What Real Estate Investors Need To Know About The Impact Of Evolving Fintech

Advances in technology continue to transform multiple industries. Every aspect of our world has changed dramatically within a short span of time. Airbnb is bigger than the world’s top five hotel brands combined, but doesn’t own any real estate. Uber is said to be the world’s largest taxi company but doesn't own any vehicles. Leading communication channels such as Skype and WhatsApp no longer need traditional telephone infrastructure.

Unsurprisingly, there is also a long line of startups promising to bring automation and "uberize" real estate as well. The arrival of WeWork and Airbnb was just the beginning. But what does this mean for the industry — and more importantly, for investors?

The Acceleration Of Technology

As the pace of change accelerates, it can be challenging to keep up with the latest trends and associated industry buzzwords. The emergence of real estate technology is often referred to as “proptech,” and by joining forces with financial technology (fintech), it is already disrupting the world of real estate.

A new era of trust and transparency is making investing in property more accessible to everyone. For many years, investors have accepted that the world of real estate involves navigating time-consuming and laborious processes, not to mention exorbitant transaction fees. However, new players are removing traditional pain points to create a very different future that should be celebrated rather than feared.

Investors now have a variety of options that are making the market more accessible and creating an era of unprecedented opportunity for everyone. My partners and I started our firm, for one example, to help open up access to real estate investment opportunities. Most of us, if we’re lucky, get to invest in one real estate property at a time — the one we live in. We may dream of more, but the minimum buy-in cost is more than we can afford. In the digital era, that’s an antiquated model of real estate investing, and that sense of injustice served as our inspiration to create a more inclusive marketplace for everyday investors to join the rewarding world of real estate development with a much lower barrier to entry.

Embracing The Shared Economy

With this new wave of real estate startups, innovators are paving the way for online investing and technology to empower investors from all backgrounds to build their own portfolios quickly and at lower costs than ever before. Welcome to the shared economy. Contrary to popular opinion, technology is not creating a divide; it’s actually bringing people together and providing opportunities to those who dare to think differently.

Traditional real estate assets come in many forms, including land, residential homes and various commercial building types. But rather than having a single owner or landlord, new tech-based solutions are ushering in a new era of shared or fractional ownership.

By embracing fintech, real estate crowdfunding companies have democratized real estate investment by enabling more less-experienced investors to participate. The good news is that it has never been easier to invest in real estate and build a portfolio with lower capital requirements. The bad news is that the lower barrier to entry has allowed technology companies to enter the industry without a real estate background. It is critical for investors to perform as much due diligence on the platform they are investing with as the assets they are investing in.

Transformative Tech Ushers In A New Landscape

Possibly the most exciting aspect of the fintech revolution is how it is changing customer behavior and increasing expectations at breakneck speed. But there is an increasing realization that this speed of change will never be this slow again.

Fintech makes possible lower-cost solutions that traditional real estate companies are slow to offer. However, tech disruption is nothing new, and many forget that we have been here many times before. In a relatively short time, technology replaced typewriters, fax machines and floppy disks in offices all over the world. Transformative technologies will continue to lower costs, increase operational efficiency and ensure that every industry continues to evolve in the name of progress.

Sitting at the same desk every day of the week is unproductive in an age where collaboration and flexible working are considered the norm. Equally, landlords cannot expect to lock business tenants — who are increasingly looking for flexibility to expand as they grow — into long-term leases.

As fintech and real estate continue to evolve, we can expect the connections between buyers, renters, landlords and property owners to be transformed by blockchain, digital media and technology. More and more creative, alternative models and solutions will continue to appear and force incumbents to adapt to the changing real estate landscape. Who will the big winners be? The answer is a new generation of consumers from all walks of life who will have opportunities to participate in the real estate industry for the first time. Don’t get left behind.


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