Disruptive Technology in Real Estate: What It Means to You

The Big Picture On How Disruptive Technology is Changing Real Estate Investing

Platforms like Fundrise and Groundfloor democratize real estate investing, allowing individuals to pool funds for property ventures.
Tech-enabled investment clubs offer fractional ownership of high-value properties, secure transactions, and real-time document access.
3D scanning and VR tech enhance remote property exploration, increasing buyer confidence through virtual tours.

Forget those ads on YouTube or TikTok with some tech bro promoting a shady new platform or program to “corner the real estate market.” Suppress the gag reflex and stay with me. Not all instances of disruptive technology in the real estate world are created equal.

Online scammers aside, have you noticed how a handful of technological advancements have transformed the real estate investing landscape?

It happened gradually, with one small innovation empowering real estate investors with new opportunities and greater convenience. Many of us barely noticed the profound transformation happening in real-time.

Take a moment to consider the innovative technologies reshaping the real estate industry and revolutionizing the way investors approach buying, owning, and selling properties.

 

1. Real Estate Crowdfunding Platforms

Real estate crowdfunding originated in 2012 when the JOBS Act made it possible for private companies and investment projects to raise money from the public.

Fundrise became the first real estate crowdfunding platform, and other digital platforms that facilitate crowdfunding investments have proliferated ever since, making real estate crowdfunding a billion-dollar industry today. Technology is disrupting real estate, allowing these platforms to streamline the way people invest in property.

These platforms enable individual investors to pool their resources to collectively invest in real estate projects or loans, giving them access to opportunities once limited to institutional investors or high-net-worth accredited investors.

Thanks to crowdfunding, investing in residential or commercial real estate with low investment minimums has never been easier or more accessible.

Real estate crowdfunding comes in different flavors. Some, such as Arrived and Ark7, let you buy fractional ownership in rental properties. Others like Groundfloor and Concreit let you invest small amounts toward property-secured loans.

Either way, crowdfunding allows individual investors to invest in real estate without maintaining tenants or properties themselves.

 

2. Tech-Driven Real Estate Investment Clubs

You need a lot of cash to invest in multimillion-dollar multifamily properties. Or do you?

Real estate investment clubs have been around for a while, in which a group of individual members invests together.

Investors in a club can pool their funds and collectively own a share of an investment property, sharing both risks and returns. This model removes one of the main barriers to entry and opens up investment opportunities that were once out of reach for individual investors.

Newer, tech-driven real estate investment clubs offer fractional ownership in private equity real estate syndications. In real estate, disruptive technology makes it more accessible to a wider range of investors.

Clubs like SparkRental’s Co-Investing Club scour the marketplace to find and vet investable deals and invite members to join. Participants in each deal become partial owners of an investment LLC with voting rights and a share of the property’s proceeds.

We all use tech platforms that let you view joint banking history in real time, transfer funds securely, access the joint LLC legal documents, and vote on decisions.

They can also help members invest in diverse properties, including different types of properties in different geographic locations they may not otherwise consider.

 

Traditional vs. Club Real Estate Investing

For a better picture, here’s a quick comparison:

Aspect
Traditional Real Estate Investing
Real Estate Investment Clubs

Minimum Investment
High (often $100,000+)
Low (can be as little as $5,000)

Diversification
Limited by capital
Easier to diversify across properties

Management
Hands-on
Typically passive

Legal Complexity
High (individual ownership)
Managed by club (simplified for investors)

Liquidity
Low
Varies (potentially higher with some clubs)

 

3. FinTech Changing Home Loans

Thanks to FinTech, home loans have significantly improved—it has made mortgages smoother and more accessible for all kinds of investors.

Specifically, online lenders like Better.com and SoFi are shaking up traditional banking as they roll out these digital solutions that can give borrowers the green light in minutes, not days.

Smart algorithms can now crunch the numbers on financial data, credit scores, and job histories, providing faster loan decisions.

With these technologies, borrowers can upload their paperwork safely online or keep tabs on their application as it moves along.

