The Importance of Data Quality:
Like all businesses, data is the foundation of effectively running your real estate investment firm. Accurate and current data is critical for every stage in a real estate asset’s life, from acquisition to disposition.
That being said, there are very few tools, processes, or safeguards in place at many real estate investment firms. At IMS, we see this daily. Simple errors, whether it be contact information, account information, or calculations, propagate, wasting time and causing credibility issues.
Process and tools can solve these data quality issues. Based on our experience in working with investor, loan, and property level data, we recommend the following 5 tips to assist with data quality.
5 Data Quality Tips:
- Choose scalable systems that support your business today and for the future. We see many cases where entire projects are managed in a single spreadsheet. After acquiring a new asset, one of the other spreadsheets is copied, renamed, and used. This is prime for data propagation issues. For example, formula errors in a hurdle rate that was never hit would propagate through to other projects. Think about spreadsheets that include contact and bank information and how hard it would be to update if each project is discrete (watch our run your business as one webinar to learn more on scaling your business).
- Decide and enforce what is mandatory. We often see cases where firms don’t enforce mandatory versus optional data elements. Additionally they do not enforce standardizations like two letter state abbreviations (NC) versus spelled out names (North Carolina, N. Carolina, etc.). This leaves contact data with holes that, when stored in systems, end up as invalid information. How many 555-555-1212 phone numbers or 123 First Streets are in your customer data? Minimizing data quality issues start with discipline and accuracy of data acquisition and maintenance.
- Data is perishable. People and businesses move, change phone numbers, get new email addresses, and change bank accounts. View data as perishable and ensure you are regularly reaching out to your investors or other stakeholders to ensure data is up-to-date using a CRM system. Something as simple as an email to all of your your contacts to ask them to update any information can significantly reduce the amount of invalid data. A side benefit is keeping your firm top-of-mind.
- Move your data carefully. Any time you are moving data from source to source, whether it be in software or even paper, introduces opportunities for data issues. Ensuring you are auditing your data prior to moving, preparing your data for movement and have a robust scheme for what is called ETL (extract-transform-load) will reduce the chances for data issues when you are migrating or onboarding.
- Check your work. It is amazing the impact a quick human check of the data. A quick skim can identify both acute and systemic issues in your data. Don’t be afraid to spend a few minutes checking the data for consistency and accuracy, especially the first time you are moving data or using a new system.
What can you do next?
Data audits, preparation, and quality is critical for your credibility and profitability. Following the five tips above, as we do with onboarding and data maintenance for our clients, will ensure data quality is not derailing your business. Additionally, centralizing your data in a single platform, like the IMS Platform, will enable you to better manage your business as it scales. Learn more about how your can fuel your firm’s growth with IMS.