Harnessing the Power of AI: The Future of Real Estate Investing

Harnessing the Power of AI: The Future of Real Estate Investing

Written by Deepak Bhagat, In Real Estate, Published On
September 13, 2023

Artificial intelligence is an almost omnipresent part of our lives in what seems like a stunningly short amount of time. One can barely open their web browser without coming across another news story about how AI is now writing code, crafting academic research papers, and more. For the first time in decades, both the Hollywood writers and actors unions are on strike at the same time, in part due to the implications that AI has on the future.

However, there are more sectors that are feeling the impact of AI than just those that are commonly talked about—case in point: AI in real estate. Right now, cutting-edge applications are already being used in traditional and wholesale real estate transactions to allow people to work better, smarter, and more efficiently.

But the key to harnessing the true power of AI, especially when it comes to real estate investing, involves understanding not just where it is but where it might be headed as a concept. That way, you’re armed with the actionable information you need to get there before anyone else.

The Applications of AI in Real Estate

 Future of Real Estate Investing
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Even at a basic level, there are a number of ways that artificial intelligence can be applied to real estate that are absolutely worth exploring. They include leveraging things like predictive analytics to uncover market trends and smart property valuation models, automated investment decision-making, and more.

While certain events in real estate can seem like they happen suddenly, this is rarely the case. Trends develop slowly over time. The data created as a result of every transaction in the industry tells this story – but unfortunately, data volumes are exploding. There’s already far too much data for a human to comb through to uncover that story effectively. Luckily, thanks to AI-powered predictive analytics, technology can – use information about the past to predict better where the market is headed.

The same is true of concepts like smart property valuation. Generating “comps” ahead of a transaction takes a significant amount of time for a human, but an AI tool could do it in a fraction of that and likely with better results. That human is free to focus on other elements that need their attention.

The Benefits of the AI World We’re Living In

 Future of Real Estate Investing
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In a larger sense, these types of AI-driven tools can streamline virtually everything about the industry for all parties. They can make due diligence faster, more accurate, and more efficient. They can help identify lucrative opportunities that may have what is otherwise lost in the “noise.” They can optimize portfolio performance based on massive volumes of data. The list goes on and on.

Again, so many of these concepts involve wading through massive volumes of data that are constantly A) being added to and B) changing. This is a problem that is only anticipated to get worse as time goes on. But thanks to AI technology, everything is far more efficient than ever, while human error (or decisions based on emotion as opposed to fact) gets eliminated entirely.

Instead of spending days or weeks doing due diligence ahead of a transaction, an AI tool can arrive at the same result in far less time – allowing humans to quickly act on an opportunity as opposed to letting it pass them by. The overall arc of someone’s investment portfolio can be proactively monitored by a tool that knows precisely what to look for. The moment that conditions begin to deviate beyond the accepted definition of “normal” – meaning that if investments are underperforming or if things are getting too risky – someone can be alerted so that action can be taken.

The Potential Challenges on the Road Ahead

Of course, none of this is to say that leveraging AI in real estate isn’t without its challenges – no industry has thus far been immune to those potential hurdles. Things like data privacy and ethical considerations are already an ongoing discussion and will continue to be, likely for years to come.

In regard to data privacy, the real estate industry is already a challenge because of its mixture of different types of data. Some is publicly available, but a lot of it is sensitive financial or otherwise personal information related to a party in a transaction. Some of it is proprietary and represents how a real estate firm might maintain its competitive advantage. Other data is for internal use only. How can you be confident that the AI tool will treat all these types of data appropriately in terms of cybersecurity?

There’s also the question of data ethics in real estate. People have concerns about how data is not only generated but also collected, generated, stored, and ultimately disseminated. How do you meet the demands of the audience while still extracting as much value from that data as possible? These are the types of hard questions that most industries are asking that sadly do not have easy answers.

Embracing AI Technology is Paramount to Success in Today’s Landscape

In the end, AI in real estate is here to stay – and with good reason. It doesn’t replace humans at all in this context. Instead, it supports and empowers them – allowing them to gain a legitimate competitive edge by making more informed decisions all the time.

Yes, the real estate industry itself is about to change dramatically. The same is definitely true of journalism, healthcare, IT, and nearly everyone else. But this is one of those situations where “disruption” shouldn’t be feared at all – it should be embraced. Doing so allows seasoned investors to unlock the immense potential that the future holds for AI-driven real estate transactions across the board.

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