Mashvisor is the CEO and cofounder of a real estate data analytics company that enables novices to make profitable investments in minutes.
Real estate investing has been around since the beginning of time and will continue to be so in the future. After all, even if they cannot afford to buy a home, people will always require a place to live. They will also require lodging while traveling, and an increasing number of people are opting out of traditional hotels.
This is not to say that investing in real estate is a dormant business that remains the same decade after decade. On the contrary, it has undergone significant change over the years, which has been accelerated by recent technological developments and advancements.
According to Forbes, if you own rental properties or plan to buy in 2023, you will no longer be required to run your rental business the way our forefathers did. In this article, I’ve compiled the four most prominent ways in which technology can assist investors in improving their bottom line.
Investor-Focused Online Property Marketplaces
Buying a good property in a good market is the first step in any real estate investing journey. According to investor experiences, the amount of research and analysis required to choose a location and a property for sale for investment purposes takes an average of three months. Furthermore, because of their access to professional networks and personal contacts, experienced investors have always had an advantage in locating good deals.
However, due to recent technological advancements, real estate investors will be able to search for suitable listings for sale online in 2023. This makes investing in remote markets where investors lack experience and physical presence possible, which is a significant benefit for those living in expensive cities.
Marketplaces such as Zillow and Redfin offer technology-enhanced general searches for properties for sale. Importantly, such platforms give individual investors access to MLS listings, which were previously only available to real estate agents and brokers. In the meantime, other marketplaces, such as Auction.com, provide off-market properties.
Overall, by 2023, technology will assist investors in locating potentially good opportunities from their desktop or mobile device, taking significantly less than three months per deal.
VR-Based Rental Showings
Virtual reality, which is expected to reach a market value of $252.16 billion by 2028, is becoming increasingly important in real estate. It is used not only by real estate agents to create virtual tours of available listings, but also by rental property investors to provide 3D tours of their properties. While all investors can benefit from this technological advancement, it is especially beneficial for out-of-state landlords and short-term rental hosts. The former is unable to physically show their rental to every single qualified tenant, whereas the latter has a high turnover.
Because rental property listings with virtual tours are already yielding promising results, we can expect this to become a significant competitive advantage in 2023, and possibly the norm in a matter of years.
Automated Rental Property Management
Previously, investors had to hire a professional property manager to generate passive rental income. Many were hesitant to do so, however, because professionals are less personally involved in the business, do not provide the best renter support, and ignore property damages and maintenance, resulting in suboptimal results. Not to mention that they charge substantial commissions, ranging from 10% to 50% of revenue.
However, technological advancements are now allowing real estate investors to achieve the long-desired passive income from rental properties without relinquishing control—and a significant portion of revenue—to third-party managers. The boom in online property management platforms offering solutions for both long-term and short-term rentals has been one of the most noticeable real estate technology trends in the last decade or so. Platforms such as TurboTenant, Hostaway, and Guesty enable rental property owners to sync and automate a variety of processes such as signing rental agreements, managing booking calendars, collecting rent, and so on.
This is a significant technological breakthrough that combines the advantages of hands-on property management and passive investing.
Dynamic Rental Pricing
According to a panel of 19 real estate experts we recently interviewed about their projections for 2023, the short-term rental industry will resume its expansive growth that we saw prior to the pandemic next year. Investing in short-term rentals, as opposed to long-term rentals (traditional rental properties), does, however, present its own set of challenges. One of these is choosing the appropriate daily rate that maximizes revenue and profit by striking the ideal balance between daily rate and occupancy. In contrast to long-term rental websites, vacation rental marketplaces let property owners set a different price for each day of the week to account for seasonal variations in demand. Finding the best rates for each day is easier said than done, despite the fact that this is a crucial strategy for improving outcomes.
In 2023, real estate investors will be able to rely on a variety of technological tools to handle this task for them. In most cases, these tools forecast future trends in demand and pricing by analyzing past and present data from rental comparables in the area. Although the Airbnb platform includes a Smart Pricing tool, investors can also use third-party services such as BeyondPricing and PriceLabs.
However, because how you price your property is so important to the success of your short-term rental business, I would advise investors to double-check the results provided by any software they choose to ensure that the numbers make sense.
Final Words
While 2023 appears to be a good year to invest in real estate, each individual can decide if this is the right investment for their specific needs and goals. If you decide that this is the best option for you, I strongly advise you to use technology at every stage of the investment process.
