Data is the hot commodity of the 21st century. Because of its ability to fuel and inform nearly every industry in existence, data accumulation and usage should be focal points for any business, no matter the product or service. This is especially true of real estate finance, where tech tools and predictive analysis are changing the playing field.
Real estate finance has historically been restricted to backward-looking analytics, less helpful in predicting the future of an investment than in observing the patterns of the past. With emerging financial and data analysis technologies, that is changing.
When it comes to real estate investment, there is ample room for innovation. With intelligent tools, massive pools of accumulated data, and commercial real estate technologies capable of high-quality analysis, real estate investors have the power to grow their return on investment (ROI) more than ever.
Here’s how.
Gather Real Estate Data
With the always-online nature of our world, data can be accumulated on a massive scale. This data has real value in the real estate finance and investment industry, where understanding a wide variety of informative metrics can help investors and financiers navigate deals to build value.
The advantage of scale data analytics is clear in a variety of data categories. Here are the types of data commercial real estate professionals can use to inform their finance decisions:
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Property data
Any real estate agent worth hiring would be able to find information on property type, year built, and all features and characteristics. A thorough analysis of that data, however, gives investors a broader picture of all available properties, enhancing the property-hunting experience.
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Market data
The data accumulated by the trends in area real estate give lenders and investors powerful tools in predicting the success of an investment property. Market data analysis looks at property values, rental incomes, local trends, selling times, and much more to give all parties of a real estate transaction the predictive tools they need to determine the best investment decisions.
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Mortgage and lender data
With fintech tools, real estate investors and financiers can navigate a marketplace of borrowing and lending to find the best possible deals. Increasingly, these deals can be found in online databases, where borrowers can easily sign up and get qualified.
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Real-time data
The final component of real estate data useful in finance is the real-time data that assists financiers and investors in adjusting to price changes, mortgage interest rates, and economic factors that might influence an investment decision. Real-time data gives investors the timely updates they need to make an informed deal.
In any real estate transaction, the more data the better. Understanding that data through analytics enhances and informs real estate decisions, providing investors with easy methods of conducting due diligence for the best return.
Use Fintech Tools to Inform Every Step of the Finance Process
Financial technology, or fintech, represents the ability for industry to evolve at rapid rates using smart solutions. In real estate investment, fintech is the burgeoning future, giving investors the ability and data to conduct business in a digital environment like never before.
But what exactly is fintech?
Fintech comes in many forms, all of which are changing the way business is conducted in their respective fields. Asset management, investing, mobile banking, insurance, and digital wallet and payment services all are areas of the financial sector where fintech is proving itself to be the future of finance.
In every step the real estate financing process—from finding the right investment property to securing the best mortgage rate—fintech is here to help.
Finding the Right Investment Property
Here, the property and market data you have accumulated can be used to examine every aspect of an investment. This gives you the best understanding of how a property might perform long before you begin the process of closing on a deal.
Zillow, for example, makes use of data and fintech tools to offer real-time predictions on the price, rent, and more for all their property listings. Real estate investors and financiers need predictive data like that to make informed investment decisions that will have the ideal outcome.
Securing the Right Financing
In real estate, fintech is growing in prevalence with the use of mobile apps and digital marketplaces for lenders and sellers to list products and property purchasable with a few clicks. Popular online mortgage brokers like Rocket Mortgage make substantial use of this available data to bring easy analysis to real estate markets across the world. With mortgage and lender data accessible with real-time updates through a digital platform like this, investors can shop for options like never before.
This has empowered many prospective investors and homebuyers, who can now explore a broader world of real estate data from the comfort of their own home. And as more and more transactions happen online, the more data is accumulated for study and application.
Data is transforming investment management, giving lenders and investors real-time usable data on home and commercial real estate values, rent numbers, tenant experience, and mortgage rates. All this informs what investors can expect from a deal, creating broader opportunities for higher ROIs and more profitable investments. Some investors are even looking at cryptocurrencies as another avenue of data in real estate.
Build Value through Data Analytics
Through every part of the real estate financing processes—the search for property to financing and refinancing—data analytics is an essential aspect of informing and improving decision making. With the right data and tools, real estate investors can transform the way they do business.
Big data and its emergent place in real estate have proven worthy of investor interest. In fact, Greenwich Associates reported firms interested in alternative data were on average investing $900,000 a year. The money is there. The data is there. All that’s needed are the right tools and application of them.
The opening up of real estate investment to a broader audience through data analytics and new technologies is transforming the state of real estate finance as a whole. Now, investors can make use of fintech tools powered through data science and analysis to make ideal investments and maximize ROI in every investment deal, adding insight and value to real estate finance.
