The New Frontier of Commercial Real Estate Tech and Finance
As global investment in real estate technology spikes, startups eye opportunities in real estate mortgage and finance.
It goes without saying that investing in real estate can be very lucrative. Whether you view real estate as a hedge against inflation or its total return potential over a certain holding period, generations worth of wealth can be created through real estate investing.
Depending on your real estate investment strategy, chances are you're going to need capital. And while many aspects of real estate are changing with advances in real estate technology and innovation, the process of securing a real estate financing has remained relatively unchanged.
The introduction of real estate crowdfunding has allowed for accredited individuals to invest in income producing real estate projects from a large number of people, "the crowd". The ability for real estate owners to secure financing for projects, pertaining to their asset, has been a great alternative to traditional secondary mortgages and bridge loans. However, how can today's real estate owners, investors, and landlords secure a mortgage, outside of traditional financing?
Consumer demand for a streamlined mortgage process for single-family homes in residential real estate has resulted in a more unified process, driving investment in online lending startups delivering actionable results. From consumer search and discovery platforms like Bankrate and LendingTree, to Lenda, an online home mortgage procurement and refinancing platform, many of these types of companies are moving the residential mortgage needle and in some cases consumers can even select a rate quote, complete their application, upload financial documents and sign the electronic dotted line without ever leaving their bedroom.
So if securing financing in residential real estate is becoming a more streamlined process, why not commercial real estate? In the digital age of technological innovation, where's the commercial real estate fintech evolution? The answer might be an impending opportunity for the third wave of commercial real estate tech startups.
Real estate finance technology's appeal is simple. It gives owners and investors direct access to capital. Similar to the micro banking movement lead by PayPal, Venmo, and Stripe, financial transactions will allow for more accurate, prompt, and convenient investing. And while Wall Street has taken notice with JP Morgan CEO Jamie Dimon's letter to shareholders earlier in 2015, stating, "Silicon Valley is coming...There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking," the classic tale of industry shifting innovation in commercial real estate finance and mortgage is coming.