How Big Data Is Helping Real Estate Investors Weather Market Turmoil

Following last week’s initial claims number, more than 30 million Americans filed for unemployment benefits since the COVID-19 coronavirus crisis prompted the implementation of nation-wide stay-at-home orders.

In the face of rising unemployment, the U.S. housing market realized a significant shock with millions requesting forbearance, home sales decreasing, and foreclosure risks rising across all demographics.

"The Northeast, particularly New Jersey, faces a triple whammy of unaffordable housing, above-average levels of underwater properties, and relatively high percentages of properties facing possible foreclosure," said Todd Teta, chief product officer at ATTOM Data Solutions.

Alongside the changing near-term market dynamics, one Zumper report suggests substantial price declines are ahead.

“Usually as the warmer months approach, demand and rent prices pick up. However, this report shows that as we enter into Spring 2020, this is not the case.”

With COVID-19’s full impact on the real estate market yet to be realized, interest in solutions that help prepare property owners and operators for the market environment ahead has risen.

One solution is Beekin, a London-based artificial intelligence fintech that helps investors lower risk and maximize income.

“We take billions of data points on things like income, demographics, and shopping patterns to build a model and neural network,” said Vidur Gupta, the firm’s founder, and CEO.

In its simplest form, Beekin’s solutions help understand tenant behavior, tailor amenities, optimize incentives, and reduce turnover.

“We’ve increased retention for the largest operators in the country by 600 basis points,” said Gupta in a discussion regarding Beekin’s work with S&P 500 CRE companies. “We determine the probability a renter is going to move and then derive the discount needed to keep the renter.”

Pandemic Effect

"In the next 18 months, demand patterns will change massively.”

Due to the economic impact of the coronavirus shutdown, there is a broad-based consensus the U.S. will experience a recession. To weather the storm, many property owners are beginning to extend lease terms.

“It seems short-term property owners originally renting out to traveling guests are now marketing their properties to longer-term flexi-stays in response to the collapse in demand from travelers,” said one Zumper report.

In observance of the evolving market behavior, Beekin is expanding its platform, helping investors stay on the right side of the real-estate market.

“At first, we built a model that predicts who’s going to move for 40 million renters in the United States,” said Gupta. “More recently, we can now even predict how far they’ll move at a 65% to 75% accuracy rate.”

The firm’s big data platform will help property managers, developers, and owners holistically acquire, manage, tailor, and deploy their real estate assets to the most interested demographics.

In total, the Beekin methodology increases occupancy up to 5%, lowers marketing costs, as well as decreases turnover and time on the market.

“It's only a matter of time that the 'backyard fog [in real estate]' is replaced with empirical frameworks and data,” said Gupta. “Data may not be oil, but as Moneyball and Renaissance [Tech] have shown us, it is definitely alpha.”

To learn more about Beekin’s holistic suite of data-driven solutions, please visit beekin.com.

Photo by Jacoby Clarke from Pexels.