To put it mildly, the sheer volume of data being created daily is enormous.
According to most estimates, about 90% of all data on the planet was created in just the last two years. Contained inside that data is the true story of what is really going on – the trends and patterns that would have otherwise gone undiscovered.
Data analytics help professionals uncover that narrative, and they’re a tool especially helpful in areas like wholesale real estate. Not only can they help us understand the current state of the industry and help us make better and more informed decisions – but they can also help savvy real estate pros better understand where things might be going, all in the name of getting there before anyone else.
In fact, there are five primary ways data analytics are being used in real estate that are worth a closer look.
Predicting Property Values
One of the great things about the real estate industry is that there is a wealth of easily accessible, readily verifiable data about the values of just about any property you can think of. If you want to know the entire transaction history of a home before you buy it, you can find it right online – such things are a matter of public record.
Data analytics comes into play when you consider simultaneously ingesting a massive amount of property value data. Looking at the history of property values in a particular area, you can see how far they’ve come and where they might be headed. This could help contextualize whether a property has peaked or is still on the rise, even if that ascent is (relatively) slow. This can help you make more informed decisions regarding where to invest, how much, and what type of return you could reasonably expect.
Understanding Market Trends
Along the same lines, data analytics can be a great way to understand current market trends better as they relate to potential future ones.
Data analytics can identify increasing demand for certain types of property in specific geographic areas in real-time, allowing savvy investors to get in on the ground floor before a trend has the opportunity to take off. Likewise, if things are trending downward, you’ll know about it immediately to mitigate your risk or diversify your portfolio further.
Optimizing Property Management
But data analytics is more than just helping you find the right investment at the right time. When leveraged properly, it can also be the key to unlocking the full potential of that property in the future.
Case in point: property management. If you buy a home to rent it out long-term, it is a perfect use case for the Internet of Things (IoT for short). This is a network of countless devices that all create and share data with one another at all times. Regarding building management, this is how your HVAC system automatically optimizes the temperature to balance comfort and cost savings. It’s how equipment like your furnace instantly alerts you when preventative maintenance needs to occur, allowing you to take care of a small problem before it becomes much more expensive tomorrow.
This type of optimization helps reduce costs, thus improving your return on investment and creating a better experience for tenants. This keeps vacancy rates low, even when that may not happen elsewhere.
Better Assessing Risk
Remember that “big data” pulls information from many different sources in a real estate setting. This includes current property listings, long-term sales data, demographic information about the people who live in an area, and more. From that perspective, you won’t just understand the market as a whole – you can understand it to a niche degree.
Because of this, you can get an accurate insight into a property’s actual current value and potential future one. It’s not just about comparing one home to a similar one in the area – it’s about comparing a snapshot of all that exists in the current market against additional snapshots from the past.
Even when it comes to properties you may be considering renting, you can analyze information like vacancy rates, rental yields, the average cost of maintenance in a particular area, and more. This can help you better understand what conditions would need to occur for an investment to perform to peak efficiency. It enables you to assess risk today so you don’t fall into a potentially unexpected trap tomorrow.
Streamlining Operations Across the Board
Finally, data analytics are invaluable in real estate because they allow professionals to work “smarter, not harder.”
Do you want to quickly and accurately determine the fair market value of a property so that you don’t overpay? Data analytics can do that. Do you want to instantly conduct market research and analysis so you know exactly what you’re working with at any given moment? Data analytics can do that, too.
More than anything, it’s about freeing up as much of your valuable time as possible so that you can focus on matters that truly need your attention – which may be the most significant advantage of all.
Collectively, strategies like those outlined above are all about empowering real estate professionals. Yes, they do so in the name of helping them make more intelligent choices and streamline their operations. However, they do this in service of the most crucial goal: enhancing customer experiences daily.
Data analytics have revolutionized how properties are bought, sold, and managed in just a few short years. Although the market constantly changes, even the newest real estate professionals have a fighting chance at a legitimate competitive edge.
By embracing these strategies, the real estate industry can usher in unprecedented insights and significant opportunities for growth and efficiency. This is an excellent position to be in, regardless of how long you have been in the field.
Read more on KulFiy