Our CEO Matt Rodak was recently featured in the Disruptor Daily series "The Future of Real Estate" for his predictions on the technologies and trends are shaping the future of real estate. Below is the director's cut of the interview, including expanded analysis and insights.
Outline your top three predictions for the future of real estate.
Prediction #1: Expect the unexpected. Although the real estate market can be unpredictable, one thing is certain - it moves in cycles. We’re most likely in an upturn now, meaning that eventually, we'll see a down-cycle. Predicting the “when” is nearly impossible, but we do know it will eventually happen. Armed with this reality, we've got to be prepared for this to happen - and actually believe this is where many of the best real estate investment opportunities are created. We've set our business up to reduce the risk of default on our investment properties and create the most transparent experience for all our real estate investors.
Prediction #2: The HML industry is slowly but surely going online. Despite the fact that HML applications are up 50% since 2007, more than 90% of the HML volume is still controlled by thousands of analog, “offline” lenders. But the industry is starting to become digital as more customers expect to have a seamless online experience with their lender. At Fund That Flip, we predict this will lead to consolidation around the hard money lenders who are investing now in better experiences for their borrowers. We strive to be on the cutting edge of the industry by blending the best of hard money with the speed, transparency and flexibility of an online platform.
Prediction #3: Renting isn't going anywhere. Demographic shifts and more transient lifestyles are two big reasons fewer people own a home nowadays. Nearly 1 in 8 single family homes is renter-occupied, and homeownership is at a record low. We believe this trend is likely to continue over the next few years, creating huge opportunities for investors and entrepreneurs to create fantastic living experiences for tenants who need the space of a single-family home but value the flexibility of renting.
What are the technological trends you're seeing in real estate?
Trend #1: Virtual and augmented reality are beginning to change the way buyers and tenants choose their next home. Real estate agents and companies are providing potential buyers - often out of state, or even out of the country! - with a virtual tour of the space before renting or purchasing. This trend is likely to continue, and I can envision a future where an owner or tenant makes a buying decision without ever stepping foot into the property.
Trend #2: Access to real estate data and analytics is at unprecedented levels. Real estate companies who harness the power of data and turn it into actionable insights are already making faster and smarter business decisions. Moreover, the firms who are on the cutting edge of data are able to create better, more personalized experiences and high-value services to their customers, meaning a win-win for both parties.
Trend #3: We've heard a lot about Bitcoin's value in the news recently, but the underlying protocol has huge potential for real estate. While still extremely nascent in our industry, blockchain technology has huge potential to upend the real estate market. The process of tracking “chain of title,” for example, is hugely important and costs consumers thousands of dollars on each transaction. Smart contracts built on a blockchain network will eventually upend the legal and title insurance aspects of real estate, eliminating the hours of man power and headaches currently involved.
Why is the real estate industry ripe for disruption?
Real estate is one of the oldest industries in the world. It's notoriously old school in a lot of ways, and it's evolved with some quirky nuances. It is also an inherently “high-ticket” industry, with most transactions in the hundreds-of-thousands to millions of dollars. This means change is difficult because the status quo is proven and much “safer” when dealing with such big numbers.
That said, consumers expect more. Closing a bank loan can take up to several months. In a rapidly-changing world where consumers can order everything online, from food to clothes to home goods – and have it delivered in less than 24 hours! – people are demanding better service from other industries as well.
Even with the advent of cloud computing, self-service access to data sources and savvy entrepreneurs willing to challenge the status quo, the real estate industry is one of the last frontiers for online innovation. It may move slower than some other industries, but real estate is modernizing and evolving. After all, there are countless smart people working on these challenges, meaning that change is inevitable - and for the better.
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