The introduction of artificial intelligence (AI) into the Proptech space is revolutionizing real estate investing. Maximize Market Research reports that the AI in Real Estate market, valued at 220.68 billion in 2023, is expected to grow significantly to 1803.45 billion by 2030. AI technology refers to any software, computer, or algorithm that automates human tasks. Leveraging AI data analytics supports real estate investors looking to make data-driven decisions to enhance efficiency and profitability at every stage of the real estate investment process.
Why Is AI Beneficial?
AI offers two main benefits for real estate investors:
- Enhanced operational excellence: AI optimizes processes through task automation, freeing real estate investors to focus on portfolio management and strategic growth initiatives.
- Increased profitability through risk assessment: AI instantly pores over mountains of property data, economic indicators, and natural disaster assessments to spot undervalued properties and risky investments, enabling investors to make data-driven decisions and optimize capital allocation.
McKinsey estimates that real estate companies that utilize AI for efficiency, improving tenant retention, and selecting profitable assets see a 10% increase in net operating income.
Uses of AI for Experienced Real Estate Investors
There are many ways real estate investors can leverage AI tools in their real estate investing business. Here are some to consider:
Property Marketing
In today’s digital age, more than 70% of renters and 90% of homebuyers start their property search online. Investors can optimize property listings, target specific demographics, and enhance property listing images with AI tools such as Virtual Staging AI.
Location Analysis of Property
Accurately predicting property ROI directly impacts portfolio returns. Real estate investors can leverage AI tools like HouseCanary and Skyline AI to analyze granular property data like market trends and demographic shifts. This data can be correlated with predictive modeling to identify undervalued assets and ensure optimal ROI.
Tenant Screening
Real estate investors can minimize vacancy rates and tenant-related financial losses with AI-powered platforms like Propertyware and RealPage. These programs conduct tenant risk assessments such as income verification, rental history analysis, and eviction history, allowing investors to reduce delinquency rates and protect their cash flow.
Building Monitor Tools
Proactive property management can maximize asset value and tenant satisfaction. Smart Flow Ark, Mezo, and other building management AI tools analyze sensor data to identify problems before they escalate, optimizing property performance, reducing operational costs, and improving building conditions and tenant retention.
Are There Downsides to AI?
AI usage in real estate investing does present challenges.
Data security and compliance should always be top of mind for real estate investors utilizing AI. Safeguarding sensitive data from investors, tenants, and partners requires robust cybersecurity measures.
The initial investment in AI software, infrastructure costs, and employee training can also be prohibitive for real estate investors. However, the potential ROI from more efficient operational performance and risk assessment may recoup some of these costs.
So, Is Using AI Worth It?
Embracing AI tools as part of their workflow gives real estate investors a competitive advantage in today’s rapidly evolving market. Investors can boost financial performance by improving their operations and risk assessment processes and watch their portfolios grow with powerful AI tools.
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