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The digital evolution of real estate investing

We know that technology has disrupted the home buying and selling process, but it's also heavily influenced how we invest in real estate.

We could talk to any executive at length about how technology has impacted their respective industries. It’s incredible hearing about the transformation of different industries by the hand of technology, and then getting to share my own experiences with the current digital evolution happening in real estate investing.


We know that technology has disrupted the home buying and selling process, but it’s also heavily influenced how we invest in real estate. We all remember quite well Airbnb’s significance in the evolution of short-term rentals. This simple, yet ingenious idea proved that technology can completely upend a market almost overnight.


Within a year, Airbnb was already valued at over $2 million. This inspired other innovative entrepreneurs to exploit technology to disrupt other segments of the real estate industry in hopes of becoming the next Joe Gebbia, Brian Chesky, or Nathan Blecharczyk.


Here’s how real estate investing has changed alongside advancements in technology.


AI and big data even the playing field

Successful real estate investors can attest to the time and energy that typically goes into collecting and analyzing critical data to help make smart, informed investment decisions. It can take beginners months of research until they have enough information under their belts to identify lucrative opportunities in the market — time that leaves them vulnerable to more seasoned investors.


But not anymore. Artificial intelligence has automated big data analysis, making it faster, more efficient, and more accurate. AI has leveled the playing field so beginner and part-time investors have equal footing and can compete with investors who know the real estate market like the backs of their hands.


This doesn’t mean the technology is the be-all and end-all, however. Yes, technology can quickly sift through potential opportunities and identify the ones worth pursuing, but investors must still do their due diligence and compare these results to their own research before finalizing their decisions.


Simplifying the real estate buying process

A good investment decision does not end after you’ve identified a property. Buying real estate is a complex process, rife with opportunities for mistakes and setbacks.


Over the last decade, there has been a boom in prop-tech startups that help both homeowners and investors optimize and streamline the process of buying a property. A considerable $32 billion has been spent on real estate technology and new prop-tech companies globally over the past few years alone.


Real estate technology has influenced everything from viewing property listings to mortgage approval to signing a contract. Investors don’t need to have advanced knowledge of technology to utilize programs that help them buy and invest in real estate, which benefits small-scale investors and makes the world of real estate investing more welcoming to all.


Crowdfunding opportunities

Owning and managing a property might be the dream for many real estate investors, but it’s not always the end goal for everyone. Technology has helped propel real estate crowdfunding forward and this modern-day solution to traditional real estate investment trusts (REITs) allows multiple investors to own a shared property.


This investment approach reduces the minimum required investment amount, which is a great option for beginner investors. However, there are some pitfalls, like not having total control over a property, which means it might not be the right fit for everyone.


Virtual real estate

This is one of the most recent advancements that has stemmed from technology. If you’re unfamiliar with virtual real estate, investors can now invest their money into virtual property in the metaverse. If you’re wondering who might be crazy enough to try this, you might be surprised that metaverse real estate sales exceeded $500 million last year — and that number is expected to hit $5 billion by 2026.


This might not be a good strategy for every investor, at least until the metaverse experiences more regulation and security, but it could be a great opportunity to diversify your portfolio.


Those who establish and own real estate assets in the metaverse could be ahead of the curve, but there are also a lot of risks involved with this investment approach. If the metaverse collapses, for example, your virtual real estate investments would disappear along with it and you’d have nothing to show from it aside from a loss of profit.


The adoption of technology in real estate investing has been swift and significant. So much has changed in such a short time, and we cannot even begin to imagine how the real estate industry, and our role as investors, will continue to evolve over the coming years. All I know is that I’m excited to be a part of this change and see where technology takes us in the next five, 10, and 20 years.


By Avi Philipson


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