The newest high-tech industry: real estate
When it comes to naming high-tech industries, few would think of real estate. But with a record $32 billion pumped into the industry last year by VC’s and a new generation of tech-savvy entrepreneurs building products, real estate is increasingly incorporating new technology.
At Fortune’s Brainstorm Tech conference in Aspen on Wednesday, two founders in the real estate industry spoke with Fortune’s CEO Alan Murray about how their companies are bringing innovation to their business.
One of the speakers was Ryan Williams, who founded Cadre, a marketplace for commercial real estate investments. Williams said one reason he started the company is because he grew up renting, never being able to own a property—a situation familiar to many Americans today as interest rates and home prices increase.
Williams explained how a job at investment giant Blackstone opened his eyes to the immense wealth being created by owning commercial properties—an investment that is inaccessible for most people.
“I wanted more people to be able to share in the wealth,” he said. “I wanted more people to be able to own their financial futures.”
The smallest investment Cadre accepts right now is $25,000, which is then invested across a 15-property portfolio that a customer can pick on their own or let Cadre choose for them. But Williams said Cadre is working on a “true retail product” that will bring the minimum investment price even lower, expanding its customer base in the process.
As for the tech angle, Cadre is using machine learning to analyze the variables that make a property a good investment so it can present the best ones to its customers through its online platform.
On the residential real estate side, Adena Hefets is using technology to bring the dream of homeownership to a bigger group of people with her company Divvy Homes. When a customer goes to the company’s website, the company proposes a budget for various properties and suggests potential financing options, Hefets said.
In practice, this means the customer picks whatever home they want on the market within the budget Divvy gave them. The company may then buy the home for them and customer moves in, though technically as a renter. But that doesn’t mean a Divvy customer isn’t building equity in their home, Hefets said Wednesday.
“We parse the payments into rent and equity. Equity builds up their ownership in the property the same way with a mortgage that you pay principal and interest. It works the exact same way. And so you can continually build up equity in your rental property, get the benefit of appreciation, and at any point in time you can either cash out or leave the home,” she said.
DIvvy Homes’ technology allows them to search for and buy homes for their customers, all with a smaller team than their competitors, said Hefets.
“Today, we’re buying hundreds and hundreds of homes a month and we do that with an acquisitions team [of around] 10 people or so whereas the largest single family rental company, in the U.S., Invitation Homes has a $30 billion market cap,” she said.
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