The Tech Entrepreneur’s Guide To Real Estate Investing
The real estate market has opened up amazing opportunities for tech savvy entrepreneurs, while simultaneously becoming an essential form of investment for the full spectrum of investors. From start-up founders to software developers, these individuals are finding that their knowledge of the tech industry is helping to make real estate investing easier and more lucrative. So where are the opportunities in real estate for tech entrepreneurs, and how can property be used to best empower them in their mission to do what they love the most?
Two Options
There are two main ways in which the current real estate market can be capitalized on by tech savvy entrepreneurs. Both can be invaluable:
The first, and perhaps most obvious, is the massive opportunity to bank on huge monetary potential in this chain of related industries. Online real estate marketing alone is working its way to being a $30 billion sector. There are plenty of other multi-billion sub sectors too. This ranges from home improvement, to vacation home rentals to financing, and more. In the commercial realm, there have been a slew of recent $1 billion plus sales.
The second side of this is the opportunity and benefits of investing in real estate itself. No tech industry professional or start-up founder should be without this.
Critical Thoughts before Considering a Real Estate Tech Start-up
Launching a tech fueled real estate start-up can be very tempting. The market and profit potential is huge. Some have already been hugely successful. Many others have failed to see much traction at all. Beyond the draw of the cash and fame of a successful start-up, there also appears to be a lot of room for tech enabled improvement. This can be true, but also equally dangerous to assume.
There has been a lot of success realized in attracting substantial sums of venture capital, even though many would argue the ideas and uses haven’t been very revolutionary. Perhaps the biggest risk, and number one reason for failure in this sector for decades has been failing to conduct proper market research. If someone collected a cent for every start-up attempt that was a blind copy of what already exists, they’d be immensely wealthy without having to lift a finger. You’ve got to conduct a decent amount of research. Even a quick Google search could have saved many from this blunder in the past.
It’s got to be unique and add value to make it big. It’s all about really knowing how and where to disrupt, and equally as importantly, what not to try and disrupt.
Disruption is trendy, and some say start-ups and companies should disrupt just for the sake of it. Of course this doesn’t always make for sound business. There is plenty of room to disrupt, but doing it in the right areas, with the right balance is important. First; remember that while the demographics of the real estate workforce is changing, it is a very entrenched field, full of individuals which are very resistant to change and embracing new technology. Despite the buzz in the media about all types of innovation in real estate, the real data shows that real estate companies are investing very little in technology. Think about how many years it took them to start using email. Still, some are just beginning to use text messages to converse with clients. Cross the border to Canada and you might still be asked to send a fax or letter in the mail versus email or direct message via social media.
Most importantly, those venturing into new areas must make sure they really understand how the industry works, why some things are the way they are and have been for decades, and really get what the user needs and wants. If you don’t know, bring in a pro that really gets the industry to ensure the core product works and the language resonates.
It can be far easier to find success by first determining the want and filling that with a solution than pushing something that may not be desired or even allowed for the user to participate in due to never ending regulation. Right now, some may find more wins in providing software that backs up professionals than trying to change the front end, or compete head on with the deep pockets of Zillow, Trulia and Realtor.com.
The Need to Invest in Real Estate
There is a huge need for tech professionals to invest in bricks and mortar real estate. Many fear the tech industry is on the verge of experiencing its own bubble. There is little protection from the downside on the tech front. For both owners and tech workers having a few brick and mortar real estate investments can provide a huge amount of safety and protection. These investments can provide ongoing income and wealth building as a backup plan, or even to fuel other passions and new start-ups. It can provide the confidence to take the risks in tech, knowing it doesn’t have to mean putting your entire financial future on the line.
Options can include flipping houses, rental property investing, commercial real estate partnerships, turnkey property investing, acquiring vacant land for long term hold, and even private lending. Successful tech firms are also realizing that real estate is an extremely valuable corporate asset which can add huge value to the company, prop up revenues during down times, and sometimes far outperform other commerce channels.
