What is proptech and why it matters for CRE
While there are many definitions for PropTech, it's assuredly something to take note of for CRE professionals.
When it comes to embracing cutting-edge technology, the real estate industry has been trailing the business world for years. A new generation of PropTech companies however has risen to the occasion in the past few years and is working to change this technological status quo.
“PropTech” is a term that refers to software and other digital products created specifically for the real estate industry.
Derived from combining the words property and technology, PropTech encompasses solutions such as online listing services, mobile apps, property management SaaS products, crowdfunding platforms, and more. Many solutions employ data analytics in order to help users make intelligent decisions when it comes to buying, selling, leasing, or investing in real estate, streamlining property management, or marketing their products in the industry.
In addition to PropTech, real estate technology is sometimes referred to as REtech (real estate technology) and CREtech (commercial real estate technology). As with technological advances in other industries, the purpose of PropTech is to streamline work processes, reduce paperwork, improve communications and accuracy, and open access to the industry for a wider base of users.
For example, any real estate owner, whether commercial or residential, can now list their property for sale on services such as Zillow and LoopNet, and thus reach thousands of potential buyers while bypassing the traditional realtor and their services. Property management solutions like RealPage Commercial, AppFolio, and Rentmoji offer features such as lease creation, automatic CAM reconciliation, online rent payment processing and work order request submissions, and more.
In the following section we will highlight a few of the more noteworthy PropTech companies and how their products are working to advance the real estate industry.
Notable PropTech companies to watch
Reonomy is one of the leading PropTech firms in the commercial real estate industry. Reonomy’s property intelligence platform helps CRE professionals unlock property data and owner contact information to discover new opportunities and win more business. Brokers, investors, lenders, appraisers, insurance providers, and other service providers all use the platform to find and win prospects in their market.
Applications are available to help these professionals find off-market properties likely to sell, likely to refinance, in need of building services, and so on, then gives access to property owner contact information.
Founded in 2014, Opendoor revolutionized the selling of residential real estate by giving interested home owners competitive cash offers to purchase their homes through their web site. Users provide their address and some details about the property and receive a customized offer based on the home features and local housing market trends within 24 hours.
If the home owner would like to proceed with the sale, the company conducts an in-person home assessment and schedules a convenient closing date.
Opendoor not only simplifies the home selling process, but eliminates the hassle of finding a realtor, listing the property, and dealing with multitude of phone calls and property showings. It also removes the uncertainly of a potential sale falling through at the last minute because the buyer fails to secure financing. The company lists the acquired residential properties for sale through their app and allows interested buyers to unlock and tour houses throughout the day at their convenience.
They also offer a trade-in program, which allows customers to coordinate the selling of their home and buying of a new one so they don’t have to pay two mortgages or move twice. Opendoor is headquartered in San Francisco, but it has local offices throughout major cities in the United States.
Fundrise is another PropTech pioneer that popularized the concept of crowdfund investing in real estate. Based in Washington, D.C., the company owns investment properties throughout the United States. Its portfolio consists of a healthy mix of new and renovated real estate assets, including apartment buildings, single family homes, and commercial properties.
The company is very forthcoming about its selection of investment properties and features a detailed profile of each one on their web site.
Fundrise allows users to start investing in real estate with as little as $500 and offers four investment level plans to meet the various income and wealth growth objectives of their customer base. Since 2012 the company has acquired over 500,000 members and has invested in close to $2.5 billion worth of commercial and residential properties.
According to their web site, their overall investment portfolio return after fees in 2018 was 9.11%, with earlier years bringing in as much as over 12%. Returns are earned via quarterly dividends and asset value appreciation, with the different plans offering various levels of each.
Bowery Valuation has taken on innovating the property appraisal aspect of the real estate industry.
The company has developed cutting-edge proprietary software that helps the in-house appraisers prepare higher quality reports faster than the competition.
The Bowery platform relies on such features as their robust database of comparables and public record integration to generate visually appealing reports with less manual work. The accompanying mobile app allows the agents to upload photos and notes while working in the field. Bowery provides its services to national and regional banks, mortgage originators, private lenders, as well as Fortune 500 companies. It can prepare appraisals for all types of real estate assets, including land, office, industrial, retail, self storage, multi family, condos, affordable housing, and mixed-used developments.
