Technology vs. People Skills: Which Real Estate Strategies Will Win?
The real estate industry caters to independent strategies. For every investor , there is another way to go about
conducting business. Some may prefer to utilize the convenience of
technology while others want to maintain personal relationships. However, for one reason or another, there remains a void between these two independent strategies. Smart investors will figure out how to incorporate technology into their business while simultaneously maintaining the personal relationships that they have worked so hard to create. Others will need to learn this before it is too late. Using the latest technology, in association with establishing lasting relationships, can go a long way in making a business successful.
Programmers, and the venture capitalists backing them, certainly want the real estate industry to be run through advancements in technology. At the same time, a number of the leading industry minds, and young entrepreneurs are dismissing technology as just another tool. So which real estate strategies will prevail over the next decade? The early adopters riding the next wave of technology? Or those taking customer relationships seriously? Perhaps both?
#NewRealEstateTechnology
Tech is invading real estate, and fast. The following advancements in technology have already been incorporated into the real estate industry:
Drones
Highly controversial drones have been flying their way into mainstream real estate applications. They are now being used for enhanced photography, virtual tours, and even property management.
Big Data
As the world becomes a planet of digital natives, more and more data is becoming available to the public. While big data may seem hyped up to many real estate professionals, better data means being able to pinpoint prospects with highly targeted marketing, and give them more of what they want. Theoretically, this means improved real estate marketing performance and ROI.
Curation
Curation remains a popular trend, though its value may be suffering due to larger trends, and the obvious need for originality.
Crowdfunding
Not only is technology creating more efficiency in mortgage lending, it is spawning new financing models altogether. The advantages of speed and streamlining operation technology can increase lender margins, or help keep interest rates and borrowing costs low. One of the largest new developments has been ‘buy to rent’ loans for single-family rental home investors. Crowdfunding goes even further, completely breaking from traditional mortgage lending and having to rely on banks.
Home Search
Home searches haven’t necessarily benefited from new technology much. The big home listing portals haven’t changed much. The many new startup attempts at mimicking these real estate search engines haven’t appeared to gain much traction. The data shows house hunters are still far better served turning to local real estate websites.
Website Design
Web design has changed significantly in the last year; both aesthetically and functionally. HTML 5 has taken over, and both responsive sizing and content is becoming the norm.
Augmented Reality
Augmented reality is rapidly gaining traction. Augmented reality and interactive ads are taking over as the top ads in print and outdoors. Google Glass is now being used on the streets by some real estate companies to coach agents and team members in real-time. Technology is also working its way into improving green building efforts.
Where’s the Personal Touch?
Technology is great. It can make life and business a lot easier, and more profitable for real estate agents, investors, and the companies they work for. However, some entrepreneurial thought leaders and real estate commentators are increasingly highlighting the benefits of offline, and personal connections.
It all comes down to what is best for business, and enabling real estate professionals to stay in alignment with the things they really care about. Efficiency from technology is great. It gets even better when it improves service for home buyers, sellers, and renters. Done right, integrated technology can make management easier, facilitate business growth, ensure sustainability and long term competitiveness, and significantly drive up ROI and profits.
Still, it shouldn’t be a replacement for real interaction and service. Unless this is kept at the forefront of the mind, short term gains will be just that – short term. Winning customers could become far more expensive, and those with the strongest relationships will be those that retain customers and benefit from their referrals.
With this in mind, some real estate professionals and companies have been taking another look at brick and mortar storefronts. However, they are also taking the time to build real relationships. These are all good things. But, unless the same care and attention to caring for customer needs, and wowing them with great service is maintained at all levels of an organization, it may not make much difference. In fact, you might be better off with just a website, instead of allowing poor customer service reps destroy your reputation, and brand.
The latest technology has been helping to blur the lines between offline and online. Perhaps this is the best strategy for real estate companies. Meet each client where they are and interact across multiple channels for efficiency, while still providing tailored, but high quality service.
Real Estate Investing As A Business
“Investment is most intelligent when most business like” – Warren Buffett
If investing is better when conducted most business like, does it mean that more real estate investors ought to be investing in a more businesslike fashion? Should every real estate investor be investing as a business? What does that really mean? What does it look like? Does that limit the types of properties and strategies that can be applied? Where can help and support be found for building a more businesslike property portfolio?
What does Real Estate Investing as a Business Mean?
“Businesslike” investing suggests a less emotional, better organized, well thought out approach to real estate. Definitions of ‘business’ can range from describing a profession, to commerce and trade, to an actual company. All of these definitions likely influence Warren Buffett’s decision to be more businesslike in investing. It has certainly worked for him, and for his own prized real estate investments, and real estate companies. It could mean running a real estate company of some type, owning an investment (which is distinctly different from managing one), or just being more businesslike in every day investment and real estate decisions.
Why Should Investors Approach REI as a Business?
There are many practical benefits of taking a business approach to real estate including:
- Scalability
- Better true investment decisions
- More profitable investment moves
- Efficiency in organization
- Separating personal from investment finances, assets, and income
- Building substantial additional value within a business entity
- Tax reduction
- More free time
What does Building a Real Estate Business Look Like?
Not everyone envisions building a company and mounting an international conglomerate when they get interested in investing in real estate. So will you need an office, hundreds of staff, and have to go back to wearing uncomfortable suits again?
Most won’t.
Many simply want to generate some extra income, and perhaps build more wealth over the long run. Others aspire to building multinational real estate empires. Yet, what we are really talking about here is approaching investment with a businesslike mentality, and structure. Even for those wishing to go really big, most will find they can now operate a multi-million dollar company from their patios via their smartphones.
However, there ought to be businesslike characteristics regardless of size. This may include incorporation and forming a registered business entity, obtaining business credit and bank accounts, setting up a new business phone number, hiring professional vendors to help out, and having a real estate website.
What Types of Properties can be Invested in as a Real Estate Business?
Not all will incorporate as a C Corp, or LLC. Regardless, of which entity type is chosen, or none is used, every type of property is open to investment.
This may include:
- Single-family homes
- Small multifamily properties like duplexes, triplexes, and 4 units properties
- Apartment buildings
- Office buildings
- Industrial real estate
- Hotels
- Retail property
- Vacant land and lots
What about Real Estate Investment Strategies?
The same goes for real estate investment strategy. Virtually any real estate investing strategy can be formalized and systemized to create a business model.
These REI strategies include:
- Wholesaling houses
- Fixing and flipping homes
- Acquiring and holding income generating rental properties
- Commercial real estate investing
- Mortgage debt investing and note investing
- Private mortgage lending
- Options
- Buying, selling and leasing various real estate related rights
- New construction
Where can Real Estate Investors find Support in Building a Business?
The majority of new real estate investors may have very little experience in starting and running a real business. So where can they find help in investing more intelligently, and building a real estate business which can produce better returns, and build more wealth over the long term?
Simply relying on out of date books, and trolling online real estate forums may not be well suited for investors that want to invest intelligently and businesslike. Look for an organized real estate course and proven system that has synergy with your big picture goals. Build on this by seeking out a mentor or coaching program which actually offers business building help, or combines both real estate and business.
Is This the Best Approach for Everyone?
Certainly not all investors want to, or are suited to full time investing, or even running a real estate investment business. There is nothing wrong with that. Yet, all can benefit from taking a more businesslike and smarter approach to investment. This applies whether simply renting out your old home, flipping one or two houses a year, or investing capital in real estate startups.
Those that want the best results, with the lowest risk, and see the value in fast tracking to their goals, while avoiding the pitfalls will see the wisdom in educating themselves on this approach to investing, and will incorporate the best elements to suit their personal goals and aspirations.
