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Real Estate Investment Trends: What You Need To Know

By Karen Janowitz, California Business Journal

The real estate market is constantly shifting, with new technologies, processes and laws regularly changing the way that real estate professionals work. Keeping on top of these latest trends and identifying the ones that will truly make a difference in the market is what allows real estate professionals to maintain effective and sustainable businesses, even with continuous changes in the market. As technological developments in business increase at a rapid rate, many real estate businesses are making heavy use of tech solutions digital real estate investing to increase their efficiency and overall profitability.

Automation and AI

As with many industries, the benefits of automation and artificial intelligence are also coming to the forefront of the real estate market. Companies are using automation and AI to clear bottlenecks in some of their key processes, such as accounting, documentation, contracts and reporting, in addition to generating new business opportunities much more quickly. This allows these businesses to spend less time on these administrative tasks and more time on the ones that earn their business money. According to an article published on EY, more than 61% of real estate companies are currently leveraging technology, and as per an article in Uptech, over 35% are considering using automation in their processes.

Real Estate Investor CRMs

One of the biggest technology solutions being used by real estate investors is real estate investor CRMs and technology such as a real estate investor portal. These technologies allow real estate businesses to manage their projects and investors more effectively whilst reducing the amount of time taken on administrative tasks. The portals also allow real estate businesses to have key documents uploaded and accessible by all critical parties, such as contracts and documents for investors, financial reports for accounts, and more. In recent times, the number of real estate investor CRMs in the market has increased massively and real estate businesses are making significant use of them.

Virtual and Augmented Reality

While virtual and augmented reality technology is not a new thing, its use in the real estate market has been expanding rapidly in the last few years. Many real estate agents and those seeking investment are making use of virtual and augmented reality to show potential tenants and buyers around new properties, as well as highlighting the potential of an uncompleted property by showing a virtual version of what it would look like when completed. These visualizations can go a long way to enticing either an investor to back a real estate project, or getting a new buyer or tenant to agree to move into a property by offering virtual viewings.

Reversal of Some Pandemic-Era Trends

The COVID-19 pandemic changed a lot of things in the real estate market. The rental market suffered due to many young professionals and students choosing to stay with their families, and commercial real estate suffered greatly with the massive move to working from home. Now there are suggestions that some of these trends are reversing, with many companies demanding that employees return to the office. Since lockdown restrictions have ended in countries worldwide, the rental market has started to make a good recovery, which has alleviated some of the issues of inflation and higher interest rates in the market.

Increases in Debt Financing

With ever-increasing interest rates, the main method of real estate investment may be changing, with methods that have been used in the last fifteen years becoming less popular. As a result of this, the use of real estate debt financing will become increasingly popular compared to direct equity investments and development projects. A big part of the reason behind this is that debt financing presents much less risk for the investor than other methods so long as proper due diligence is conducted.

Crowdfunding Properties

Crowdfunding for properties is something that is becoming much more popular in the real estate market. Not everyone has the money to invest significant amounts in a property, but there are still a lot of people who are happy to invest a smaller amount and receive distributions and benefits in the property. Many companies have set up investment platforms specifically dedicated to real estate businesses that want to raise investment through crowdfunding. In the USA, between 2013 and 2021, crowdfunding property deals raised a total of $51 Billion, and the amount being raised each year continues to grow as less wealthy investors attempt to get into the real estate market.

Conclusion

Today, there are a huge number of technological and process-based advances in the real estate investment market. Real estate businesses are making use of tools such as real estate CRMs and automation to improve their relationships with their investors and earn more for their business. Furthermore, the actual methods for investing in real estate are also changing, with crowdfunding and other alternative investment types becoming increasingly common. These new trends are presenting real estate businesses with ways to tackle the problems caused by rising inflation and increasing interest rates that have been generally seen in the global market.