CEO and cofounder of Mashvisor, a real estate data analytics company that helps even beginners make profitable investments in minutes.
Real estate investing has been around since time immemorial and will continue into the future. After all, people will always need a place to live, even if they cannot afford to buy a home. They will also need a place to stay when traveling, and an increasing number of people opt out of traditional hotels.
However, this does not mean that investing in real estate properties is a stagnant business that remains the same decade after decade. On the contrary, it has significantly changed over the years, and this transformation has been accelerated by recent technological developments and advancements.
If you own rental properties or plan to buy in 2023, you will not have to run your rental business in the way our ancestors used to. In this article, I have gathered together the four most prominent ways in which technology can help investors improve their bottom line.
Investor-Focused Online Property Marketplaces
The first step of any real estate investing journey is buying a good property in a good market. Investors’ experiences show that the necessary amount of research and analysis that go into choosing a location and a property for sale for investment purposes takes an average of three months. Moreover, traditionally, experienced investors have always had the upper hand in locating good deals through their access to professional networks and personal contacts.
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Due to recent technological changes, however, in 2023, real estate investors can search for suitable listings for sale online. This makes investing in remote markets where investors do not have experience and physical presence feasible, and this is a major benefit for those living in unaffordable cities.
Technology-enhanced general searches for properties for sale can be done on marketplaces like Zillow and Redfin. Importantly, such platforms provide individual investors with access to MLS listings, which have been traditionally reserved for real estate agents and brokers. Meanwhile, other marketplaces, like Auction.com, offer off-market properties.
So, all in all, in 2023 technology will help investors locate potentially good opportunities from their desktop or mobile device and will take significantly less than three months of time per deal.
VR-Based Rental Showings
Virtual reality, expected to reach a market size of $252.16 billion by 2028, is playing an increasingly large role in real estate. It is not only used by agents to create virtual tours of listings for sale but also by rental property investors to offer 3D tours of their rentals. While all investors can use it to their advantage, this technological advancement is particularly useful for out-of-state landlords and short-term rental hosts. The first is not physically available to show their rental to every single qualified tenant, while the latter has a high turnover.
As rental property listings with virtual tours are already showing promising results, we can expect this to become a major competitive advantage in 2023 and even potentially the norm in a few short years.
Automated Rental Property Management
To achieve passive rental income, in the past, investors had to resort to hiring a professional property manager. Many were hesitant to do so though as professionals are less personally involved in the business, do not provide the best renters’ support, and overlook property damages and maintenance, leading to suboptimal results. Not to mention that they charge sizable commissions, varying between 10% and 50% of revenue.
However, technology is now enabling real estate investors to realize the long-coveted passive income from rental properties without giving up control—and a significant part of revenue—to third-party managers. One of the most noticeable real estate technology trends in the last decade or so has been the boom in online property management platforms providing solutions for both long-term and short-term rentals. Platforms like TurboTenant, Hostaway and Guesty allow rental property owners to sync and automate many processes like signing rental agreements, managing booking calendars, rent collection and others.
This is an important technological breakthrough combining the benefits of firsthand property management and passive investing.
Dynamic Rental Pricing
According to a panel of 19 real estate experts that we have recently interviewed on their projections for 2023, next year will witness a resumption in the expansive growth of the short-term rental industry that we were seeing prior to the pandemic. Nevertheless, investing in short-term rentals—as opposed to long-term rentals (traditional rental properties)—comes with its own unique set of challenges. One of these is setting the right daily price that brings the best balance between daily price and occupancy in order to maximize revenue and profit. Unlike long-term rental websites, vacation rental marketplaces allow investors to set a different price for their property for every day of the week to reflect seasonality in demand. While this is an important way to boost results, coming up with the best rates for each day is easier said than done.
In 2023, real estate investors can rely on various technology tools that can take care of this task for them. In most cases, these tools use past and present data from rental comparables in the area to forecast future trends in demand and pricing. The Airbnb platform offers a Smart Pricing tool, but investors can also use third-party services like BeyondPricing and PriceLabs.
However, since how you price your property is so important for the success of your short-term rental business, I would recommend that investors review the results delivered by any software they choose to ensure that the numbers make sense.
While, in general terms, 2023 seems like a good year to invest in real estate, every individual can decide if this is the right investment for their own purposes and aspirations. In case you decide that this is the right choice for you, I would strongly encourage you to harness the power of technology across all stages of the investment journey.