The Role of Technology in Modern Real Estate Investing

Technology has changed our everyday lives – including how investors approach real estate. Property tech (known as ‘proptech’) has changed everything from how investors find properties to their investing strategies and how they generate a profit. 

Zillow, launched in 2006, transformed how homebuyers and sellers interact with real estate, but it primarily serves residential transactions rather than investment-driven searches. The launch of Airbnb in 2008 revolutionized short-term rentals, also making real estate investing even more accessible for would-be entrepreneurs. Over the last two decades, technology has evolved to support everything from price estimating to enabling investors to quickly find and analyze profitable real estate deals.. 

For real estate investors, these technological advances have streamlined the process of identifying profitable deals, analyzing comps, and scaling investment strategies with data-backed insights. Instead of relying on outdated or generic listing platforms, modern investors can now access live on-market and off-market investor-focused data, investor driven analysis, and investor transaction tracking to make faster, more confident investment decisions.

The real estate industry is undergoing its second great technological revolution with 80% of Gen Z now using social media when making purchases, including choosing real estate. Proptech is everywhere you look in modern real estate investing, from AI’s ability to automate manual tasks to VR home viewings and blockchain transactions. 

Let’s dive into the role of technology in modern real estate investing. 

Technology in Property Search and Acquisition

Technology first changed the real estate industry by fundamentally altering how buyers search and acquire property. Real estate platforms and marketplaces are still relatively young, with the most established names being close to celebrating their 20^th birthday.  

Online property listing platforms, such as Zillow and Realtor.com, have changed how buyers approach the market with over a million properties listed for sale in the US monthly on these websites. According to the National Association of Realtors, almost 97% of home buyers search for properties online. 

AI has been incorporated into these platforms to provide customized recommendations and personalized property searches. These algorithms analyze the preferences of the buyer, from location to property types, matching them with potential properties that fit their investing niche. 

Generative AI may be the current hot topic, but it’s been playing a role in property searching for years. Zillow’s ‘Zestimate’ tool estimates a property’s value, giving both buyers and homeowners the ability to determine the potential value as a starting point. 

AI-Powered Investment Tools

AI is at the heart of today’s proptech developments, enhancing and streamlining real estate investing. This emerging technology can automate property value, conduct predictive analytics to identify market trends, and assist with data-driven investment decision-making. Investors interact with AI-powered tools throughout the property search and acquisition process, leveraging historical data and analytics to give investors more in-depth insights.

Exploring potential properties can be overwhelming, especially if you’re a first-time investor or exploring an unfamiliar neighborhood. AI-powered tools help investors pinpoint undervalued properties, track investor activity, and instantly assess whether a deal aligns with their return on investment (ROI) goals. Privy’s Patented Comparative Search technology, for example, allows investors to see what strategies successful investors are using in a given market.

One of the biggest challenges for real estate investors is finding truly profitable deals in real time. Privy’s Comparative Search technology solves this problem by tracking successful investor transactions and surfacing deals that match those same criteria—allowing investors to emulate proven strategies instead of manually comping properties. This means investors can identify high-performing markets and investment opportunities with one-click deal validation, giving them a competitive advantage.

Blockchain and Smart Contracts

Property acquisition is an area where we’re only just beginning to see the impact of modern technology, including blockchain and smart contracts. This technology streamlines property acquisition by verifying property ownership online and helping to reduce fraud. 

While blockchain adoption in real estate is still emerging, investors are exploring its potential for tokenization—fractional ownership of properties—and more secure, transparent transactions. Paying in blockchain when purchasing a property can speed up the closing process, to the benefit of both the buyer and seller.

What Privy’s Technology Offers Investors

Privy is at the forefront of proptech, giving investors direct access to data tailored for real estate investing—not just traditional property listings. Unlike other  platforms, Privy helps investors find properties with built-in equity, track investor comps, and validate deals instantly. 

What makes Privy unique is our Investor Activity, empowering investors to replicate the strategies of successful peers to minimize risk. As an investor, you can access real-time data in 1 U.S. state, 3 states, or nationwide, depending on your investor account. Our advanced forecasting tools make it easy to project long-term rental ROI with a live market heat map to identify emerging opportunities to stay ahead of the curve.

Technology for Property Management

Successful real estate investors leverage technology to streamline their property management. Most investors prefer to take a hands-off approach with their properties, whether they’re investing as a side hustle or have multiple properties. Thankfully for investors, we no longer live in a time of mountains of physical paperwork and collecting rent by cheque. 

Property management software like AppFolio and Buildium automate rent collection, while electronic signatures and cloud storage have replaced paper copies of leases and renewal documents. Management software benefits both property owners and tenants with AI-powered tools making tenant screening more efficient and automating maintenance requests. 

Research by McKinsey & Company suggests investing in this software could reduce operating costs for property investors by 20%, while also boosting tenant satisfaction. 

Smart Home Technology and IoT

Our homes are smarter than ever before, from energy-saving appliances to basic security systems that only cost a few hundred dollars and smart thermostats that keep energy bills under control. Investing in smart home technology is a win-win for investors, positively impacting the property’s value and improving the experience of tenants to ensure long-term occupancy. 

Integrating the Internet of Things (IoT) technology enables property owners to access real-time data with sensors to monitor and control energy usage, including HVAC, appliances, and lighting to optimize cost savings. Embracing the potential of smart properties can make maintenance easier by identifying potential problems early. 

