- Real estate is easing into the digital revolution, with iBuyers purchasing homes in a week and VC money flooding into startups that add a tech twist to the industry.
- Business Insider talked to executives at companies ranging from short-term rentals to commercial real estate brokerages about the ways data will change how real estate professionals do their job.
- While all the execs said they are analyzing data to better understand markets and customers, they also flagged hurdles like small sample sizes, and still emphasized the importance of a human touch.
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While other industries are jumping into machine learning and artificial intelligence, and data scientist has been dubbed the best job in America, real estate still has a reputation for handshake deals and decisions made on gut instinct.
There may have been some truth to that reputation, but companies that revolve around real estate are quickly finding ways to adapt to a digital world. Where before documents only lived in a file cabinet, they’re becoming digitized. Zillow, Redfin, and other iBuyers are closing on homes within a week of the original application. VC money is beginning to flood into "proptech" startups that marry real estate and technology.
The first step is collecting better data and finding ways to actually use it.
Business Insider talked to executives at companies ranging from short-term rentals to commercial real estate brokerages about the ways that data will change how we work and live, and how real estate professionals do their job.
Still, many acknowledged that the process of capturing enough data to pull out legitimate trends can be cumbersome. Some say that for short-term rentals, at least, higher turnover may help produce more data compared to traditional house sales.
There are also worries about potential regulatory issues that could hem in growth of some startups and the data they can collect, as well as the ever-present challenge of selling people on change. And finally, some said that real estate still requires a level of human interaction and judgement that evades traditional data analysis.
Andrew Kitchell, Lyric co-founder and CEO
Andrew Kitchell, co-founder and CEO of Lyric, has been working to marry real estate and data for almost 10 years. He worked in business development at Movity, a housing data company that was acquired by Trulia in 2011, and was the CEO and founder of Beyond Pricing, a company that used data to price vacation rentals. He also founded and still runs Wheelhouse, another company that prices vacation rentals and Airbnbs. Kitchell is a data missionary for the real estate industry.
"Data is going to continue to eat real estate," Kitchell said.
Lyric, which operates designed short-term rentals focused on business travelers, says it relies on data for most of the decisions it makes. This can be data about the local markets they’re looking to operate in, or it can be data about their guests’ stays.
"Not only can you use data to inform where you should buy, but also what people want in those spaces and how to design those spaces," Kitchell said.
Lyric’s chief experience officer, Ravi Hampole, told Business Insider about their comprehensive end-of-stay survey, which covers typical topics like general satisfaction and NPS as well as providing feedback on the design of rental units. While the company emphasizes storytelling and the artistic side of design, it takes a close look at the customer satisfaction data. Capturing those feelings accurately can have another upside – customers will be more likely to share their experiences on social media, Kitchell said.
"Real estate will be better-branded and more Instagram-able."
Nick Romito, VTS co-founder and CEO
Nick Romito’s VTS is rapidly becoming the dominant leasing and asset management platform in commercial real estate. According to the company’s most recent estimates, VTS tools are used in between a third and a half of US commercial office buildings, giving it access to a huge amount of data.
The company has raised more than $190 million from backers like Brookfield Ventures, GLP and Tishman Speyer, and proptech VC Fifth Wall, and is planning to launch Truva, a commercial leasing marketplace, later this year.
Romito says he came up with VTS out of necessity. He used to work in real estate, and was sick of using spreadsheets to communicate between different companies and data sources. When he looked for a solution, he realized that no one had created it. So he did.
"Amazon for example – you see what you could buy," Romito said. "You know how much it costs. The minute you hit purchase, we know where it is in getting to you. And that exists for anything else in the world right?"
While Romito is fully focused on Truva’s launch, he is also particularly impressed by some of the automated valuation model companies that have found ways to use third-party data to price buildings. These algorithms can be tied to all sorts of data, from typical indicators like building locations and sales price to more demographic information.
Romito thinks real estate has embraced data in recent years because it has become a lot easier and cheaper to build technology. Still, the challenge ahead lies more with "people and process change" than the actual challenges of building tech.
"You can build the fastest race car on the planet, but if people don’t know how to drive, or don’t want to drive, its worthless."
Harvey Hernandez, founder and CEO at Newgard Development Group, Niido and Natiivo
Data is not only the realm of young, tech-forward startups. Traditional real estate is getting into the game. Some are simply using data to give their own businesses an edge. Others, like Harvey Hernandez, the founder and CEO of Miami-based development company Newgard Development Group (NGD), are creating their own proptech ventures.
In 2017, Hernandez founded Niido in partnership with Airbnb. NGD had noticed that some of their tenants were renting out their apartments on Airbnb, which created tension in their buildings between tenants and building staff and left NGD vulnerable to potential legal and regulatory violations. Hernandez decided to create a full community dedicated to Airbnb under the Niido brand, where renters are encouraged to rent to others and the company provides hotel-like amenities, like a concierge and cleaning surfaces. Shortly after, Natiivo launched, which replicated the Niido model but for condo-purchasers.
As Hernandez continues to develop these two businesses, he’s also getting access to more and more data. For one, the company’s partnership with Airbnb gives it access to information about each unit’s utilization and demand. Niido also collect data on the utilization of all of the amenities they provide, everything from the concierge to their partnership with smart lock company Latch. The effect is a panopticon-like view into the patterns of both their tenants and their tenants’ guests.
"We manage the behavior, we see everything that happens — what people want, and what doesn’t work," Hernandez said. "There is a tremendous amount of intelligence that we acquire in our communities."
Both Natiivo and Niido are still young, so Hernandez estimates that they’ll be able to use the data more productively to help it make business decisions in a year or so.
Hernandez told Business Insider that the patchwork of local and state regulations around have slowed their ability to expand and gather larger amounts of data. Natiivo’s approach is to actually acquire a hotel license so that the company can operate in municipalities with strict short-term rental laws.
"Technology goes very fast, but it’s not the case with legislation," Hernandez said. "I think at the end of the day, that has been what has been holding back real estate’s adoption of some of these new ideas."
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