5 Ways Big Data is Disrupting Real Estate – and How You Can Take Advantage
Big Data can seem complex and impenetrable, but it is important to understand the practical and useful ways that Big Data will change the real estate industry, and to stay ahead of the curve when it comes to its disruptive potential. This technology is already bringing huge changes to real estate – from decreasing risk in real estate investing, to helping save money and more efficiently manage buildings.
Big Data is, broadly, the collection and analysis of data sets that are so big and complex that it requires higher level software in order to draw conclusions from it. The ability to analyze these huge volumes of data, however, allow businesses the ability to discover patterns, and to make predictions that were not possible before.
Here are 5 ways in which Big Data is already changing the landscape of the real estate industry:
Taking the Risk Out of Real Estate Investing
Leveraging Big Data can decrease risk when investing in real estate – both commercial and residential. There are several platforms available that now use algorithms to determine risk scores for real estate investing. These take into account data such as: the last time the property was renovated, how sound a structure is, even details of the building’s loans. There are thousands of pieces of data that can be analyzed – from demographic variables like traffic volume, crime statistics, closest amenities, average neighborhood income, and so much more. This can help investors really pinpoint what they are looking for and get a better picture of risk and potential gain, including trends over the long term.
Using IoT to Improve Productivity and Lower Costs
The “Internet of Things” (IoT) allows for the embedding of sensors into everyday objects, which enables them to send data and communicate over the internet, including operational data. IoT can produce benefits in so many areas for building owners and managers. Even the most experienced building manager would never before have had access to massive amounts of real-time data on conditions and performance.
“Smart” buildings leverage IoT to collect data from all aspects of the building – from energy and water use, to how often and how long people are in the building, how many resources are used. Alerts can be sent when resources are close to running out, and need re-order. There is a huge volume of data that can be collected and analyzed to reduce cost and increase efficiency. Efficiency gains can also go a long way towards environmental sustainability goals. Data such as carbon use and indoor air quality can be tracked, and understanding which areas of a building are highly used and which are under-utilized, can lead to better strategizing underused spaces and supporting more highly used spaces. Machines can report when a part has failed or when equipment is not functioning as it is supposed to. Shifting a building manager’s time from research and constant checks to problem solving and solution implementation can make a big difference. Across a building management portfolio, the use of Big Data can lead to huge cost savings from better strategizing parts, utilities, use of space and so much more.
Managing Budgets
Requesting and waiting for financial reports when you have a decision to make that is time-sensitive can lead to lost opportunities and incorrect decisions. Big Data analytics platforms allow both portfolio and building managers to view reports in real-time and look at the factors that will affect their decision-making. This data can include invoices, usage and payment data, which for example, can allow a building manager to see how much power a piece of equipment uses on a regular basis. This will allow them to decide on whether it is cost effective to purchase a more efficient version, which may require a greater investment up front, but will lead to extensive savings over time. Portfolio managers can view the cash flow of a property or analyze the impact of potential circumstances, such as weather events.
Prevention of Fraud
Investment funds move at a rapid pace these days, and Big Data can provide alerts for any suspicious activity, like money laundering, in real time. This is an extremely important safety net for loss prevention. Big Data is helping the government track buyers of commercial and luxury real estate using shell companies, which can be a cover up for fraud. Being able to monitor and analyze suspicious activity can help real estate companies keep their resources and funds safe.
Insurance and Weather Analytics
Big Data can quickly analyze large or small geographical locations to understand a variety of elements related to insurance – for example, to determine what level and types of coverage would be needed for a building, or set of buildings. Big Data also allows for prediction of damages and losses based on weather events, like the recent set of hurricanes, flooding and fires the U.S. has experienced. The earlier that potential impact can be understood, the more time companies can have to plan for events and shift resources as needed.
There are many companies offering Big Data software for the commercial real estate industry these days. Each software tackles a different set of problems, so it helps to understand your biggest pain points and decide where you can best apply this intelligence to your business to get the most out of Big Data analysis. Once you have that information, shop around and speak to as many different vendors as you can to find the right fit for your requirements and budget. However, many resources are also available for free – under creative commons or commercial use licenses. So you don’t always need to always sign up for potentially costly software subscriptions to leverage Big Data for real estate management and investing.
Here are some examples of real estate Big Data / Business Intelligence software*:
https://www.realpage.com/yieldstar/business-intelligence/
http://www.4tellsolutions.com/
*Realty Tax Challenge does not have any affiliation with any of the companies linked / listed above, nor do we recommend their services. We are providing this list purely for informational purposes.
