The real estate market has changed a lot since the COVID-19 pandemic. These changes present both opportunities and challenges to people looking to invest in real estate, but few are as impactful as the emergence of artificial intelligence (AI) in the industry.
AI assistants have also come a long way in a short time. You may be most familiar with them in the form of Siri and Alexa, but specialized, business-grade versions are popping up and promising to transform entire industries. Here’s how these intelligent assistants will change real estate investing for the better.
Real-Time Property Valuation
The biggest advantage of AI for real estate investors is its ability to analyze real-time data. In the past, property valuations came largely from old data and historical trends, which don’t always reflect how your investment will shape up in the future. AI can make more informed, up-to-date valuation estimates.
Machine learning algorithms can look at the same data conventional valuations use and add real-time data from current market trends. By analyzing up-to-the-minute real estate data, AI offers a more comprehensive — and more reliable — picture of a property’s worth. As a result, AI valuations have a 98 percent accuracy rate of the actual property sale price.
AI can also go further to predict future value changes. You can see estimates of how your investment properties will likely perform years down the road to make smarter decisions with your money.
Personalized Investment Strategies
AI assistants can also tailor investment advice to your specific situation. Certain properties are good investments for some people but not others depending on their assets and cash. Similarly, individual investment goals can vary, and AI can adapt to these differences.
This process is similar to how AI shopping algorithms make personalized recommendations. Investment bots analyze your investment history and past searches the same way e-commerce ones look at your past purchase habits. Then, the AI model tailors results based on your financial data, which it can use to determine your risk tolerance and maximum payments.
Some firms have found that these AI-driven recommendations can increase returns by 3 percent or more. That may not seem like much at first, but over time, it makes a big difference.
Real estate investing also involves a lot of regulatory hurdles that can be challenging to navigate. AI advisors can help you understand what rules apply to you and how to comply with them in minimal time.
Automated regulatory assistance can help you make money — not just avoid fines — too. For example, you can defer capital gains tax on the sale of an investment property if you exchange it for another similar one. AI can analyze your situation, the market, and relevant regulations to suggest the best course of action you may have missed without it.
AI can also automate all the data entry and paperwork filing involved in regulatory compliance. That way, you can both save time and reduce the chances of making a costly mistake in these documents.
Optimized Search Functions
Even simple AI improvements can make investing in real estate a more headache-free process. Optimized search is an excellent example. AI-driven property search functions can help you find the right property to invest in quickly and easily.
Roughly 46 percent of U.S. adults say AI features are important when choosing a search engine, but far more say they look for ease of use, relevant results, and personalization, which AI enables. AI models built into property searches can use your web history and trends among similar investors to list the most relevant properties first.
Finding properties ideal for your goals with less searching lets you invest in them sooner. You can then maximize your returns and waste less time and effort getting started.
Automated Property Management
AI assistants can even help investors make the most of their properties after buying them. Smart home technologies let you monitor a house in real time, giving you insights into its energy consumption, water usage, or maintenance needs. You can then respond to any issues faster, ensuring your investment stays in top condition.
If you rent out your investment property, AI-enabled smart home features make living there more cost-effective for your tenants. That affordability can draw people in and boost your reputation as a landlord, helping your renting business down the line.
When the time comes to sell your investment property, you can use these AI technologies to ensure it’s in premium condition. They may also boost your chances of a sale by appealing to future landlords and increasing the property’s value.
AI Will Thoroughly Disrupt the Real Estate Market
AI in real estate is a relatively new concept but it’ll undoubtedly be a disruptive one. Any industry as complex and regulation-heavy as real estate investing can benefit heavily from AI, and investors are quickly catching on to these benefits.
These improvements are just a sample of the ways AI could change the real estate investing market. As this technology advances and more people use it, new use cases will emerge, and the sector won’t be the same again.