PropTech has recently taken the real estate industry by storm by innovating new technologies and developing in-depth improvements to existing technologies. However, what is PropTech? What does it mean for the real estate industry? And why has it become so popular in recent years?
PropTech may seem like a shiny new buzzword, but if you're dismissing it because of the terminology, you're setting yourself up for failure. Chances are good, however, that you're not ignoring it; you simply don't realize that you're already using it.
Real estate is an industry that thrives on data. Harvesting, collating, managing, and understanding that data is a massive part of the job of real estate professionals. In the past, you may have handled this data through paper record-keeping, manual research, and spreadsheets. PropTech has advanced to the point where much of this data management is largely automated.
This blog post explores the rise of PropTech, its relation to property tax tech, and its potential effects on the real estate industry.
Let's get started!
PropTech isn't too difficult to understand. It's a portmanteau of the words "property" and "technology"—it's the technology you as a real estate professional use to gather or organize data, understand what that data means, and take appropriate actions. PropTech can encompass anything from online real estate portals to 3D-printed homes. As our world becomes increasingly digitized, it's no surprise that property-focused technology is growing.
PropTech comes in many forms. There are as many kinds of PropTech as there are real estate tasks that need to be completed.
For example, since 2009, Zillow has taken over real estate sites by using big data and digital marketing techniques to attract buyers and provide advanced insights into properties. With more people searching for their next house or commercial property on their phones, they're also looking for ways to use tech tools to conduct face-to-face meetings, find new listings, or streamline their taxes.
In a way, PropTech is a buzzword, but it's a buzzword encapsulating an entire industry. Any way you can integrate modern technology into the process of managing, buying, selling, leasing, or maintaining a property is a form of PropTech.
PropTech has a lot of crossover with other kinds of technology. Moreover, PropTech is typically an advancement on the tools you already use or advances processes you already have in place for property management.
In broad strokes, you can divide PropTech into two main categories: residential and commercial.
Residential PropTech is a suite of tools, platforms, and technologies predominantly used by individual home sellers, home buyers and homeowners.
It can include:
Essentially, any intersection between modern, usually internet-connected technology, and various aspects of owning and managing real estate is part of residential PropTech.
The other kind of PropTech is called CRETech, which stands for Commercial Real Estate Technology.
As you might imagine, it's similar to residential PropTech but is either aimed at managing commercial needs or buying and selling commercial property. This can include anything from online tools that help you find properties to apps that help you manage your portfolio to drones that help you take photographs and inspect buildings. CRETech is changing the way we manage, operate, buy, sell, and lease commercial real estate.
There's a lot of similarity in purpose between residential and commercial PropTech. For example, where residential PropTech has platforms like Redfin and Zillow, commercial PropTech has platforms like Biproxi and LoopNet. They serve the same general purpose – a marketplace for real estate – but aim at different groups of people.
Commercial PropTech can include:
These examples are all just scratching the surface. The truth is that PropTech is a relatively new and rapidly evolving industry. Any property managers, real estate agents, or individuals involved in the industry will need to adopt some form of PropTech sooner rather than later.
PropTech is quickly becoming more and more integrated with the property buying, managing, and ownership process. You've likely encountered it in many different forms. All of the following are forms of PropTech.
Have you ever browsed a real estate platform looking for property to buy and noticed instances of virtual tours? The ability to do a "walkthrough" of a property without leaving your home or office is an instance of modern PropTech.
Virtual tours are just scratching the surface. Augmented reality, often presented through phone apps, can show you real estate concepts in place, allowing you to visualize how you can convert a property to your uses. These tools dramatically increase the ability to shop and conceptualize property uses.
Modern internet-connected tools have a wide range of benefits for property owners.
PropTech can facilitate signing contracts digitally, streamlining various tasks, and remotely managing and monitoring properties at the most basic level. Everything from agents to taxes can be managed when shopping for a property through modern PropTech.
The proliferation of Smart Devices – technology connected to the internet – has enabled many more advanced forms of PropTech. These can range from intelligent locks on properties and smart thermostats to adjusting temperature dynamically or remotely to monitoring assets with automatic maintenance tickets.
IoT has drawbacks; devices are often unsecured and more expensive than non-IoT devices, but the convenience is generally worthwhile.
One of the most valuable modern developments in PropTech is the introduction of camera-equipped drones.
Drones aren't just toys, and they aren't science fiction. Drones equipped with high-resolution cameras can be used for many purposes, including:
Drones themselves, the software used to operate them, and the software they facilitate with their photography, are all forms of modern PropTech.
A spreadsheet with connected APIs and automatic data processing may not be as exciting as drone photography or virtual reality. Still, it's one of the most common forms of PropTech available, and it's in use by virtually everyone involved in real estate.
Software that harvests data from various sources, combines that data into comprehensive reports, and then facilitates decision-making recommendations, has become more prominent every year.
Gone are the days of binders full of data, paper spreadsheets, and manual calculations.
Math, science, and analytics can all be handled by computers. Moreover, machine learning and AI algorithms are more capable than ever; they can even make recommendations while removing personal biases that would hinder accurate decision-making.
