Real estate is the land that technology forgot. A land where millions of dollars in property inventories are tracked on whiteboards, where client histories are jotted down in notebooks, and where high-end leases are negotiated and signed by fax.
This comes at a time when multi-family real estate is one of the hottest investment sectors in the country, with $43 billion worth of investment made during Q4, 2015 alone. But in spite of the huge amounts of money being plowed into multi-family real estate, the sector is also one of the most resistant to technological advances. In part because of the relationship-driven nature of the business, and also due to an “old guard” of owners and landlords, technology has failed to make inroads in real estate as it has done in other sectors.
But the winds of change are slowly breezing through.
One driving force is that changes in people’s lifestyles means rental demand has skyrocketed. A recent Harvard study expects that there will be an additional 4.2 million renters in the U.S. by 2025, what with younger generations less attracted to home ownership and the lingering effects of the mortgage crisis the main factors driving those changes. This surge in demand means that rental vacancies in big cities like L.A. and New York have plummeted.
Technology is also forcing its way into real estate via consumer-focused apps and services like Zillow and Rent.com, which have made it easier than ever for people to hunt for, and arrange viewings, of properties by themselves. Few wannabe renters find themselves sifting through newspaper classifieds any more. In turn, this Internet-inspired revolution has led to an expectation of easy online interfaces to handle transactions too – for example, signing contracts, applications, paying rent and more.
Additionally, the habits of the “old guard” are changing too. A new generation of tech-savvy landlords is emerging, and they’ve probably never even seen a fax machine, let alone actually send one. As such, older and less technologically proficient landlords are being forced to adapt or risk being left behind. When one is managing a portfolio of dozens of rental units worth several thousand dollars a month, being able to share and manage listings online can make a huge difference.
That’s led to the rise of a new breed of SaaS-based platforms – new, cloud based software solutions that pack all kinds of marketing and leasing tools, online hubs for inventory tracking, verified listings, syndication, analytics on property performance and more.
At last, investors are taking notice. Investments in real estate technology are sky-rocketing, with some $1.7 billion in venture capital plunged into the sector in 2015, a fifty percent year-over-year increase, says CB Insights.