The fintech world has also developed fresh loan offerings, such as shared equity mortgages and peer-to-peer lending, which open new doors for real estate investors.

4. Tokenized Fractional Real Estate Ownership on the Blockchain

No article about real estates’ disruptive technology would be complete without including the word “blockchain,” right? But in the real estate space, the blockchain really does open up unique investing possibilities.

By leveraging the blockchain’s decentralized and immutable nature, investors can confidently purchase digital tokens representing fractional ownership in real estate assets, much like shares of a stock.

Because the “shares” exist on the blockchain, your ownership cannot be questioned or revoked. This is just one example of technology disrupting real estate in unprecedented ways.

Tokenized fractional ownership shares offer real estate investors a new level of liquidity and accessibility. For instance, investors can buy, sell, and/or trade fractional shares of real estate assets on specialized platforms like Lofty, Propy, BrickBlock, and Harbor.

Wary of blockchain investments? These evolving markets might not fit your risk tolerance. Crypto and NFT scams have made many cautious.

You must conduct thorough due diligence before engaging with any specific platform to ensure regulatory compliance and assess the suitability of its investment opportunities. As with all things blockchain, buyer beware.

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5. Algorithm-Based Rent Default Insurance

What’s the greatest concern keeping landlords up at night?

Tenants defaulting on their rent — and having to chase them down for payments, file for eviction, clean out their abandoned junk, advertise the unit again, screen tenants all over again, yada yada yada.

Fortunately, you can now scratch that worry off your list. Several companies today offer rent default insurance, priced based on complex algorithms that predict the tenant’s likelihood of default. Check out Steady and The Guarantors as prime examples.

Some don’t even cost money. The Guarantors charge the renter directly, and they pay for it because the policy also covers any damage they might cause to the property.

 

6. Online Marketplaces for Turnkey Rental Properties

Rental properties fit the bill if you prefer a tried-and-true real estate investment.

But becoming a landlord comes with its own headaches: you must find suitable properties to buy, fix them up, and find tenants to occupy them.

Enter turnkey rental properties — homes or apartment buildings an investor can purchase and immediately rent out as-is.

Technology makes it easier to vet, buy, and sell turnkey rental properties sight unseen. Technology that’s disrupting real estate is evident in platforms like Roofstock, which connects investors with pre-vetted, fully renovated rental properties ready for immediate occupancy.

Through these marketplaces, prospective landlords can browse various properties, access detailed financial and operational information, and make informed investment decisions.

Some properties even come with tenants already occupying them and paying the rent every month (although make sure you screen them as if they’re new!).

Many of these platforms also offer property management services, so you can focus more on being a real estate investor and less on unclogging toilets in the middle of the night.

 

7. Drones for Better Property Views

Real estate professionals can utilize drones to capture eye-popping views from above or layout properties in full detail.

The latest drone tech even grabs thermal images, which give investors a whole new perspective. Investors can now dive into 360-degree panoramas to get the full picture of potential properties. 

Crystal-clear footage showcases sprawling estates, spotlights the neighborhood’s offerings, and peeks into tricky-to-reach spots like rooftops or vast stretches of land.

Some drones are equipped with LiDAR sensors for extra precision, which can produce exact topographical maps.

8. 3D Virtual Property Tours

Uneasy with the idea of buying investment properties sight-unseen? Technology has a solution to make that part easier, too.

The pandemic forced the real estate marketplace to rely heavily on virtual tours with prerecorded walkthroughs or tours with a Realtor using Zoom.

Even since then, new technology has revolutionized the way prospective buyers can view and experience properties for sale from anywhere in the world.

Advanced 3D scanning technology and virtual reality (VR) capabilities allow real estate professionals to create 3D virtual property tours.

Moreover, they can rotate their viewpoint, zoom in on details, and even measure dimensions, giving them a comprehensive understanding of the property’s layout and features.

Disruptive technology is particularly evident in these virtual real estate experiences. They offer a nice confidence boost when buying properties you’ve never physically seen.

