While the old adage “location is king” still rings true, another important thing investors should have on top of their list is data - this is where technology comes in.
Despite still being a people-centric space, the real estate sector is now playing catch up with other industries like finance which has completely embraced innovation. As digital becomes the norm, modern-day investor tools in the form of online platforms and mobile apps have started to emerge.
These tools are taking the burden off crunching numbers and figures, providing investors with intuitive and meaningful representations of property data.
Property Developer Network buyers agent and site acquisition specialist Trent Muffett believes it’s important for property investors to have an understanding of different technological tools and innovations.
“Getting access to various different data points across different technologies will help property investors make more informed decisions. Technology can also do a lot of the heavy lifting in the research then transacting phase of the property process,” Mr Muffett told Your Investment Property Magazine.
For Property Mavens CEO and author of Property Prosperity Miriam Sandkuhler, the key is to utilise the right set of data and information when using the available digital tools.
“Focusing on irrelevant data and not taking action as a result of that data can also cost investors dearly. Opportunity costs can be significant, especially over time,” she told Your Investment Property Magazine.
Here are five of the most useful digital tools available for tech-savvy property investors.
1. DSR Data
Founded in 2010, DSR Data works like a one-stop-shop for property investors who enjoy crunching data and making sense of numbers.
DSR means ‘demand-to-supply ratio’, which is a crucial predictor of capital growth potential. It is the core algorithm that powers DSR Data, which has become a platform with several built-in tools that fulfil specific data needs for property investors.
In addition to the typical market statistics like the vacancy rate, rental yield, days-on-market, and median price, the DSR Data tool can provide specific numbers that can help investors study their target markets.
The Suburb Analyser tool, for instance, allows users to search for a specific suburb and provides a comprehensive set of data. One upside of this tool is that it provides sets of data that aren’t available anywhere else.
Neighbour Price Balancing (NPB) is a prime example. NPB refers to the percentage price difference per kilometre between a property market and its neighbours. It provides an insight into the potential of a market to experience strong growth relative to the other nearby markets.
Market Watcher is another tool under the DSR Data platform that operates as a search engine. It finds markets that match the user’s set criteria, including budget, yield, property type, historical growth, and distance.
For investors who want to register for alerts to keep an eye on their portfolio, Market Monitor is the perfect tool. The tool alerts users via email of the best times to sell, refinance, buy, or renew a lease with a tenant.
All of these tools are taking advantage of DSR as its primary backbone in supplying relevant information to their users.
DSR Data is subscription-based, with two types of membership: Lite and Pro. The latter provides more comprehensive tools that give statistics and more in-depth insights for data-savvy investors.
Soho.com.au is the dating mobile app of the property market - using data and machine learning, it helps users match with their dream properties, be it for rent or for sale.
Property investors can use the Soho.com.au website or download the mobile app to get access to the platform.
Similar to some dating apps, the Soho app uses the swipe feature that allows users to quickly browse and check properties that meet their preferences.
Users can set the location, their intention (buy or rent), price range, property type, and number of bedrooms, bathrooms, and car spaces to customise the selection of listings available for them to flick through.
The Soho mobile app is free and available to download from both the Google Play Store and App Store.
It’s important for property investors to be able to trust their real estate agents and RateMyAgent serves as a platform for finding the right agent that can assist them as they go through their investment journey.
RateMyAgent is a platform founded in 2014 that aims to provide independent reviews of real estate agents in Australia. The platform has grown to include not just sales agents, but also rental agencies and mortgage brokers.
There are several ways to take advantage of the platform.
One is to use its search engine to look for specific agents and agencies and the respective reviews given by previous clients.
Users of the site can also use the location filter to sift through the thousands of postcodes available and find the most active agents in the area for a particular transaction - either to buy, rent, sell, or finance.
Reviews that can be found on the platform are verified and are tied to a genuine sale. Recent sellers or buyers can provide written reviews to selected agents and have their recommendations posted for others to see.
Agents can subscribe to RateMyAgent to have their profiles customised, but consumers can use the platform for free.
Microburbs is a free platform that provides property investors with a comprehensive set of information about particular markets across the country that goes beyond the usual statistics like median price, rental vacancies, and price growth.
Microburbs provide numeric scores for locations based on several factors.
For instance, the Convenience Score depends on the access of a particular market to places and transport options that most residents need several times per week.
Meanwhile, there is the Lifestyle Score, which evaluates the local options for public social activities. The number, quality, and proximity of cafes, pubs, restaurants, gyms, pools, and other similar establishments.
Family Score is another interesting factor. This one is calculated based on the proximity and performance of nearby schools, proportion of families, age distribution, and fertility rates.
There is also the Tranquillity Score, which indicates how peaceful and ‘natureful’ the location is based on population density, tenant rates, dwelling types, maximum building height, nearby bush reserves, the density of trees, and tenure types.
Microburbs also analyses how strong social ties are in a specific location, providing a Community Score that takes into consideration volunteer opportunities, long-term residents, libraries, town halls, and religious groups.
Affluence Score is also something Microburbs can provide — this score looks at the level of wealth, status, employment, income, and education of the residents in a specific market.
5. Investor Forecasts
Investor Forecasts is a recently-launched platform that hosts calculators and financial literacy solutions for investors.
Investor Forecasts is a membership-based service, which has a monthly or annual fee depending on the membership plan.
The platform’s Property Assessor and Property Optimiser calculators allow users to simulate renovations and market movements, helping them optimise potential financial returns and assess investment risks.
The Property Optimiser tool, for instance, can help investors predict how renovations on the property can impact expenses, capital growth, potential sale costs, rental income, and asset depreciation. It can also forecast the impacts of taking out an interest-only loan or an introductory interest rate.
Is it worth spending on subscriptions?
Mr Muffett believes whether to use free online tools or pay a premium for subscriptions all boils down to the goals of each property investor.
“The serious property investors and industry professionals all have some level of paid subscriptions as getting access to property data that is not on the open market is key but it can be expensive,” he said.
“You might be able to buy a subscription for one to two months, do all your research then cancel as a way to avoid ongoing costs.”
Meanwhile, Ms Sandkuhler said property investors must always consider what they are trying to make sense of and achieve.
“I have also looked at a single ‘all inclusive’ investor tool that wasn’t as good as subscribing to two separate tools, which ultimately provided more depth of data and analysis,” she said.
“Ideally, use free tools but also research what is provided with a short-term full subscription with each service provider, as it may well be worth the fee.
“However, investors need to be wary of any online provider who wants you to pay a subscription before demonstrating exactly how their tool works in full. A one- or two-page simple descriptor is a red flag.”
Human emotion vs technology
Mr Muffett believes that while technology will keep evolving, it will not totally replace humans in every part of a property transaction.
“Technology can make things easier, cheaper, and faster which benefits different stakeholders, but real estate is still a very emotional decision and will still see the need for human involvement,” he said.
Ms Sandkuhler had similar insights, adding that technology does not account for human emotion and variables in the decision-making process of a buyer.
“It can’t see beyond what it can see - for example, we all know the free bank valuations or appraisals can have up to a 15% price range variation and often have nothing to do with the reality of what a highly emotional buyer will pay at auction,” she said.
“They can be used as a simple guide, but an in-depth understanding of all data and unquantifiable factors to consider when buying is often the difference between buying and missing out. This is where a highly experienced investment buyer’s agent can make all the difference to the outcome.”