Using FinTech to Optimize Real Estate Investments

Whether you’re a real estate investor, entrepreneur or simply a finance-savvy consumer, financial technology (fintech) has allowed great strides when it comes to optimizing real estate investments. Fintech involves using blockchain, big data, cloud computing or artificial intelligence to complete financial transactions. Most property technology (proptech) overlaps with fintech, allowing real estate agents and investors to digitally manage their investments.

Ways to Use FinTech for Real Estate Investing

The share of direct commercial real estate investment in the housing sector has more than doubled since 2007. By 2022, buying homes accounted for 28% of real estate investment transactions, making it a lucrative market. Whether you’re interested in investing or you already own property, here’s how you can make the most of fintech.

1. Crowdfunding Platforms

One of the fintech’s biggest impacts on real investments has been the rise of crowdfunding platforms. These platforms allow individual investors to pool their resources and invest in real estate projects, allowing for reduced risks and more diversification. Crowdfunding also allows smaller investors to access real estate investments that would otherwise be out of reach.

2. Automated Underwriting

Fintech platforms can use machine learning and algorithms to analyze vast stores of data and provide a more accurate assessment of property values. This process allows for more efficient underwriting, reducing the time and costs associated with traditional investment in real estate.

3. Smart Contracts

Financial tech platforms can use smart contracts to automate the complete investment process, from deal sourcing to closing. Smart contracts, which are computer programs that automatically carry out actions according to the terms of an agreement, reduce the need for intermediaries and streamline the investment process. They provide increased transparency, efficiency and security.

4. Real-Time Analytics

Real-time analytics and reporting allow investors to monitor their real estate investments and make more informed choices. Fintech platforms can provide information on a wide range of factors in real time, including property values, market trends and potential risks.

For example, single-family home prices have increased 15.9% since January 2021, but investors can use fintech to keep a close eye on the housing market to decide when they should buy and sell.

5. Digital Currencies

Financial tech allows people to invest in properties via digital currencies, reducing the need for traditional banking channels and providing greater security. Cryptocurrencies, such as Bitcoin and Ethereum, can reduce some of the risks associated with traditional banking channels.

6. Online Property Listings

Fintech platforms can change the way people search for properties. Companies like Zillow allow investors to look through listings anywhere in the world, providing photos, videos and detailed descriptions for each property. They make the home-buying process easier and more transparent for interested real estate investors.

7. Virtual Tours

Traditional, in-person property viewings can be costly. Real estate agents have to take time out of their day to make sure the property is clean, communicate with interested parties and show the property to several groups individually. When all is said and done, only one of those people will actually sign the papers for the home, which means the other showings were essentially a waste of resources.

Fintech platforms are changing the way investors view properties. Virtual tours can provide an immersive viewing experience from the comfort of your couch, allowing everyone to save money on fuel, cleaning supplies and taking time off work. You might also realize you’re not interested in the home within the first few seconds, saving yourself the embarrassment of ducking out early from a viewing.

8. Property Management

Advances in financial technology, such as online banking, make it easier to manage properties. Landlords can collect rent from anywhere in the world with the tap of a button. They can also transfer funds to plumbers, maintenance workers and housekeepers through services like Zelle or PayPal.

9. Blockchain

Blockchain is revolutionizing the way people invest in real estate. This distributed ledger provides increased data security, and you can use it to track property ownership, reduce fraud and streamline the investment process.

The Best Real Estate FinTechs Available

If you’re looking for a financial tech service that helps you invest in real estate — or manage your current investments — there is a wealth of resources available.

1. Fiserv: This fintech service provides property management services to help expedite and automate payment collection. Especially popular with commercial buyers, Fiserv also facilitates real estate loans by helping credit unions, banks and mortgage brokers underwrite loans.
2. Opendoor: Opendoor lets interested parties take virtual tours of properties. Notably, it also speeds up the home-buying process by letting sellers offer their house to cash buyers, helping close the sale within two weeks. It’s the perfect fintech if you’re looking to sell a property fast.
3. Cadre: Listed in Forbes magazine’s Fintech 50 for four years in a row, Cadre lets individuals and companies directly access commercial real estate. It offers a broad range of services, including help with investing, process management and transactions. The company also lets investors trade their interest on the secondary marketplace.
4. Divvy Homes: If you’re not ready for a mortgage but want to buy a home, Divvy lets you rent while helping you save for a down payment. The company pays for the house in cash and covers the closing costs, taxes, fees and insurance. In exchange, you make an initial payment of a percentage of the selling price.
5. Generation Home: This fintech company assesses how much home buyers can afford to buy without hurting their credit score. Generation Home’s main goal is to help homeowners start investing, so it doesn’t support buy-to-let or interest-only mortgages.
6. Roofstock: This fintech company offers to sell or buy properties with current occupants, helping to maximize profits and provide a more stable source of income. Roofstock specializes in single-family rental properties and is one of the leading online marketplaces for real estate investors.
7. Emoov: U.K.-based Emoov enables sellers and real estate investors to complete the buying process online. The fintech organization assigns users a single agent who helps complete the sale. Today, it’s part of larger parent company Mashroom.
8. LendInvest: LendInvest focuses on commercial real estate rather than homes. It’s a non-bank alternative mortgage lender based in the United Kingdom and specializes in helping investors and small to medium-sized businesses.
9. Yourkeys: Buying a new home or investing in real estate doesn’t have to be stressful. This fintech startup allows sellers and investors to quickly, consistently and transparently track the online purchasing process in real time.
10. Garentii: This German-based fintech offers renter’s insurance, allowing people to rent their home without paying a cash deposit upfront. For a low monthly fee, it pays landlords a security deposit so people can move in sooner and with less financial risk.
11. StackSource: StackSource gives commercial real estate inventors the best options when it comes to debt and equity financing. After answering a few questions, you can instantly match with the optimal sources of funding. The company features a team of advisors to help approve the deal, allowing you to delay paying fees until the funding closes.
12. Setpoint: Setpoint builds new infrastructure for asset-backed lending and real estate sales. It includes digital workflow tools that expedite document collection and verification, increase transaction throughput, reduce overhead costs and automate manual closing procedures.
13. Crowdstreet: This Texas-based fintech allows real estate firms to get in touch with private equity investors. It gives investors multiple options when it comes to making passive income, from industrial sites to multi-family dwellings. You can compare direct real estate investments and engage in crowdfunding projects to invest in large-scale projects. Importantly, Crowdstreet allows you to earn an income without having to maintain the actual buildings you’ve invested in. It’s more like investing in the stock market than buying traditional real estate.
14. Hometap: When you need access to capital, Hometap provides a loan alternative that allows you to tap into your home equity without acquiring debt or selling your property. This fintech company gives you funds in exchange for a share in your home’s future value. It also gives you the option to settle at any point within the next decade, and there are no monthly payments or interest charges.
15. Obligo: Security deposits can be steep, making them difficult for many renters to pay. This fintech company gives landlords a secure billing authorization that lets them charge renters for damages, instead. It’s a binding authorization and tenants cannot cancel it before the expiration date.
    Obligo offers security to both landlords and tenants alike. Property owners can only take out a certain amount of money, and renters may dispute unreasonable claims.

Making the Most of FinTech

The traditional way of buying and selling properties was long, tedious and — for many people — inaccessible. Now, practically anyone can use fintech to help with any part of the real estate investment process, from the initial tour to closing a deal.

It offers investors new ways to analyze the market, get a loan or collect rent from tenants, and will surely shape the real estate landscape even more in the future.

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