How To Use AI For Real Estate Investing

How to Use AI For Real Estate Investing

June 27, 2024

Produced by:
Richard Stevens

Richard Stevens is an active real estate investor with over 8 years of industry experience. He specializes in researching topics that appeal to real estate investors and building calculators that can help property investors understand the expected costs and returns when executing real estate deals.

Reviewed by:
Carmel Woodman

With over 8 years of expertise, Carmel brings a wealth of knowledge as the former Content Manager at a prominent online real estate platform. As a seasoned ghostwriter, she has crafted multiple in-depth Property Guides, exploring topics such as real estate acquisition and financing. Her portfolio boasts 200+ articles covering diverse real estate subjects, ranging from blockchain to market trends and investment strategies.

Artificial intelligence is a major technological breakthrough that will surely disrupt many industries. Real estate is not immune to its impact, and AI will likely lead to many advancements in the field. While AI is unlikely to change the nature of the business entirely, it does offer many potential applications that will benefit real estate professionals in countless ways. To help you take advantage of this exciting new trend, here are a few ways real estate investors can leverage AI to find more opportunities and increase profits.

10 Ways To Use AI For Real Estate Investing

Predict Market Trends

Predict Market Trends

Real estate investors need to predict how the market will change over time so they can choose the right investments. Artificial intelligence can expertly analyze large amounts of data, including property values, historical rent prices, and market conditions, to make assessments about how real estate prices will fluctuate with time.

AI isn’t quite a crystal ball, and it can’t predict the future with 100% certainty. However, it can be great for analyzing large quantities of data on the broader real estate market, making it easier for investors to make smarter decisions.

Analyze Investment Opportunities

Artificial intelligence can be useful for locating and analyzing investment opportunities. AI can identify undervalued properties by quickly analyzing real estate market data and historical prices. It can also evaluate profit potential by comparing potential rent income to projected construction costs to determine which deals offer the most promise.

Real estate companies already use AI to quickly identify investment opportunities and submit an offer before the competition. So, by not leveraging the tool, you may miss out on a great opportunity.

Assess Property Values

AI also has many interesting applications for property valuation. It can produce surprisingly accurate appraisals by analyzing data such as location, age, market trends, and comparable sales. Some AI-platforms can even analyze images to factor in the condition and need for future repairs. In situations where you need a quick and reliable property valuation but don’t have the time or ability to commission an appraisal, AI may be the next best thing.

AI probably won’t replace human appraisers completely, as it can’t always predict structural problems and underlying maintenance issues that aren’t immediately apparent. But if you need a quick way to draft an offer based on hard data, artificial intelligence can be a major help.

Predictive Maintenance

Another interesting application of AI is the ability to predict maintenance needs. AI can analyze complex business systems and equipment conditions to predict potential failures and determine when tune-ups will be needed.

It can also be useful for calculating expenses and lowering costs by spotting potential issues before they happen. This feature can be especially helpful for landlords who own a large portfolio of properties and want to easily spot potential problems and perform proactive maintenance to prevent issues that could threaten their investments.

Enhance Analytics

Real estate professionals always need reliable analytics to make informed decisions about properties and potential investment opportunities. However, the human mind can only take in so much data and process it accurately. Artificial intelligence can process complex data and create reports and visualizations that are easy to understand and heighten one’s ability to make informed decisions.

This application can be especially useful to larger real estate companies who need multiple parties to sign off on a deal but don’t have the time to explain large data sets to each key decision-maker. Instead, you can use AI to analyze the data and draft a statement showing all the key takeaways and important information that needs to be communicated.

Improve Marketing Efforts

Another underrated application of AI is the ability to strengthen your real estate marketing efforts. There are many different ways artificial intelligence can be used to help you generate leads and create new opportunities. Let’s say you’re a house flipper struggling to find motivated sellers.

You could start a blog and use AI to develop post ideas, create the content, and make suggestions to improve the SEO. You can also run a paid ads strategy and use AI algorithms to track audience behavior, demographics and trends to ensure your ads appear in front of the right customers.

It can even help you draft personalized emails and direct mail messages that you can send to prospective sellers to increase the likelihood that they will give you a call.

Portfolio Optimization

Artificial intelligence can also be very useful for creating a well-diversified real estate portfolio. It can analyze vast amounts of financial data to suggest the optimal asset mix for your investment strategy and recommend ways to generate the best possible returns while minimizing risk.

Real estate investors often diversify their portfolios across different types of properties, locations, and strategies to protect themselves from real estate market volatility and economic downturns. The more properties you own, the harder it becomes to make predictions about the potential risks of each investment and how it may impact the health of the overall portfolio.

AI can create accurate risk portfolios for each investment by analyzing economic trends, demographic data, and even weather patterns that may indicate the potential for a natural disaster. It can then balance the risk profiles of different investments in the portfolio to suggest a mix that will reduce exposure and maximize returns.

Screen Tenants

AI can also be used to screen tenants and spot any red flags that may not be immediately obvious on the typical rental application. Screening tenants can be a major headache for landlords. Even if the applicant meets all the credit and income requirements, that doesn’t guarantee they will be a good tenant. But often, by the time you find that out, it’s already too late.

AI tools can be great for conducting comprehensive background checks on applicants based on data such as criminal history, credit reports, past rental history, and even social media profiles. If you are trying to decide between multiple tenants, you can use AI tools to predict which one is more likely to pay on time based on employment data and credit history. You can even use AI tools to create a profile of the ideal applicant based on property features and personal preferences, so you can make predictions about who is most likely to stay in the unit for an extended period.

Automate Due Diligence

The ability to automate due diligence is another useful feature of AI. Real estate investors need a way to verify property details before completing a transaction. However, confirming all that information manually can be difficult and time-consuming.

AI can instantly analyze public records, databases, listing sites, and legal sources to help make this process faster and more accurate. It can help check property records, titles, zoning laws, transaction history, and other key details that may require confirmation. It can also be helpful for analyzing property conditions, neighborhood info, and financial data to ensure you are making a wise investment.

Streamline Communications

Artificial intelligence can also be very helpful for streamlining communications and cutting down on unnecessary phone calls and emails. For instance, landlords can set up automated chatbots to troubleshoot common issues with tenants to avoid bothering the property manager whenever an issue arises.

Chatbots can also provide instant information about a property, schedule showing, and provide 24/7 customer service without hiring a human employee to handle these tasks. You can even take it a step further and use AI to create virtual and augmented reality property tours, offering a unique, immersive experience that may set you apart from other landlords.

Final Thoughts - Are You Ready to Embrace the Power of AI?

Like it or not, artificial intelligence is here to stay and will surely become more prevalent in the real estate industry in the years to come. If you want to stay ahead of the competition, it’s best to embrace the change and use the technology to strengthen your investment strategy.

Real estate is still a people business, and AI is unlikely to completely upend the industry. However, it’s already beginning to change the way investors source deals and make decisions. So, those who want to be ahead of the curve will benefit from learning these tools and using them to elevate their investment techniques.