Perhaps one of the most valuable forms of PropTech is simply technology that facilitates property deals and remote management.
Whether virtual walkthroughs, digital document signing, or any of the many modern financial management tools online, digital solutions facilitate a much broader range of deals, including international real estate purchases. As well, digital contracting and remote paperwork make real estate transactions more accessible regardless of the location of those involved in proximity to the property.
FinTech, or financial technology, is closely related to PropTech. Some of the most valuable forms of PropTech are simply property-focused FinTech platforms; for example, our core product, itamlink, is a PropTech/Fintech property tax platform.
What can it do for you?
PropTech's most significant benefit to real estate management is financial, both directly and indirectly.
One of the essential benefits of PropTech is for commercial real estate management and scale. The more properties you own, manage, or sell, the more you need accurate data, streamlined information, and easy-to-access/use processes. PropTech facilitates all of this through cloud-based, digital, and online platforms.
Property taxes are a huge factor in property ownership and management. At scale, properly managing the financial aspects of real estate can be an incredible task, where simple mistakes can have million-dollar repercussions.
Tax software in the PropTech arena, especially in commercial real estate, provides many tangible benefits.
Modern software is effective and quick in collecting and analyzing data. This software can not only facilitate faster analysis, it can also facilitate faster decision-making and communication of those decisions throughout a company.
API access to data streams removes the need for human data entry, while automatic analysis and software calculations guarantee consistent, accurate data manipulation. Eliminating human error helps reduce problems and delays, across the board.
Reporting and analytics becomes more and more difficult as an organization scales. As well, valuable reporting and analytics can only be done using accurate data. Modern software must provide a more precise picture with more significant data streams and volumes of data. The ability of technology to process data at scale inherently facilitates better decision-making. If nothing else, the reduction of potential human error and greater accuracy – and the inclusion of machine verification to identify data gaps or for what data entry is necessary – means the analytics you get is reliable.
Speed, accuracy, and analytics are the standard for modern-day PropTech. However, what RethinkSolutions/itamlink does differently than other PropTech (and Tech specifically serving the function of managing property tax), is that we incorporate risk management as a core element of our offering.
4. Risk Management
Perhaps the most important benefit to consider with regards to PropTech is Risk Management. When you rely on spreadsheets and manual processes to manage your property taxes, you open your portfolio to potential security and privacy risks, human error, missed due dates, steep penalties, and decentralized data.
Using PropTech like itamlink provides you with a centralized repository for all your property tax data. With all your information organized in one place and in a uniform format, you can now report on and analyze your data, develop workflows to automate manual processes, and ensure data accuracy across your entire portfolio. By accounting for all vital dates and providing complete visibility into their portfolios, itamlink ensures that our clients truly maximize their portfolio value.
Our platform, itamlink, offers a wide variety of features.
While our core offer is property tax management, a whole suite of data monitoring and analysis modules are available at your fingertips.
With any cloud-based platform, data security is a primary concern. That's why we use enterprise-grade security, complete with SOC1 and SOC2 auditing and logs.
Our enterprise platform also offers multi-factor authentication (MFA), single sign-on (SSO), user role definitions for added security, and granular permission management.
PropTech is the wave of the future, and as with any new technology, there will be growing pains.
Perhaps the most significant risk is the initial investment. It takes time and training to convert from one system to another, and if you're still using paper records and offline, non-centralized data, it can take quite a while to convert everything into a format usable to new technologies.
This isn’t an alarming risk, but it’s also not one you can completely disregard. When you are considering a new tech solution, you need to look beyond the software to the customer service and customer success components that come along with the offer.
At Rethink, onboarding is typically not a concern because it’s a priority for us upfront. As soon as onboarding begins with Rethink, we assign you a dedicated itamlink Customer Success Representative (CSR) to ensure the smoothest transition possible. During that time, your CSR will guide you through the transfer of data from your system to itamlink, and will continually be available to answer questions and help you apply best practices within itamlink going forward.
PropTech is not inherently bad or risky. However, every piece of PropTech you choose, from data analysis to digital document signing to virtual tours, must be vetted and approved. It's an investment, and you must properly review every investment. This is especially important when it comes to aspects of onboarding. Make sure you are satisfied that you will get the support you need before you take the leap.
With our property tax platform, itamlink, we remove sources of risk that exist in your current system. The software provides a multitude of tools to help you maximize your portfolio values. Maximzing your portfolio value is done mainly by reducing risk across your entire portfolio in the form of missed opportunities, non-uniform data, and error-prone data (often from manual data entry).
The best part is that you don’t need to buy itamlink to begin addressing these concerns...
We offer a free needs assessment that ultimately assesses the health of your property tax management practices as they currently exist today. We help identify areas of risk that should be addressed. Whether or not you choose to use itamlink going forward, this kind of intelligence is priceless.
Based on the results of this "health check" you can decide what solutions you might want to explore.
If an itamlink demo is next, we're happy to set that up. If itamlink is not an option for you at this time, that shouldn't stop you from reaping the benefits of the free assessment session. You can easily book yours today!
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