The collection, analysis, and usage of data are an important components of how informed investment decisions are made. Using data to provide investors with extensive, in-depth information about both the physical and human-related aspects of an investment, including demographic reports, traffic counts, flood maps, and EPA reports, can help expedite the investment process. By providing insights extracted from big data, investors are given actionable information that can help them more quickly determine a property’s potential ROI.
Managers understand the vital role that data analysis has in both their current and future real estate investments. However, sifting through the seemingly unending volume of information at their disposal can become overwhelming. Additionally, because not all data is created equal, it can be difficult for managers to determine what information to keep or discard. Understanding how technology platforms, like RealPage AIM, can be used to avoid a data swamp and instead convert big data into higher returns is necessary for today’s proactive and forward-thinking real estate managers.
Read ahead to learn how advancements in technology are creating opportunities for managers to avoid a potential data swamp and instead use the data to provide true competitive insights for investors.
Creating Trust in The Data
Real estate managers are exposed to an insurmountable volume of data from multiple sources at any given time. With so much information, knowing what data and what sources of data to trust can be difficult. Alan points out that “if they do not trust the data, they revert back to their old ways of doing business, which unfortunately is Excel spreadsheets”. The issue with Excel spreadsheets is that 9 out of 10 contain at least one error, such as mistyped numbers, incorrect formulas, rounding mistakes, and incorrect cell references. Overtime, these mistakes increase the risk of distributing an incorrect amount of funds to investors. Both over distributing and under-distributing funds can lead to unresolvable issues such as a damaged reputation, impaired business relationships, and reduced credibility. With the major role of an asset manager being to “work the asset and generate value”, embracing and implementing technology is one way to ensure that this task is accomplished while also establishing a relationship built on trust.
Managing Data More Efficiently
Historically, real estate investors and managers have collected and used data to make informed decisions in one way or another. Today, however, data can be aggregated on a more granular level thanks to advancements in technology and a growing database of resources from which to pull additional information. There are now platforms available that provide technology for use across the investment lifecycle, like RealPage AIM, with the ultimate goal of providing a 360-degree view of the entire process. Still, many asset managers are spending about as much time collecting and harnessing data as they are analyzing or reviewing the results. And without having an efficient method of managing data in place, the potential of creating a data swamp is increased. A greater adoption and utilization of technology is the ideal solution for forward-thinking mangers to begin managing their data and providing more quality information to investors.
Using New Datasets to Identify Opportunities
For managers, using new datasets can seem intimidating. However, proactive managers understand how the combination of new types of data and technology can unlock another level of value in their real estate portfolios. Specifically, new datasets can be used to identify opportunities in markets that may not have shown up on the radar previously. In addition, new large datasets can be leveraged to generate ROI and to better underwrite risk in real estate portfolios. Technology is an important part of properly extracting data from new datasets to help provide visualizations and potential outcomes to stakeholders.
The accessibility of big data has caused a shift in the way that real estate managers control real estate investments. Ultimately, a leadership mindset is one of the key determinants in being a better real estate investment manager. If a firm’s leadership team is not in agreement about investment technology and the need to be more analytical and data-driven, the likelihood of an ineffective method of data collection, analysis, and management increases – and so does the potential of drowning in the data.