How AI Will Transform the Real Estate Market
Artificial intelligence is coming, and it will change the property industry forever.
Opinions expressed by Entrepreneur contributors are their own.
As a multimillionaire property investor and trainer, I look ahead at future trends in the real estate industry. Artificial intelligence (AI) and machine learning (ML) are starting to gain prominence in many parts of the economy and have the potential to transform property investment.
While no one can know what the future holds, we can look at current trends and where they might be heading. Understanding these possibilities will set landlords, estate agents and investors up for success in this ever-changing landscape. Let's look at three ways AI could impact property investment for the better and the potential risks of AI in real estate.
Related: This Is the Secret Sauce Behind Effective AI and ML Technology
1. Predictive maintenance
Costs can add up when something goes wrong at a property you own. If the situation has to be fixed immediately, there can be high call-out fees. This can be mediated by having a power team of trusted contractors, handymen and a reliable property manager nearby. That said, there will always be some problems, especially if you have an extensive portfolio of properties.
With AI, predicting when maintenance will be needed in advance may be possible. By analyzing sensor data from properties, AI could estimate exactly when care might be required and even go ahead and schedule the work itself. This will be particularly useful for landlords with several properties to manage. AI could also identify if things in the property are being misused and advise tenants to help prevent the need for maintenance.
Related: This Tech Will Transform Commercial Real Estate in 2023
2. Home automation
When renting a property as an HMO (house in multiple occupation), i.e., by the room, utility bills can be very high. This can be for legitimate reasons, but it can also simply be that tenants forget to switch off lights or heating when not at home. You can do many things to reduce these risks, such as activating the lights in communal hallways' motion sensors so that they are not left on when no one is there. You can also use smart tech to control the thermostat remotely.
AI has the potential to take this to a whole new level. AI can learn exact patterns of tenants coming and going from the property and arrange things accordingly. When no one is home, something like TVs can be switched off entirely, and when people are expected back, they are put on standby mode. Heating can be linked to the weather and the times tenants normally get up in the morning. Managed correctly, this will not only mean lower costs and better environmental outcomes but also better experiences for tenants.
3. AI market analysis
There are many ways to predict what property prices will do in a particular area. You can look at what businesses are moving in or out, you can look at local redevelopment plans, and you can look at historical trends. This can take many hours of research and ultimately has limitations because humans cannot accurately consider millions of data points in their minds. AI, on the other hand, can.
AI could look at millions of bits of data from the area and what those data points have meant for similar areas. It could look at news, crime stats, companies opening up, business registration records and more — it could predict future market trends and potential investments.
Investors with access to this kind of software will be at a distinct advantage and will be able to find opportunities that other investors overlook.
Related: How AI Will Transform the Housing-Market Consumer Experience
4. The risks of AI in the real estate industry
Although AI has many upsides in the property industry, there are some potential downsides too. It is important to put the correct safeguards in place when dealing with any new technology and to act cautiously when appropriate.
With increased monitoring of properties by AI, there are privacy concerns to consider. Tenants may not be happy with AI monitoring their patterns of behavior. The implementation of this technology should be done in dialogue with them, considering any concerns they may have.
It is also possible that AI could get things wrong. It could switch things off when people use them or switch them on when no one is home. It is also possible that a minority of bad landlords could use technology to limit the use of services, such as heating. Tenants must have the option to override the AI when necessary and use it appropriately.
A.I. could also be a risk for investors. If the A.I. is considering millions of data points, it won't be possible to check its work. It may have misunderstood something that no human would. It will be important for investors not to rely too heavily on A.I. and also to do their independent research.