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AI in Real Estate Investing

I came across this article about AI in real estate investing that I thought you might like.  The author is Ben Mizes, the Co-Founder and CEO at Clever Real Estate, a real estate education platform for home buyers, sellers, and investors.


Enjoy!

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What is AI?


These days, it seems you can’t swing a wired mouse without hitting a new report on artificial intelligence (AI) and how it’s poised to take over the world. But what is AI?

Applications in commercial real estate focus on two aspects of AI: machine learning and natural language processing.


Machine learning

Machine learning (ML) refers to when computers take a set of data and use it to improve performance. This function is perfect for commercial real estate because AI can perform complicated calculations and translate intricate algorithms nearly instantaneously.

Natural language processing (NLP)


The aspect of AI that gets the most attention is natural language processing. This is when a computer uses machine learning to mimic human speech and writing styles. It works well for personalizing simple transactions, such as answering simple client questions or delivering updates during a transaction.


Eight Ways AI Will Impact Commercial Real Estate

Real estate professionals have already been using AI-like tools for a long time. Things like preprogrammed chatbots direct home buyers and sellers to the information they need, and automated email responders also streamline the process of buying and selling a home.

But today’s tools are much more robust, able to interact more naturally and drill down to what clients seek.


  1. Property Search and Matching

AI can streamline property searches by using machine learning algorithms to match properties with buyers or renters.

Intelligent systems analyze numerous factors, including:

  • Price range

  • Location

  • Preferences

  • Housing requirements

In some cases, AI can even tailor property searches to subtle preferences that users may not explicitly state. As an example, Crexi’s property search features run machine learning operations on the backend to surface the most relevant properties to buyers, based on search behavior, past preferences, and other inputs.

Landlords can also integrate AI into virtual reality to let potential clients virtually tour properties, saving time and resources. Some of these tools can be controlled through real estate apps that add another level of service for clients.


  1. Predictive Analytics

Who’s moving where? How much are rents now, and what might they be in six months? Is a neighborhood rising, falling, or staying the same regarding home values, demographics, and desirability?

Predictive analytics leverage AI algorithms to analyze vast amounts of data and make accurate predictions about future market trends.

AI can predict:

  • Rent price fluctuations

  • Property value appreciation

  • The best time to buy, sell, or invest in properties

  • This lightning-fast capability is critical in an ever-changing market for investors and other real estate professionals looking to better serve their clients.

  1. Loan Modeling and Financial Predictions

Real estate agents who have been in the business for a decade or more remember when all financials were calculated by hand or with a simple computer program. With AI, all of these transactions move quickly through machines trained using past financial models.

For example, if investors need to know how much they’ll pay versus how much rent they can charge, AI can analyze several properties simultaneously. This means that potential investors can easily see the outcome of their investment or compare several investments to determine the best strategies.

This is also a valuable risk assessment tool that many commercial clients want. AI algorithms can analyze historical data, market trends, and economic factors to anticipate risks such as market downturns, property devaluation, or tenant defaults. Stakeholders can then take preventive measures or make informed decisions about potential investments.


  1. Property Management

AI can automate many aspects of property management, from scheduling maintenance and tracking repairs to managing leases and processing payments. Chatbots, for example, can handle tenant queries 24/7, improving tenant satisfaction. AI can monitor building conditions and schedule regular maintenance, preventing costly repairs and improving efficiency.


  1. Administrative Assistance

Bots are good for more than just canned responses. They can act as administrative assistants, taking over many routine tasks. These include:

  • Researching and preparing market reports

  • Delivering real-time updates on listings

  • Sending follow-ups and reminders of appointments

  • Scheduling viewings

  • Natural language processing means that, in some cases, clients might not even realize they are talking with a bot. Advancements can now personalize interactions in ways the old chatbots could not.

  1. Smart Buildings

AI plays a vital role in the development of smart buildings. By integrating AI with Internet of Things (IoT) devices, buildings can become more energy-efficient, safe, and comfortable. AI can control lighting, heating, and cooling systems based on occupancy patterns or weather forecasts, reducing energy consumption.

But AI isn’t just about controlling the light and the temperature. These tools also function as real-time security systems, alerting police to potential break-ins or any other concerns at a commercial property after hours. This is especially critical in cities struggling with higher vacancy rates, as security is highly desirable to tenants.


  1. Streamlined Transaction Process

AI can significantly streamline the transaction process in commercial real estate. Smart contracts powered by blockchain and AI can automate many aspects of transactions, making them faster, cheaper, and more secure. AI can also perform due diligence tasks, such as title checks or property inspections, reducing human error and speeding up the process.

When AI takes over the administrative side of a transaction, real estate professionals spend more time interacting with clients than completing paperwork.


  1. More Effective Marketing

Top-rated agents with many reviews don’t get there only through word-of-mouth marketing.

These days, major players in commercial real estate use AI to refine their marketing. Insights gathered through artificial intelligence help brokers spot hidden trends and reveal untapped potential markets.  And yes, it is possible to use AI to create targeted social media ads and blog posts.


The Bottom Line: Why AI Matters

Artificial Intelligence is poised to transform the commercial real estate industry in numerous ways, from enhancing property search to streamlining transactions.

As AI evolves, we can expect more innovative applications to increase efficiency, reduce costs, and improve decision-making in the CRE sector. It is crucial for industry stakeholders to understand these potential impacts and adapt to this technological revolution to remain competitive in the ever-evolving commercial real estate market.


End Article

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Make the wise decision,

 

Jay Kennedy

On behalf of the Sovereign Sage Team

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