I am fairly new to multifamily real estate investment and learning this trade. It is quite complex and heavily manual and opinionative (a lot of decision comes from intuition).
Being an engineer, I am wondering if there are areas[deal analysis, underwriting, acquisition, financing, or investment/funding) where some automation (intelligent insight, reasoning, and decision support) can help you grow the business.
There are a few software tools out there. Keep in mind the numbers don't always tell the whole story. The one thing you can't change about a property is the location. On paper a property can look great yet be a bad investment. Talk with multiple agents, property managers, handymen, and contractors. We do a ton of analysis on the Reno Nevada area Multifamily properties and the top property on paper is not what people buy. Other factors of condition, schools, and rental increases are some of the other factors to consider that will not appear on a spreadsheet.
There are investor platforms, such as Cash Flow Portal, that offers underwriting tools that incorporate AI and automation. They also have tools for on boarding investors.
There are property managements softwares to help with property/asset management.
There are CRMs that help with capital raising and investor automations.
I would not focus on automation right now, but on the business of multifamily. Automation is a great tool when you can understand it is what you are analyzing.
Underwriting can be laborious in the beginning, but that's how you learn to value deals. Once you can properly analyze a t12 and rent roll, then plugging it into a tool will help you spot opportunity.
There are a few software tools out there. Keep in mind the numbers don't always tell the whole story. The one thing you can't change about a property is the location. On paper a property can look great yet be a bad investment. Talk with multiple agents, property managers, handymen, and contractors. We do a ton of analysis on the Reno Nevada area Multifamily properties and the top property on paper is not what people buy. Other factors of condition, schools, and rental increases are some of the other factors to consider that will not appear on a spreadsheet.
You could automate underwriting pretty easily, as well as scraping and feeding data into an underwriting AI. For example, you can ping Zillow APIs for rent information in the surrounding area.
I don't find too much value on this aspect, the valuation models are all the same, and your data wouldn't be differentiated. Maybe automated tenant issues would be interesting.
Thanks. for all the feedback. The reason I posted this question is to see if any specific areas could be improved by technology that can help you be better at your business. we don't live in an ideal world, and sometimes the existing tools, may be useful as we are used to using it, but they arent very optimal.
The best way to look at it is to see if there are some problem areas that you think if addressed via technology will help you be more efficient and reduce your investment risks.
Rental Property Investor · Philadelphia, PA · Member since 2021 · 774 posts · 501 votes
1y
@Suhaib - For me, the biggest driver is the ability to increase rents for a particular building/property and then investigating what it would take to get the rents to that level. (i.e. renovations). This can be done for a specific property by researching competitors and using some software to identify rental rates of nearby properties. (e.g. rentometer). What would be interesting to me if a software/program could do this analysis at a larger scale in order to identify off-market properties that have "below market" rents that would help prioritize someone's off-market focus. For example, is there a way to analyze the rent rates for a particular county and identify the subset of buildings (maybe less than 20%) that have below market rents? Then, one could target that subset and reach out to owners knowing that there is "upside" in revenue. There are larger databases (Co-Star) that have information on larger properties, but I'm personally interested in small to mid-sized multifamily. Not sure if something is out there in that respect, but I'd be curious to know!
Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 654 posts · 622 votes
1y
Analyzing is easy. To find good deals you'll need to meet in person with the Brokers selling the properties. Get them to call you first when a deal comes to them.
I appreciate your goal to automate some processes and I'm sure in your field it happens all of the time, but there is no replacement for good 'ol person contact and networking.