The company has offices in New York and Washington, D.C. however it offers appraisal services in several states up and down the East Coast. Individuals interested in evaluating the quality of Bowery’s reports firsthand can request a free sample through their web site.
PeerStreet has created a marketplace that allows users to invest in real estate backed loans using personal savings and self-directed IRA funds. Founded in 2013, the company was the first online platform that opened access to an asset class that has been historically inaccessible to individual investors.
According to their web site, PeerStreet’s typical loans feature 6% to 9% annualized returns, a loan-to-value (LTV) ratio of 75% or below, and short terms of 6 to 36 months. The platform does however offer a range of products with varying rates, LTVs, and durations.
Accredited investors can start investing with as little as $1,000, and can select loans on their own or use the platform’s automated investing option. The company works only with established private lenders and uses big data and state-of-the-art algorithms in their underwriting process in order to generate higher quality loans.
PeerStreet’s portfolio of loans is well diversified across real estate asset types, locations, terms, and lenders in order to minimize risk.
As one of the more mature companies in the PropTech field, RealPage has been providing data analytics and software solutions to the real estate industry since 1998 and it currently serves over 12,000 customers around the world.
With their main focus on optimizing property operations and maximizing capital returns, RealPage offers products for the various aspects of the real estate business, such as leasing, accounting, property management, marketing, applicant screening, online resident services, renters insurance, spend and utility management, and more.
The company’s software is tailored to owners and property managers of a wide range of real estate assets, including single-family, affordable, student, military, and senior housing, as well as all types of commercial and mixed-use properties.
RealPage’s software suite is cloud-based and many of its products have been optimized for mobile devices. In addition to their in-house product development, the company supports its growth efforts through acquisitions.
The company also hosts a User Group and seeks feedback from participating customers in order to enhance existing products and develop new features. RealPage is headquartered in Richardson, Texas and has additional offices throughout North America, Europe, and Asia.
Procore for owners
A platform with the hefty mission of connecting everyone in construction, Procore for Owners was known as Honest Buildings prior to getting acquired in 2019.
The software empowers property owners to stay in control of construction projects by implementing standards, mitigating risks such as surprise expenses and schedule delays, and facilitating access to critical data in order to make the right management decisions.
Procore for Owners can be utilized for various types of real estate projects, including retail, hospitality, office, hospitals, and other medical facilities.
The platform allows users to track cost changes and project status updates in real time, collaborate with other users, oversee contractors work, standardize vendor bids, inspections, and punch processes, and maintain consistent document management across projects.
According to their web site, Procore for Owners has saved its users an average of 6.3% on construction project costs, with the biggest chunk of savings coming from the reduction of project administration expenses as a result of automating repetitive and time-consuming project management tasks.
Procore for Owners can be integrated with other commercial real estate PropTech including Yardi, MRI, AvidXchange, with more industry partnerships to come in the future.
NavigatorCRE’s vision is to become the ultimate platform for commercial real estate professionals by combining data analytics and visualization tools traditionally offered by various products used in the industry.
The fully cloud-based platform offers features such as multiple map styles including heat maps and streetview, map filters, various data presentation formats, customized dashboard, and a business intelligence engine.
Customers can also choose to import their existing real estate data and utilize the NavigatorCRE user interface to manage it. Additionally, the platform supports integration with external and proprietary databases, and other property management and CRM systems including Yardi, MRI, CompStak, Salesforce, Zoho CRM, and many other digital tools.
NavigatorCRE’s brokerage pricing plans include single user, team, office, and enterprise packages, and there is also an option to build a customized package for users like property managers and title companies.
The NavigatorCRE team has over 75 years of combined experience in the commercial real estate industry and the company is an official member of the Forbes Real Estate Council. Already adopted by some of the major players in the industry, NavigatorCRE took second place at TechCrunch’s Meetup + Pitch-Off: Seattle 2017.