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7. Big Data and Artificial Intelligence
Big data paired with AI to help parse it makes a pretty unstoppable combo. Real estate investors will benefit from it, too, in ways we’re only beginning to understand.
Take pricing a property for example. When buying or selling a property, AI-powered algorithms can analyze the property characteristics, recent sales data, comparable listings, and market trends, to provide more precise property valuations. This data helps investors determine a fair price to pay for a property and can serve them in price negotiations during the buying or selling process.
Big data and AI can also streamline the deal sourcing process for real estate investors. Artificial intelligence algorithms can sift vast amounts of data from various sources, including listings, public records, social media, and news articles, to identify potential investment opportunities. This saves investors time and effort by providing them with a curated list of markets and properties that meet their investment criteria.
Perhaps worryingly, you could even use AI to find distressed sellers.
Investing in real estate inherently involves some risks, but big data and AI can help investors assess and mitigate these risks more effectively. By analyzing vast stores of historical data, such as property performance, market volatility, economic indicators, and even natural disaster patterns, AI algorithms can generate risk profiles and probability models that investors can use to make more informed decisions and take appropriate risk management measures.
Get the feeling that we’re only scratching the surface? Yeah, me too.
8. AI-Enhanced Predictive Analytics
How would you invest in real estate if you could predict the future?
Get used to asking yourself that question. Investors armed with AI-enhanced market analysis tools have begun using predictive analytics to try to predict future trends, identify markets with potential for growth, and anticipate market shifts.
Training AI on market data like historical sales, rental rates, demographics, and economic indicators can make a real estate investor look like they have superhuman predictive powers.
Predictive analytics uses AI algorithms to forecast future trends and outcomes. Real estate investors can leverage predictive analytics to anticipate market shifts, identify emerging neighborhoods, and understand the potential rental demand or property appreciation in a given area.
Sure, experienced real estate investors can sometimes intuit many of these patterns, but AI promises to make this skill widely available. AI algorithms can show investors unseen trends, help them understand supply-and-demand dynamics in a given market, and assess the potential profitability of a particular location or property type.
These insights enable investors to make data-driven decisions about which markets to target and which areas show the most potential for growth. This allows investors to make proactive investment decisions, such as buying properties in up-and-coming areas or selling at an opportune time before a market shift.
Real estate technology tools built from this data could even inform real estate development decisions. AI-driven predictive models could inform real estate developers where to expect to find potential customers in the future.
There are a few predictive analytics companies out there already, such as Smartzip, AirDNA, and Likely.AI, offering real estate investors a peek behind the curtain. Expect these to proliferate as the technology continues to improve and becomes widely adopted.
Final Thoughts
Technology disrupting real estate sounds scary, but it introduces savvy investors to a host of empowering and exciting new opportunities in the real estate industry.
You might see real estate technology referred to as “property technology” or “PropTech.” No matter what you call them, these changes in real estate technology trends will only accelerate from here. New real estate tech companies come online all the time, using the latest and greatest modern technologies to gain an edge in the competitive real estate business.
Eventually, I expect even local governments to use blockchain technology to track deeds and ownership history. That will make title searches nearly instantaneous and reduce closing costs. But the government is always the last to adopt technology, unless it’s used to spy or blow things up.
By embracing technology in real estate, real estate investors can diversify their portfolios, explore previously inaccessible assets, and enjoy greater transparency, convenience, and liquidity. As tech in real estate continues to evolve, investors should stay informed and adapt to these disruptive technologies to thrive in an increasingly dynamic market.♦
How do you see technology disrupting real estate? What do you see as the most promising tech in real estate these days?
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