As tenants increasingly look for properties with better sustainability, smart home technology can drastically reduce a property’s environmental footprint. Smart sensors and security systems are ideal for multi-unit properties, enabling investors to enhance their building management and significantly reduce energy costs in shared areas.

Financing and Investment Opportunities

Gone are the days when real estate investing was only accessible to the 1%. Research by Gallup shows that real estate has become the preferred long-term investing strategy for Americans. Technology has democratized real estate investing by providing new financing opportunities, making it easier for novices to start investing in real estate with little money.

Real Estate Crowdfunding 

Real estate crowdfunding has made it easier for investors to pool resources, reducing the capital barrier to entry. Some investors use this strategy to diversify into new markets while keeping their active investment portfolios focused on fix-and-flips or rentals.Driven by the growth of social media, crowdfunding has become the 21^st-century version of real estate investment trusts (REITs), enabling multiple investors to pool their resources together to purchase a shared property. 

Crowdfunding reduces the investment threshold with some schemes enabling individuals to start investing with just a few thousand dollars. Investors must do their due diligence as every technology, including crowdfunding, can have a dark side with the potential for fraudulent transactions. 

Digital Mortgage Solutions

Another change in the modern real estate industry is the process of obtaining a mortgage. Investors no longer need to secure an appointment with a bank and have a face-to-face meeting about their investment strategy. Instead, online mortgage applications and approvals are quickly replacing traditional mortgage applications with most Millennials and Gen Z applicants preferring to apply online. 

Instead of having a mortgage application tested and approved by a bank employee, these mortgage solutions utilize technology and AI-powered tools to assess potential risks and an applicant’s suitability for the loan. 

Real Estate Tokenization

Another way technology is democratizing real estate investing is through tokenization. This fractional ownership is reshaping investment strategies, enabling properties to be divided into tokens – or units – to be traded through blockchain platforms. Research by PwC also suggests that blockchain can make investing more accessible by reducing real estate transaction costs by 10%.

Real-Time Market Analytics and Trends

Where technology is making the most difference for real estate investors is with real-time market analytics and trend forecasting. Big data is the main focus for investors with Privy enabling them to understand the profitability of rental properties, from calculating ROI to understanding the cash-on-cash return. This type of technology and data helps investors identify high-potential markets, giving them an edge over the competition with in-depth local knowledge. 

Don’t overlook the importance of neighborhood-level data. At Privy, our neighborhood-level data gives you clear insights into the facts most likely to drive or diminish rental demand for your property. It enables investors to understand the unique dynamics, future growth potential, and risk factors associated with an area.

Privy’s algorithm incorporates data from a diverse subset, factoring in every aspect of a neighborhood to determine the property’s authentic value. Our technology allows investors to examine major community-driven insights, including cash flow potential and vacancy rates.

Location-Based Property Analysis 

Proptech has introduced geolocation and mapping tools into the analysis process for investors, helping them determine a property’s value and identify long-term opportunities. With Privy, you can search by a property address, neighborhood, or even city, to gather data with advanced search functionality, including map-drawing tools.

Investors can focus their search on areas with active development activity of high potential for increased property value in the future. Our detailed property analysis enables investors to assess the potential of a property as a fix-and-flip, short-term, or long-term rental. Privy’s location-based property analysis goes one step further with off-market information, including pre-foreclosures and owner information. Our integrated LTR calculator makes it easy to utilize dynamic data to calculate key metrics, including cap rate and net cash flow. 

The Future of Real Estate Investing with Technology

Virtual Reality and Augmented Reality 

Technology is always evolving in the real estate world with virtual reality (VR) and augmented reality (AR) presenting the next frontier of proptech. We can expect to see more immersive property tours in the coming years with VR and AR enabling potential buyers to explore properties from their own homes, removing the need for in-person viewings. Investors can now access more markets without the traditional challenges of relying solely on photos or videos, making it easier to visualize potential repairs or assess a property’s condition. 

We’re already starting to see virtual property tours become the norm with a more enhanced experience expected when VR tools become more mainstream. Brokerages and real estate agents may soon offer VR tools for clients to get an immersive experience of a potential property – even from thousands of miles away. The power of AR to enhance this experience is its ability to overlay digital information into the VR, making it easier to visualize potential renovations. 

Artificial Intelligence (AI) and Machine Learning (ML)

Artificial Intelligence is still in its infancy in modern real estate investing but will play a prominent role in the years to come – in partnership with machine learning (ML). We predict that AI will become central to property evaluations and market predictions, including trend forecasting with machine learning identifying potential hidden opportunities in up-and-coming areas.

These algorithms will streamline data, giving investors crucial insights to make better data-driven decisions by predicting market trends and providing real-time insights. On a practical level, AI will improve the operational side of real estate investing, from suggesting property recommendations to scheduling property viewings. 

Sustainability and Green Technology

‘Sustainability’ is a buzzword in every industry – and real estate is no exception. As consumers and tenants become more focused on finding greener properties, technology will play a virtual role in creating more sustainable real estate investing with energy-efficient properties and the introduction of green building certifications. 

Internet of Things (IoT) and smart buildings, explored earlier in this article, will become more commonplace. This technology will enable tenants – and property owners – to control different aspects of the property’s environment remotely, ensuring both comfort and sustainability by improving energy efficiency. The growing environmental awareness amongst consumers means tenants will increasingly expect more energy-efficient appliances, from sustainable housing materials to renewable energy with solar panels.