As the United States slowly emerges from our Coronavirus nightmare, many industries look quite different than they did before we entered the Covid-19 era. Small business has been devastated, large companies like Amazon have grown substantially and consolidated, more people work from home and video conferencing technologies like Zoom have taken off.
Like so many other industries, the real estate industry has and will continue to change as well.
One thing that the economic landscape after Covid-19 makes absolutely clear is that industries will continue to consolidate. Eventually, this could lead to political ramifications, but for now, expect further consolidation.
Fortunately, the doom and gloom about huge swaths of tenants missing their rent payments (and homeowners missing their mortgage payments) has, despite all the eviction moratoriums throughout the country, not yet come to pass. Even still, ma’ and pa’ landlords have had a tougher go of it than the big companies.
Part of this is only tangentially related to Covid however. As prices have gone up (in part due to the Federal Reserve’s loose monetary policy and quantitative easing), rents haven’t quite kept pace. This makes it more difficult for properties to cash flow which makes it tougher for small landlords to get by whereas big companies generally have the ability to stomach low returns, especially if their properties are appreciating rapidly.
This trend is also exacerbated by technology. Managing 100 houses spread throughout one city would have been an incredible pain without modern technology like rental management software, smart lock boxes, GPS or even something we all take for granted; the cellphone, which allows real estate professionals to communicate with maintenance techs, leasing agents, prospective tenants, etc at the drop of the hat. Just 20 years ago, many people didn’t have such things.
Thus, it should be no surprise that before the 2008 crash, hedge funds almost never bought houses. Now it’s commonplace.
As technology improves, it makes it easier and easier to manage a large number of properties from one centralized location. So expect further industry consolidation.
More Reliance on Technology
As noted above, technology is making it easier for large companies to manage many properties. It is therefore not surprising that technology is becoming more and more necessary for real estate investors, agents, and property managers to have in order to do their jobs well.
Real estate was rather slow to get on the technology bandwagon. While many other industries were “disrupted,” real estate just kind of did things like it used to. But it seems to be real estate’s turn.
Some technologies are simple, such as smart lock boxes that allow for showings without a leasing agent or real estate agent being present. Rently and ShowMojo lead in this area. Indeed, the fear of Covid is likely to extend some time into the future making many people prefer to view available rentals without a leasing agent present.
Other technologies include remote payment processing for tenants like PayNearMe or smart thermostats like Nest. Even real estate marketing has moved further away from mailing campaigns and toward things like SEO.
Some companies, such as Simplifyy, are even trying to centralize property management for apartment complexes by doing everything but the maintenance offsite.
Only time will tell if such disruptions will work. But what’s clear is that technology will dramatically change the real estate landscape and continue to do so for a long time to come.