Real estate is one of the last industries to adopt technology, and investors can use that to their advantage to literally make millions today. Real estate continues to lag other sectors in terms of technology disruption. But for tech savvy investors, technology is creating scalable opportunities like never before. This is the second of a series of articles on how technology is changing real estate investing. You can read the first post on how technology is changing property management here. For this article, I detailed a list of tech systems that we have found beneficial for investing.
Download Your FREE guide to evicting a tenant!
We hope you never have to evict a tenant, but know it’s always wise to prepare for the worst. Navigating the legal and financial considerations of an eviction can be tricky, even for the most experienced landlords. Lucky for you, the experts at BiggerPockets have put together a FREE Guide to Evicting Tenants so you can protect your property and investments.
1. Free Online Education
Let’s start at square one: getting educated about real estate. The wide proliferation of the free podcast has been a game changer for real estate education. Forget paying $20k for a weekend retreat taught by a “guru.” All of the education you need is available online for free in the form of articles and podcasts. This may seem very basic—but I think it’s a fundamental shift in how information and knowledge is broadcasted. In terms of podcasts, I recommend three podcasts: BiggerPockets, Real Estate Guys, and Masters of Scale.
- The BiggerPockets Podcast does a great job of describing the basics of real estate investing in an easy-to-consume fashion.
- Real Estate Guys Podcast digs into syndication, a next level up in the investing game.
- Masters of Scale Podcast by Reid Hoffman gives you the mindset and systems thinking needed for scaling a business with technology.
2. Availability of Sales Comps
Zillow is a huge game changer for any tech savvy investor. The Zillow filters make pulling comps a breeze. Zillow’s filters make it so easy that you can pull reasonable comps in literally five minutes. For any BRRRR investors out there, comps are essential to the eventual refinance, and for a flipper they are a must-have to figure out resale value.
Related: 7 Ways Technology is Completely Overhauling Property Management
Do I also use the MLS? Yes, I do use the MLS to dig for more granular data when needed, as I realize that not all data exists on Zillow. But I believe you can get 90 percent of the way there in a lot less time using Zillow data to pull comps.
3. Easy-to-Find Rental Estimates
Rental estimates are so interesting that they could probably be it’s own topic! There is a ton of data available online if you know where to look. We use four different sources to triangulate around rental information. Zillow is a decent first place to start, specifically for single family homes in highly populated areas. Next, we suggest using Rent-o-meter. As a third source, we use our own home built rent estimate tool, AccurateRent. This is only available currently in PA and NJ, but we will be expanding it to other areas in the future. It uses our own property management data to improve the algorithm and gets smarter over time as more data is available. Finally, we email a local property manager for a final check if the rents are key to the purchase price. Put these four data points together and you have a pretty solid estimate—without needing to ever leave your living room! We believe these data sets will only improve in the future as more data in available online.
4. Quick & Easy Marketing to Would-Be Sellers
Even just a couple years ago, the major way to find a deal in real estate was “driving for dollars.” Think about how inefficient it is to get in a car and literally drive block by block trying to find an old, run-down house. Then you have to go knock on the door and see if the owner is home to try to negotiate to buy their house. Don’t get me wrong, driving for dollars is still a great way to get a deal. But it’s very hard to scale a business by driving for dollars.
Today, marketing can be almost 100 percent automated in the form of buying a database and targeting via online advertising. Just this week, we sent a message to 600 owners in Chester County, PA. All-in, it took about an hour to drill down to the right data set and another hour to properly set up the right message. I can’t imagine how long it would take to go knock on 600 doors!
5. Access to On-Market Deals
Many buyers scoff at buying properties on the MLS. I personally do not agree that you can’t find deals on the MLS. The key to buying on the MLS is to be ultra organized and very persistent. I think technology strongly helps in both of those areas. I keep updated filters in different markets to get notified when a property fits our criteria. Then I try to get an offer to the seller as soon as humanly possible. If the seller rejects the offer, we add the property to a database for followup at a later point if property is still on the market. But all of this is easier through using MLS filters, rather than relying on local signs, agents, etc.
6. Simple Ways to Evaluate the Deal
I highly recommend using Google’s shared spreadsheets to evaluate deals. I have a specific form that I put in for every deal. I share that model with our acquisition agents so they know exactly how we evaluate the deal. Then the agent puts the variables directly in the model so we can immediately evaluate the price we want to offer. We also have the agent upload the pictures/video of the property to Google Drive. This way, I can evaluate the expected maintenance cost in seconds.
7. High-Tech CRM Lead Databases
Once you have a lead for an owner who wants to sell, a CRM database is crucial to staying organized to stay in touch with the owner until they eventually sell the property. There are many CRM databases out there in the marketplace. I think the key is to make sure you use at least one of them, rather than use your memory alone. We find that Google Sheets works fine, but know many investors use Salesforce and Podio. The key is to track the lead and follow up relentlessly. Without tech, followups just do not happen and leads never go anywhere in the future.
8. Useful Property Management Ledger/Databases
In my previous article, I covered the many technologies that property management companies leverage. One of those technologies is a back-end accounting database. This database is crucial for investors because they can track, manage, and optimize their properties quickly. I firmly believe that the sweet spot for investing success is to check-in against a data heavy dashboard with a property management on a weekly or every other week basis. This gives the investors an eye into what’s happening, but also the freedom to find more deals.
9. Valuable Online Communities
One of the best tech tools for investors is to be a part of an online community. For local knowledge, I recommend a local Facebook group. In Pennsylvania, we created a group for investors and joined another group specific to landlords. Both have been very beneficial, and I highly recommend creating one like this in your community. Of ourse, we also plug into the BiggerPockets forums, but you probably already guessed that!
So, what technologies do you use that I missed?
Leave a note in the comments!