Proptech is a relative newcomer to the “tech” suffix world; You may be more familiar with the more recognizable terms MarTech and FinTech. While this terminology may be trendy and buzzworthy, what does it really mean to make it work in your real estate investing business? Efficient use of technology is required to maintain our competitive edge and create efficiencies in our growing portfolio. Implementing the wrong solution or technology that doesn’t provide value can be a costly mistake. It’s essential to understand which technology can have the biggest impact on your bottom line.
What is proptech?
Before you consider applying it to your business, it’s a good idea to understand what proptech means. PropTech (property technology) is a category of technology dedicated to the real estate industry. Specifically, PropTech helps real estate investors, landlords, property managers, agents, leasing agents, investors, contractors, and other individuals or businesses research, build and develop, buy or sell, rent, and manage real estate. does.
FinTech (such as online rent/payment collection and accounting solutions) and MarTech (such as property marketing syndication functions and tools for creating outbound communications) functions are often embedded in PropTech solutions. PropTech-specific tools may include online tenant screening, virtual inspections for rental properties, renters insurance solutions and real estate communication tools, such as landlord-tenant text messaging services.
An example of PropTech in action
To bring this down to basics, let’s examine a real-life example from PropTech. Traditionally, tenants pay rent to their landlords via check, usually by mail. This process requires several manual steps:
- Write a check
- Placing it in an envelope.
- Attach postage.
- Getting it in the post office box.
Then the landlord waits for a few days for its arrival. There are so many inefficiencies here that it’s crisis-inducing in today’s automated “click-of-a-button” landscape.
Implementing PropTech in this scenario is as simple as employing a platform that allows tenants to pay rent online. Finding a solution that allows tenants to sign up to pay rent via e-check (ACH) or credit card can streamline this process exponentially. In fact, data shows that renters with this option pay rent on time more often, sometimes even automating the payment every month so they don’t have to think about it at all, making it truly becomes touchless. As per our data at Rentec, landlords are looking to offer more and more online rent payment solutions to tenants to meet the demand.
Other instruments in the proptech sector that real estate investors may want to consider are:
- Tenant screening, including automatic delivery of credit reports, rental history, and more.
- Tenant portal for rent payments, maintenance requests, communication, and more.
- Marketing vacant properties on a multitude of websites with one click.
- Virtual tours of rental properties available for both tenants and potential buyers.
- Modeling tools that can calculate your potential ROI if you are looking to invest in a new property.
- Smart home technology (eg, thermostats, locks and security systems) to help manage properties remotely (being a selling point to potential tenants).
Transforming Real Estate With PropTech
Like their other “tech” counterparts, PropTech solutions create efficiencies by making the resources, equipment and systems you need cost-effective and easy to access and use. From a strategic perspective, the right technology can streamline communications, add value for everyone using the solution, allow you to expand your business by simplifying tedious or manual processes, and ultimately save you time and money. Saves.
To uncover what type of PropTech you might need in your real estate investment business, ask yourself a few simple questions:
- What are the biggest interruptions in my daily or monthly workflow? Are there any techniques available that can overcome these points?
- Is the PropTech solution I’m considering covering all my concerns or just one piece of the problem? Was it designed with my actual job in mind?
- What are the main strengths and weaknesses of my key team members? Can they work with technology to create efficiencies in my business?
- Does the technology work for all my stakeholders? For example, your partners, employees, tenants, contractors and others?
- Will it free me up to do what I do best? From running my business to finding growth opportunities and building relationships? The right proptech solution can allow you to focus on high-value tasks.
Technology-based solutions truly emerged during the pandemic as people discovered new ways of doing things across multiple industries, including real estate. Before this happened, proptech might have been considered useful and efficient, but now it is essential and invaluable (not to mention expected). This is the new normal, and as real estate investors embrace new technologies, the efficiency and cost benefits will outweigh the learning curve.
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Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
