Tech has been revolutionizing the real estate world for years, from more capable inventory systems to streamlined paperwork to drone-driven photography and tours.
The tech evolution of the real estate sector goes beyond the actual activity of homeowners buying and selling places to dwell in, too. It has also revolutionized how we invest in real estate. Here are a few of the biggest ways technology has reshaped real estate investments in recent years.
Technology Is Fractionalizing Commercial Real Estate
One of the best examples of technology in real estate is the way it is making previously inaccessible investments available to smaller investors. In the past, only the wealthy, with tens of millions of dollars at their disposal, were able to purchase larger commercial properties (which often have the best returns).
Those with smaller pockets had to settle for smaller properties. They could also opt for REITs (Real Estate Investment Trusts), and these are certainly effective parts of a sound investment strategy. However, REITs are known more for their pleasant dividends and steady growth over time than as explosive real estate investment choices.
Now, technology is changing the investment landscape by helping investors pool their money and purchase larger properties as a group. Rather than own a portion of a corporation that makes these purchases (as is the case with a REIT), companies like RedSwan are fractionalizing the titles of properties themselves.
In effect, this turns a multi-million dollar commercial real estate property into a large number of affordable NFTs. Investors can purchase these for as little as thousands or even hundreds of dollars. The result is a channel for smaller investors to funnel their resources toward real estate investments that offer a better chance of stability and growth over the long term.
Technology Is Providing Longer Reach and Streamlined Experiences
A century ago, an individual needed to read a printed advertisement or work with a good agent to find properties for sale. Even when they found a potentially good investment, they had to pay a personal visit or, if it wasn't local, go off of pictures and eventually a video or two before making a purchasing decision.
Now, technology is making it infinitely easier to conduct informed long-distance real estate investing. Sites like homesnap.com (beloved by real estate agents everywhere) provide buyers with a fount of knowledge about what properties are currently on the market.
In addition, the act of making a purchase is becoming easier. Startups like the San Francisco tech company Open Door have created digital platforms that make buying and selling properties a seamless transaction - like buying a cart of groceries on Instacart or a car from Carvana.
Technology Is Changing the Rental Market, Too
The rental market is also feeling the impact of technology. The most obvious change here has been the rise of online short-term rental marketplaces.
Companies like Airbnb and Vrbo have made it possible for anyone with extra space to allow others to rent it for the right price. Platforms like Neighbor serve a similar function for individuals' cars, boats, and other stored belongings.
These apps are unique in that they allow anyone to monetize previously wasted space. They may not be tokenizing mammoth commercial properties, but they're providing a significant flow of revenue for a massive, decentralized crowd of entrepreneurially-minded investors, nonetheless.
Technology Is Making a Day-to-Day Difference for Landlords
Sometimes the impact of technology is easy to spot. At other times, it's the small, subtle changes that have the biggest effect. Take, for instance, the way technology is revolutionizing life for landlords.
Property management has historically been a grueling time and labor-intensive activity. However, new technology is making it easier for owners to manage their properties. Software helps calculate things like utilities owed by each renter in a multi-unit building.
Hardware is also making a difference. Smart water meters, for instance, can automatically watch over a unit's H2O usage, wirelessly reporting data at set increments (usually every hour or so). This continual stream of reports helps detect unusual water usage, which is often indicative of a leak.
There are dozens of other technological applications like this. Each one is helping to make the job of a landlord that much easier - even as the rent checks keep coming in.
Tech Is Just Getting Started in the Real Estate Sector
Real estate is an age-old source of wealth generation. And yet, even investments as venerable as these are feeling the transformative touch of technology.
From tokenization and NFTs to streamlined experiences, expanded rental options, and so on, there are many ways that the real estate market is changing for the better, thanks to technology.
The question is, what will come next? We're still at the beginning of the technological era. What major changes and new investment tools are next for this classically stable investment? And how will it open up new sources of revenue in the future?
Only time will tell. For now, investors should take advantage of the tech tools they have available and then buckle up for a wild ride ahead.
