How to harness the rising amount of data in real estate

The Fast Company Impact Council is an invitation-only membership community of leaders, experts, executives, and entrepreneurs who share their insights with our audience. Members pay annual dues for access to peer learning, thought leadership opportunities, events and more.

For years, the real estate industry had lacked the data necessary to drive informed business decisions. Data is often fragmented, incomplete, or nonexistent, making it difficult for landlords and real estate professionals to analyze trends, forecast market shifts, and optimize their operations. Our research at RentRedi showed us that 90% of our landlords previously used pen and paper or spreadsheets to manage their rental properties before adopting our software, giving them little access to helpful data.

With the adoption of centralized platforms like ours and other real estate technologies, data collection is skyrocketing. Investors, real estate agents, and property managers are adopting technologies that streamline operations, and in the process, those platforms are generating vast amounts of data that can be used to provide deep insights into market behaviors that benefit the landlords providing it. This data revolution presents an unprecedented opportunity for real estate businesses to make smarter, data-driven decisions, reduce risk, and drive growth.

By understanding where real estate data comes from, overcoming data overload, and strategically harnessing information, real estate agents and investors can significantly improve operations and drive business growth.

How to harness data and use it to your advantage

Whether you sell, buy, or manage real estate, data plays a crucial role in providing opportunities for you to make more informed decisions. Effectively utilizing real estate data can lead to improved business operations and increased profitability.

Rental property owners, for instance, can leverage data insights to increase on-time rent collection, get better tenants, minimize evictions, reduce vacancies, and streamline property maintenance. Insights can also help establish better operating procedures, such as utilizing 5-pronged tenant screening processes (comprehensive background checks, credit reports, criminal reports, eviction reports, and income and asset verification) to identify high-risk tenants or adjusting lease terms to encourage on-time payments.

Running surveys to gather customer feedback can help owners improve understanding of renters’ needs and what matters most to them. Real estate agents can use the feedback to enhance their communication skills, property showing process, and negotiation strategies, leading to an upgraded overall client experience, more referrals, and repeat business. Likewise, gathering tenant feedback helps property owners understand what matters most to their customers, allowing them to enhance tenant satisfaction and retention.

Finally, using a property management system that consolidates, categorizes, and analyzes data will streamline processes, and ensure easy access to critical information, so focus can remain on the most relevant metrics and trends.

Specific applications of real estate data

Rental property investors can leverage property management software to implement innovative solutions that benefit themselves and their tenants. For example, we analyze data to identify trends, providing it back in usable formats to improve real estate businesses.

Turning data from insight into actionable guidance is key. If data reveals that renters using autopay pay rent on time 99% of the time—as opposed to an 88% on-time payment rate for those who don’t—you know to offer your tenants (and advise them to set up) automatic payments to avoid missed or late payments and resulting late fees and penalties.

Likewise, data may show that landlords are likely to see a 13% jump in on-time rent payments when using a credit boost feature to report on-time payments to credit bureaus, which also helps renters establish credit and raise their existing credit scores. With this information, landlords can consider offering that service to tenants. These actionable insights strengthen the landlord-tenant relationship.

Where to find data sources

To leverage data to improve your real estate business, you need to know where to find it. Real estate data comes from a wide variety of sources: from public records and market reports to proprietary databases and tenant interactions.

To effectively mine real estate data, professionals should start by identifying key data sources relevant to their operations. For example, public records, MLS listings, and property tax assessments provide valuable market insights, while customer surveys and online reviews reveal tenant and investor sentiment.

Property listings and market transactions provide data on property sales prices, listing durations, vacancy rates, and location-based demand, as well as demographic data such as neighborhood trends, population growth, and urban development. This type of data provides valuable insights into property valuation and investment opportunities.

In the rental industry, tenant applications and tenant screening provide data on income, employment history, credit scores, and rental behavior, which aids in risk assessment. Meanwhile, tracking rent payments reveals payment patterns that help landlords and property managers optimize rent collection strategies.

Building performance and maintenance logs also provide helpful data, especially IoT sensors and smart building technologies that track energy usage, maintenance needs, and occupancy trends, allowing for sustainability and cost reduction planning.

The challenges of too much data

Simply having access to this data isn’t enough—it’s crucial to know how to extract meaningful insights from it. Data can be a powerful tool, but the sheer volume of information available can be overwhelming, particularly while simultaneously managing properties and/or growing your portfolios.

Too much data can slow decision making. Organizing, interpreting, and applying the data in beneficial ways for your businesses takes time, is difficult, and can lead to analysis paralysis if done manually. Besides, raw data is not always actionable. That’s why it’s important to utilize analytical tools and dashboards to translate complex datasets into visual reports that make patterns and trends easily digestible and understandable.

Final words

The growing availability of real estate data presents both challenges and opportunities. Collecting and analyzing data from diverse sources provides professionals across the real estate industry—from landlords to large-scale developers—with the ability to make better decisions regarding investment, property improvements, and customer satisfaction.

Adopting data-driven solutions can lead to greater efficiency, improved business relationships, and increased profitability. By centralizing information, leveraging analytics, and implementing smart policies, real estate investors can harness the power of data to transform their businesses in an increasingly digital world.

Ryan Barone is cofounder and CEO of RentRedi.

View the full article