There are thousands of proptech solutions out there. While many are geared more toward investors with commercial real estate or multifamily portfolios, there are also plenty for the mom-and-pop investor who may only have a couple of single-family investment properties.
What technology solutions can single-family investors use to drive property management efficiencies and improve cash flow? Take a look at some options and their applications.
What is proptech?
Property technology, or proptech, is the use of technology to drive efficiencies in real estate, ultimately leading to improved returns and cash flow, reduced friction, and greater transparency across the board. Proptech names you’ve probably heard of include Zillow (NASDAQ: Z) (NASDAQ: ZG), a home sale listing site; Airbnb (NASDAQ: ABNB), a vacation rental listing site; and Opendoor (NASDAQ: OPEN), an iBuying platform.
Single-family investing 101
As a single-family investor, you're buying traditional homes built for a single household. That usually means either fixing and flipping the properties or renting them out to short- or long-term tenants.
Much like any other real estate investor, the single-family landlord typically has two main goals up until it’s time to sell:
- Buy high-quality property for as little as possible that has the potential to deliver a steady stream of cash flow and future appreciation.
- Generate as much cash flow (net operating income, or NOI) from that property as possible.
While straightforward, it's important to get back to basics when considering how to best overlay proptech into the single-family investment lifecycle. You'll need to be strategic about where you deploy technology into your portfolio, so it's helpful to consider the different levers available to you as you look to maximize your ROI.
Are you in the market for a single-family investment opportunity? Regardless if you’re a seasoned vet or new to the game, there are some great tools out there for you to source opportunities besides scouring open houses, foreclosures, or Zillow.
Rubik is an off-market deal-sourcing tool for buy-and-hold and fix-and-flip strategies. This tool provides investors with real-time dealflow and instant comps across entire markets.
Are you more interested in getting into short-term rentals? Check out Mashvisor. While its tool offers analytics for traditional long-term rentals, there are also resources available to short-term rental investors.
A third tool to check out is Roofstock, a single-family investment marketplace. Since its founding in 2015, Roofstock has facilitated over $2 billion in transaction volume. Roofstock states that its platform "lets everyone from first-time investors to global asset managers evaluate, purchase, and own residential investment properties with confidence from anywhere in the world."
Lowering your acquisition costs
You’ve identified a property you want to invest in. Here are some tools that can help you lower your acquisition costs, thus boosting your return.
Clever is making it easier for buyers to cash in homebuyer rebate opportunities. A large part of a buyer’s purchase price goes toward commissions -- 5.45% on average. Clever helps place you with an agent who will give you a homebuyer rebate that could save you thousands.
Another way to save money on buying a single-family home is to make a cash offer, but not everyone has that luxury. Check out UpEquity and Ribbon, both companies that work with buyers ahead of time to be able to go in with a cash offer.
After securing your property, it's important to set up processes to manage the operations efficiently. Generally speaking, you have two options when it comes to managing your rentals:
- Manage the property yourself.
- Hire a third-party property manager.
There are technology tools out there that allow you to do both. Companies like RentRedi and TurboTenant are great DIY property management options. But if you’d prefer to be more hands-off, take a look at Knox Financial, which states its mission is to “make owning investment property as simple as owning a share of stock.”
There are also tools specific to short-term rentals. These tools help manage communication with guests, schedule cleaning, and perform other tasks associated with renting out a property for the short term. Check out Guesty and Smartbnb on that front.
Once you get your toes wet with one or two properties, you may be looking to scale up your operation. Stessa, a company that was actually just acquired by Roofstock, offers a free product that helps centralize reporting, expenses, and portfolio performance. Upgrade to the premium version to have access to features like rent analysis, mortgage financing, and market research.
Looking to get into fixing and flipping but don’t know where to start? Realm, which just raised $3 million, is working on taking Zillow’s Zestimate to the next level. The company is developing a centralized data set of single-family homes to analyze and highlight opportunities to increase a property’s value through renovations, additions, rental units, and more. While the company is still new, it may be worth a look if considering where to focus on any work that might need to be done.
Some people want access to direct single-family real estate deals but want to be completely hands-off with low exposure. If that sounds like you, Fintor is building a platform that lets you invest in fractional equity shares of real estate properties with as little as $5.
The Millionacres bottom line
Whether you’re a seasoned veteran or new to single family real estate, there’s always a way to gain an edge. Some of these proptech solutions currently out there are a great first start.