Integration of technology affects real estate companies’ ability to deliver for their clients as well as to attract and retain top talent, and these firms are increasingly realizing that property technology (proptech) helps keep them at the front of the pack.
In turn, technology companies are beginning to understand how real estate works in order to deliver products that solve pain points for the industry. And venture capitalists are taking note: Forbes reports that investment in proptech companies ballooned from $20 million in 2008 to roughly $4 billion in 2018.
As proptech evolves, blockchain and 5G are the latest buzzwords making their way into real estate professionals’ vernacular. Will these rising technologies impact the multifamily sector—and if so, when and how?
Courtesy RealCrowd
Adam Hooper, RealCrowd
Exploring Blockchain
Blockchain is a digital ledger that records, verifies, and maintains transactions across computers that are linked together in a network. Each user in the network has an electronic “key” that gives them access to the ledger. The technology is revolutionary in that it decentralizes and democratizes data, making the network difficult to breach and ensuring that data is accurate, transparent, and thorough.
Blockchain will not likely affect how apartment renters interact with multifamily owners or managers. It won’t change how they research a community, locate an available unit, apply for a rental agreement, pay their rent, or register a maintenance request.
However, blockchain does have the potential to disrupt multifamily investment and operations. Some of the changes the sector could see from blockchain include:
A faster and more accurate property-search process—With all information about a property easily accessible and verified, the chance of inaccurate data being transmitted to interested buyers is significantly reduced. Blockchain would circumvent unreliable data sources, making the process of searching for an apartment building in which to invest much more efficient.
A more streamlined and transparent acquisition process—Through the blockchain ledger, all documents related to the multifamily asset being purchased, including property assessments, maintenance records, capital improvement records, and the buyer’s financial and mortgage data, would be available to all parties in the transaction in a transparent manner. This would simplify the acquisition process dramatically and has the potential to shorten transaction timelines. Moreover, the tokenization of the asset that blockchain would provide in which investors purchase security tokens that allow them to own a fraction of a real estate property or asset could streamline both the capitalization and acquisition processes and in turn improve liquidity for multifamily investors.
Easier and less painful lease administration and accounting processes—Blockchain considerably increases the potential for automation of these processes, reducing their arduous nature and freeing up multifamily property managers to focus on the property and the residents. In the future, lease administration and CAM reconciliations will have the ability to be handled through smart contracts in the blockchain. Smart contracts are essentially computer code, which consists of a series of if->then statements that record a set of rules, allowing the transaction process to become automated and run on its own through the blockchain.
Better property maintenance procedures—If all the information about an apartment property, from when in-unit appliances were last updated to how much was spent on landscaping—were readily available to the owners and property managers via blockchain, assets could be better maintained and run much more efficiently.
There’s still more talk than action when it comes to implementing blockchain in multifamily real estate, but the market is likely to begin to realize the above improvements as the technology and its adoption progresses.
Understanding 5G
While currently only available in select cities throughout the country, 5G technology has the potential to significantly disrupt how business is done in the real estate industry globally.
The 5G wireless cellular network transmits data at speeds almost 500 times faster than the most efficient 4G LTE network and supports the growing volume of electronic data weighted against an overloaded bandwidth. Once 5G infrastructure is in place, it will pave the way for previously futuristic processes such as remote robotic surgeries and smart cities, and it enables advances in the Internet of Things (IoT) and the Internet of Skills (IoS) such as virtual reality.
From the perspective of the multifamily sector, in tandem with blockchain technology, 5G could be a game-changer and provide a true competitive advantage for multifamily owners and operators.
5G infrastructure could enable:
Faster response times and easier problem solving for property managers—5G provides better and faster connectivity among multiple electronic devices, meaning that resident requests could be handled by a team of property managers who are all instantly updated on the progress of the request. Faster response times lead to higher resident satisfaction levels and increased resident retention at the property level.
Better Internet service for residents—5G allows for less expensive connectivity, greater energy efficiencies, and faster Internet service among numerous devices. The cost savings can be passed along to residents, and the energy efficiencies and faster service can be used as selling points to attract and retain residents.
Improved security among owners’ and property managers’ IoT devices—Since they utilize blockchain technology, 5G-enabled devices are protected by the decentralization of data, which aids in completing transactions from acquisitions to lease administration more securely.
Better data storage solutions for owners and managers—Cloud services that store data in centralized databases can leave sensitive information about a multifamily property and its residents vulnerable to identity theft. With the added bandwidth that 5G provides, landlords and property managers will be able to encrypt this data and store it securely in a decentralized ledger.
Blockchain and 5G technology are still in the early phases as far as the real estate industry is concerned, but their adoption will likely increase as providers discover ways to enhance the industry through its usage. In the meantime, being aware of this proptech’s emergence and staying abreast of its advancement will allow multifamily executives to hop on board when the time is right.