who use the software can import construction plan data to collaborate with builders and inspectors throughout the duration of each building project. Built helps lenders manage a larger volume of loans, which can also increase transparency of that lender’s entire portfolio.
- RoOomy – A virtual staging solution that leverages CGI and 3D modeling and rendering to photos that aims to replace traditional staging services (one of the most costl expenditures for real estate agents and property owners.
- Qualia – A software solution that brings title agents, realtors, leaders, and property buyers and sellers together to streamline the closing process, while greatly enhancing the user experience. Since the closing process typically increases anxiety levels for all concerned, Qualia helps lower the collective closing angst.
- Cadre – A software solutions that allows real estate investors to buy into the marketplace for as little as $50,000. Unlike traditional real estate investment funds, where fund managers are the gatekeepers, Cadre allows investors to pick the specific properties they want to participate in.
- Cloud Storage – Storing real estate transactional data in “the cloud” can give investor more flexibility, while lowing equipment costs. According of BiggerPockets, 99 percent of leases are now signed digitally, so cloud storage can save property managers 10-20 hours a month (as opposed to expending additional resources to get hard copy leases signed by hand).
- Buildium, Appfolio & Yardi – These three tenant management platforms can help property management companies more efficiently track the manpower hours of its contractors, such as plumbers, cleaners, carpenters, and more. These technologies typically use GPS tracking to keep track of contractors who are on call, 24/7.
- Artificial Intelligence (AI) – The next wave of PropTech will undoubtedly be driven by Artificial Intelligence (AI), which has the potential to radically transform real estate and construction management. AI-based platforms can sift through legal documents and millions of bits of data in a split-second, which could help speed up the confirmation process. AI technology could ultimately help investors make more informed financial decisions.