Analytics and Automation

3 Replies

Hi BP! I'm a newbie investor with a strong background in computer science and machine learning. I feel like this is my (and other people's) "unfair advantage"; however, I don't know exactly how to apply my talents.

So, this post is really meant to get some feedback and ideas. I understand BP has a few automation tools (e.g. quick property analysis) and there are more out there. My question is: what would be some impactful pieces of automation or analytics in the investment space?

Hi @Richie Choy ! Good questions! I think AI and AML is definitely going to have it's place in REI space in the future. Zillow, House Canary and several others are already experimenting with it to get a more accurate valuations of properties. However, the possibilities are limitless in my opinion since it can be applied to anything in the space really. Risk Management, market analysis, vacancy loss prediction, etc. etc.

In the end, if AI and AML can remove 'all doubt' from an investor to engage on a property, because it has performed all the analysis to some 'certain' level of accuracy...and that accuracy has a proven track record, then I think that is where the target should be.  Within that are many layers of underwriting with several channels that can all be improved upon with AI or AML. Figuring out which channel has the 'best' data to learn from is probably the tricky part right now. 

Best of luck! 

Cheers!

@Richie Choy This is a great question. I also have a background in computer science. Since I have been investing I have found myself struggling with a lot of manual tasks and/or a lot of things that I wish were somehow done for me by some system that learns over time. Here are some of my pain points:

Given a particular property, what would be the typical expenses for this building? What is the typical price range for these expenses? Let's say I'm evaluating a property that will need some landscaping. I would like to know the typical price of landscaping yearly contracts. Who are the landscaping contractors with great reviews in the city? If the building has an elevator, what would be the typical expenses associated with it? Maintenance, emergency phone, ... etc. 

Given a particular apartment building can I have some type of automation to estimate the costs of renovating an apartment? 

Maybe there is some tools out there who do some of this work already. Not sure. 

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@Henri Meli Cost estimation tools exist on BP for rehab, but yeah there are some specific use-cases such as landscaping. Cost estimation could probably be done with some sort of regression, but I think aggregating the data would be the issue. Contracts must be submit for tax purposes, but pretty sure only the IRS gets that info :(

Have you read J Scott's book on estimating rehab costs? A really simple (non-data driven) tool might be able to follow some of these general principles.

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