Sharing a virtual tour across multiple platforms — including social media and listing portals — amplifies the property’s exposure to a broader audience.

Want to compare investment property loans?

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9. Smart Home Integration and IoT in New Developments

Property management has also stepped up its game, and residents are reaping the benefits.

Big names like Google Nest and Amazon Alexa are leading the charge with these all-in-one systems that let people control their lights, temperature, security, and entertainment with just their voice or a tap on their phone.

Smart thermostats can also help tweak heating and cooling based on people’s lifestyles to reduce energy bills.

Keyless entry and smart locks, like the ones from Yale, make life easier and safer for residents and property managers. IoT sensors also work behind the scenes by capturing water leaks before they flood your living room.

All this tech adds to buildings that can predict problems before they happen and run more smoothly overall. 

10. Big Data and Artificial Intelligence

Big data paired with AI to help parse it makes a pretty unstoppable combo. Real estate investors will benefit from it, too, in ways we’re only beginning to understand.

Take pricing a property, for example. When buying or selling a property, AI-powered algorithms can analyze the property characteristics, comparable listings, and market trends.

This data helps investors determine a fair price for a property and can serve them in price negotiations during the buying or selling process.

Big data and AI can also streamline the deal-sourcing process for real estate investors. Artificial intelligence algorithms can sift vast amounts of data from various sources.

This saves investors time and effort by providing a curated list of markets and properties that meet their investment criteria. We’re witnessing technology disrupt real estate at an unprecedented pace.

Perhaps worryingly, you could even use AI to find distressed sellers.

Investing in real estate inherently involves risks, but big data and AI can help investors assess and mitigate these risks more effectively.

Get the feeling that we’re only scratching the surface? Yeah, me too.

 

11. AI-Enhanced Predictive Analytics

How would you invest in real estate if you could predict the future?

Get used to asking yourself that question. Indeed, investors armed with AI-enhanced market analysis tools have begun using predictive analytics to try to predict future trends.

Training AI on market data like historical sales, rental rates, demographics, and economic indicators can make a real estate investor appear to have superhuman predictive powers.

Predictive analytics uses AI algorithms to forecast future trends and outcomes. Consequently, real estate investors can leverage predictive analytics to anticipate market shifts or understand the potential rental demand in a given area.

Sure, experienced real estate investors can sometimes intuit many of these patterns, but AI promises to make this skill widely available.

AI algorithms can show investors unseen trends, help them understand supply-and-demand dynamics in a given market, and assess the potential profitability of a particular location or property type.

These insights enable investors to make data-driven decisions about which markets to target and which areas show the most potential for growth. The rapid pace of disruptive technology is revolutionizing how investors approach the real estate market.

Real estate technology tools built from this data could even inform development decisions. AI-driven predictive models could inform real estate developers where to expect to find potential customers in the future.

A few predictive analytics companies, such as Smartzip, AirDNA, and Likely.AI, already offer real estate investors a glimpse behind the curtain.

Expect these to proliferate as the technology improves and becomes widely adopted.

 

Final Thoughts

Disruptive technology in real estate sounds scary, but it introduces savvy investors to many empowering and exciting new opportunities in the real estate industry.

You might see real estate technology as “property technology” or “PropTech.” Regardless, these changes in real estate technology trends will only accelerate from here. New real estate tech companies always come online, using the latest and greatest modern technologies to gain an edge in the competitive real estate business.

Eventually, I expect even local governments to use blockchain technology to track deeds and ownership history. That will make title searches nearly instantaneous and reduce closing costs. But the government is always the last to adopt technology unless it’s used to spy or blow things up.

By embracing disruptive technology in real estate, investors can diversify their portfolios, explore previously inaccessible assets, and enjoy greater transparency, convenience, and liquidity. As real estate tech evolves, investors should stay informed and adapt to these technologies to thrive in an increasingly dynamic market.

 

What’s your take on disruptive technology in real estate? What do you see as the most promising tech in real estate these days?

 

 

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