Real Estate Human Capital Shortage and Skills Gap
Technology is transforming the real estate industry, giving firms the ability to delve deeper into markets, consumers, operations, and employees. In particular, data collection and analytics are making firms more efficient and uncovering insights that, when utilized, generate higher profits. Data-driven technology can be used to solve a large number of industry challenges by organizing large volumes of data, eliminating reporting inefficiencies, and providing objective feedback on marketing and employee performance.
Data-based technology can help innovative real estate firms surpass their competition, yet a lack of talent and a dearth of skills can prevent firms from taking advantage of these technological advancements. A 2018 Gartner report showcased that 87% of senior business leaders believe that digitalization is a priority, while only 30% of employees think they have the skills they need for their current roles and future careers. Therefore, technological skills are in-demand, but many employees are not yet prepared for the industry’s technological upgrades.
Data Uses for Real Estate Management and Brokerage Firms
In an earlier blog post, we have shown how a firm can use basic data analysis tools to collect, clean, analyze and visualize real estate industry data. This post will delve into more details concerning the use of Microsoft Power BI, specifically for real estate management firms and brokerages.
We will also introduce SQL, which can quickly consolidate a real estate firm’s data and facilitate its use by increasing the data’s accessibility.
SQL for Data Consolidation
With SQL, a firm’s data can be organized allowing employees to use basic queries to obtain information efficiently. Firms without a system to collect and organize data may have to sift through large amounts of data that could be stored in many different locations or in inconvenient formats. As a result, generating timely reports could be challenging, which could impact the firm’s core functions. By using SQL, however, a real estate firm could generate a report on a specific tenant’s history in seconds, allowing for more timely and accurate decisions.
Microsoft Power BI for Property Management
Using Power BI, property managers can gain a quick overview about their operational processes, revealing pressing issues in an easy-to-digest and visual format. For example, leasing managers need to know which tenants have soon-to-expire leases so that tenants’ move out or renewal plans can be considered and renewal terms and other occupancy-related decisions can be made. Another common challenge is producing rent reports, detailing which tenants are delinquent in paying their rent so that collection activities can be undertaken. Without the proper system to organize and utilize data, ensuring that occupancy and rent collection is maximized can be time consuming. Generating reports quickly and in a digestible, visual format allows leasing directors to easily keep track of rents, late fees, and other revenue streams.
Additional Insights for Real Estate Management Firms
I. Power BI can assist real estate management companies by making predictions of maintenance costs and cash flows, as well as other financial metrics for the next 10 years based on historical data. Having such predictions can give management companies a chance to prepare and plan for fluctuations in these metrics.
II. Power BI also offers geographical analysis through a choropleth graph, which allows firms to visualize the areas where profits are higher. When a firm is looking into expanding, such graphs may give an indication of the best expansion plan.
III. Power BI can show which type of houses or apartments are the best for generating the highest profit margin (e.g.. studio vs. two-bedroom apartments) in which geographic markets. This information can help the agency pinpoint which type of property generates the greatest margin.
Additional Insights for Real Estate Brokerages
Real estate brokerages can use Power BI for better insights on how they are performing. With consolidated data and Power BI, a brokerage can analyze marketing data to figure out which types of marketing strategies are generating the most revenue for the company. Marketing strategies can be matched with specific deals and commissions in order to help identify successful marketing endeavors and unsuccessful expenditures. This information can be visualized in a clear manner, allowing a brokerage to see which types of marketing they should employ.
Additionally, using this technology effectively can showcase temporal trends in revenues and expenses. These trends can inform brokerages’ decisions for the optimal timelines to buy and sell certain properties.
A brokerage can also easily track the successes of its agents with this technology. If an agent is doing very well in a specific area, brokerages can identify the agent’s strategies and train other employees to use the successful methods in that particular area. Brokerages can also learn which type of properties their agents are most successful with. For example, maybe one agent is best with family sized homes, and through data they can assign him to mainly work on those types of homes. Without data, these insights are more difficult to capture and quantify in order to understand exactly where the strengths of each agent lie.
Competitive Advantages from Learning Data Analytic Skills
With the skills to organize and analyze existing data, real estate firms can quickly generate necessary reports. Data allows firms to delve deeper into employee performances, costs, revenues, and more, so firms can quickly analyze their challenges and implement solutions and improvements to their companies. As digitalization and technology continue to transform the real estate industry, the companies who can organize and analyze this data first will gain significant advantages over others. It is just a matter of who will do it first and for the lowest cost.
To take advantage of these changes, real estate firms must focus on technological talent. One strategy is to hire data scientists to operate these new systems. However, hiring more employees can be expensive and time-consuming. Another strategy is to pay an external technology company, but the fees for that work can be high. The most cost-effective solution is often to train the current employees to learn the exact skills needed to implement these solutions for their own company. These skills are simple to obtain, particularly when lessons are geared towards their specific industry problems. By training employees to have these skills, a real estate firm can not only become more efficient, but can see a significant positive change to their bottom line.