PropTech is a relative newcomer to the “Tech” suffix world; you may be more familiar with the more recognizable MarTech and FinTech terms. While this terminology may be trendy and buzz-worthy, what does it really mean to put it to work in your real estate investment business? Keeping your competitive edge, and creating efficiencies across your growing portfolio, requires deft use of technology. Implementing the wrong solution or technology that doesn’t deliver value can be a costly mistake. Understanding which technology can have the greatest impact on your bottom line is essential.
What is PropTech?
It’s a good idea to understand what PropTech means before you consider implementing it in your own business. PropTech (property technology) is a category of technology dedicated to the real estate industry. Specifically, PropTech helps real estate investors, landlords, property managers, agents, leasing agents, investors, contractors, and other persons or businesses research, build and develop, buy or sell, rent, and manage real estate.
FinTech (such as online rent/payment collection and accounting solutions) and MarTech (such as property marketing syndication functions and tools to create outbound communications) functions are often embedded in PropTech solutions. PropTech-specific tools can include online tenant screening, virtual inspections for rental properties, renters’ insurance solutions, and real estate communication tools, such as landlord-tenant text messaging services.
An Example of PropTech in Action
To bring it down to basics, let’s examine a real-life example of PropTech. Traditionally, tenants have paid rent to their landlords via check, generally by mail. This process requires several manual steps:
- Writing the check.
- Placing it in an envelope.
- Attaching postage.
- Getting it into the post office box.
Then the landlord waits a few days for it to arrive. There are so many inefficiencies here that it’s cringe-inducing in today’s automated “click-of-a-button” landscape.
Implementing PropTech in this scenario is as simple as employing a platform that allows tenants to pay rent online. Finding a solution that allows tenants to sign up to pay rent via eCheck (ACH) or credit card can streamline this process exponentially. In fact, data shows that tenants with this option pay rent on time more often, sometimes even automating the payment each month so they don’t have to think about it at all, making it genuinely touchless. According to our data at Rentec, landlords are looking to offer online rent payment solutions to tenants more and more to meet demand.
Other tools in the PropTech arena that real estate investors can consider are:
- Tenant screening, including automated delivery of credit reports, rental history, and more.
- Tenant portals for rent payments, maintenance requests, communications, and more.
- Marketing vacant properties across a wide number of websites with a single click.
- Virtual tours of available rental properties, both for tenants and for potential purchasers.
- Modeling tools that can calculate your potential ROI if you are looking to invest in a new property.
- Smart home technology (e.g., thermostats, locks, and security systems) to help manage properties remotely (while also being a selling point for potential tenants).
Transforming Real Estate with PropTech
Like its other “Tech” counterparts, PropTech solutions create efficiencies, making the resources, tools, and systems you need cost-effective and easy to access and use. From a tactical standpoint, the right technology can streamline communications, add value to everyone using the solution, allow you to expand your business by simplifying tedious or manual processes, and ultimately save you time and money.
To uncover what type of PropTech you might need in your real estate investment business, ask yourself a few simple questions:
- What are the biggest sticking points in my daily or monthly workflow? Is there a technology available that can relieve these points?
- Does the PropTech solution I’m considering address all of my concerns or just one piece of the problem? Was it created with my actual job in mind?
- What are the core strengths and weaknesses of my key team members? Can they work alongside technology to create efficiencies across my business?
- Does the technology work for all my stakeholders? For example, your partners, staff, tenants, contractors, and others?
- Will it free me up to do what I do best? From running my business to exploring growth opportunities and building relationships? The right PropTech solution can allow you to focus on high-value tasks.
Technology-based solutions truly emerged during the pandemic as people sought new ways to do things in many industries, including real estate. Before this occurred, PropTech may have been considered useful and efficient, but now it is necessary and invaluable (not to mention expected). It is the new normal, and as real estate investors adopt new technologies, the efficiencies, and cost benefits will outweigh the learning curve.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.