Empowering Your Clients with PropTech
Charity J. Tonelli, Esq.
Real Property Law Committee // The Briefs, November 2019, Vol. 87 No. 9
Property technology (popularly known as PropTech) is the use of digital information technology in the real property sector, and it is already fundamentally changing the way people buy, sell, develop, invest, research, and manage real estate. PropTech is changing the landscape of the real estate industry and continuing to offer financial opportunities for investors. In a culture where time is of the essence, our clients cannot be held back by inefficient business systems. This article highlights some innovative ways to effectively use PropTech in the residential and commercial real estate sectors.
In addition to the conventional practice of real estate law, educating and empowering your clients with the use of PropTech can streamline their businesses and add value to their real estate portfolios. For example, a company like Cozy.co effectively puts rent collection on autopilot for your rental investor clientele. Your clients have the ability to create a profile for each of their rental units, adding photographs, descriptions, amenities, and specific lease terms for each unit. Once the unit’s profile has been established, Cozy creates a hyperlink that can be embedded for tenant screening and marketing purposes as further discussed below. When a potential tenant clicks the hyperlink, they are directed to a rental application where they are required to provide vital information, ranging from size of household and income to past rental history. The information that is collected on each candidate is then used to perform a criminal and/or credit background check. Your investor client has the option of passing those background/ credit check fees along to the candidate or paying them directly. Cozy will then score each candidate based on his or her rental application but, ultimately, the final decision to accept or reject the candidate is up to your client. Once a tenant is accepted, the additional power of Cozy starts to shine. Cozy will automatically debit the tenant’s checking account on the lease due date and credit your client’s account within a matter of days. When drafting your client’s lease, you can incorporate the automatic payment structure as a required term of the lease agreement. My experience with this rent collection system has shown the almost complete elimination of late payments and wasted time on collecting rent, sending late notices, and other hassles involved in rent collection. Additionally, Cozy automatically creates a rent roll for each unit, simplifying end-of-the-year accounting.
Another ever-growing PropTech company to further look into is Zillow. Zillow is the 800-pound gorilla in the room. It’s been around since 2005 and was the first company to offer a free home value estimate for consumers. Zillow is constantly working on improving its “zestimate,” the term they use for their version of a desktop appraisal. In fact, as recently as this year Zillow has implemented a new algorithm that analyzes pixels in photographs to more accurately estimate the value of a home. Zillow acquires these pictures from many sources, including for-sale listings, owner uploaded photos, Google Maps, and others. The algorithm is so advanced that it can analyze a picture and, based on the pixels, determine the type of countertop used in a room and give credit to the home’s value where applicable. On the other hand, the dead shrub in front of a home may get dinged by the algorithm, negatively impacting the home’s value.
In addition to home value estimates, Zillow acquired a company called Postlets in 2011. Postlets was a powerhouse that offered free online marketing of rental properties. With its acquisition, Zillow has taken the ball in this area and run with it. Now your investors can create one profile per unit on Zillow and have it simultaneously broadcast to Zillow, Trulia, and HotPads – all with the click of a mouse. This level of marketing exposure would be next to impossible without the use of PropTech. Savvy investors can embed their Cozy rental application hyperlink into their Zillow rental advertisement and effectively streamline the marketing of their units, the qualifying and screening of potential tenants, and the automation of rent collection in a matter of a few clicks. PropTech can save your clients time and money by reducing or eliminating staff and payroll that would typically be associated with these roles. The technology is constantly improving.
Advances in technology are at our fingertips and now literally in our own backyard. Notably, Central Florida was selected as a proving ground for a collaborated project with another giant PropTech company, Airbnb. Airbnb acts as a middleman broker and offers an online platform where homeowners have the ability to rent their properties on a short-term basis. In the first of its kind, Airbnb has collaborated with Miami-based developer Niido (Newgard Development Group) to offer a hybrid apartment/hotel business model. The project, named Niido Powered by Airbnb, offers an Airbnb-friendly apartment complex where residents have the option of renting their apartments for up to 180 days per year with access to a range of tools specific to the homesharing model. The first project opened in Kissimmee last March, and property features include keyless entry and common spaces that make them optimal for home sharing. Additionally, Niido offers a specific app that is integrated with Airbnb and supports checking in and assisting guests 24/7. The project’s goal is to “add significant value to all parties, including tenants who can earn extra money sharing their apartments, and guests who will have access to unique listings that come with a set of amenities and conveniences specifically designed for travelers.”1 The project has since opened a property in Nashville and has plans for new developments in Austin and Miami. This Niido project is a great example of a developer partnering with a proven PropTech company like Airbnb to bring something new to the market.
In addition to advising our real estate clients on the law, we have the ability to educate them on new opportunities with technology to streamline their businesses. This is what sets us apart from the competitors. And with the gold rush of this multi-billion-dollar PropTech industry continuing to grow as we speak, what other opportunities lay on the horizon for our clients?
Charity J. Tonelli, Esq., Tonelli Law and ThePropertyAttorneys.com, is a criminal defense attorney with a passion for real property. Her practice consists of criminal defense in state, juvenile, and federal courts, as well as real estate litigation and residential and commercial title closings. She has been a member of the OCBA since 2012.
- Airbnb + Niido Partner to Support Home Sharing in Apartments, https://press.airbnb.com/en-us/airbnb-niido-to-partner-to-support-home-sharing-inapartments/.
