proptech real estate Proptech and data are essential parts of real estate investing—here’s what that means for short-term rental investors

PropTech in real estate, the innovations that can’t be ignored

In the early days of the Airbnb and short-term rental boom, as a host, it wasn’t uncommon to manually send out welcome messages, monitor bookings across websites to optimize and coordinate, and meet each and every guest outside of your rental with a physical key and check-in instructions. Fast forward to current times, savvy real estate investors know that the manual nature of the early days of investing is simply not scalable — enter property technology (or PropTech) real estate advancements, the growth-oriented investor’s key to unlocking profit and scale.

A brief history of short-term rentals

In some ways, the short-term rental market has been around since the turn of the millennium. Back in 2000, Expedia put out a press release documenting its purchase of TravelScape and VacationSpot, two early entrants into the field. However, it wasn’t until Web 2.0, the rise of smartphones and apps, and the massive success of Airbnb that short-term rentals (STRs) came to dominate the travel industry.

There are now dozens of STR platforms that allow travelers to find lodging owned and operated by other private citizens, or, in some cases, businesses focused on short-term rentals. As this brief history makes clear, technology has always played a key role in advancing the STR sector. Now, with recent innovations in the now-booming PropTech sector, we are seeing a shift from solely focusing on customer-facing platforms to also offering enhanced owner/operator-facing platforms, which promise huge and lasting benefits for both parties.

PropTech for real estate acquisition

With 600,000 U.S residents turning their properties into income through short-term rentals and 23,000 short-term rental companies currently operating in the country, it’s no surprise that PropTech has become a booming market.

Fortunately, PropTech solutions have made it easier than ever to enter into this highly lucrative and highly competitive space. New-to-market tools are taking the guesswork, and manual work, out of sourcing, vetting, and acquiring properties. Gone are the days of manually searching Zillow and running the numbers on each property to calculate its viability as an investment — tools on the market today allow motivated investors to specify the exact criteria they are looking for in a property–from property type to location to minimum cap rate–and notifies them as soon as a property that meets these criteria hits the market (with detailed financials and underwriting!). This allows prospective buyers to stay ahead of an almost dizzyingly fast-paced market.

For investors with a more narrow and targeted search in mind, PropTech tools exist that help investors learn about the projected revenue of any address, when operated as an Airbnb, in mere seconds. Free Airbnb revenue estimators on the market compile extensive data about a property and use real-time, nearby comparisons of similar properties to provide accurate projections of the profit to be generated by a given property. These data-driven solutions help take the guesswork out of securing the perfect property, allowing even total newcomers to feel entirely confident in their choices.

PropTech for property management

PropTech solutions promise to have equally profound effects on the day-to-day management of short-term rental properties. Between managing guest communication, guest verification, pricing optimization, vendor teams, guest turnover, and more — managing an Airbnb can easily become a full-time job, taking the “passive” out of “passive income”. In fact, the amount of upkeep required by any given property is a major obstacle to scaling a short-term rental business.

Fortunately, automation and tech-enabled analytics can fully streamline these processes. Many tools exist on the market to automate each part of property management — tools that integrate different booking platforms, handle price optimization, guest verification, and more. Though these tools exist, working in disparate PropTech tools can still be cumbersome for some. Working with a full-service property management partner who can handle all day-to-day operations for you with their own suite of proprietary PropTech is the quickest way to most effectively delegate tasks and optimize time. With the more time-consuming aspects of STR ownership out of the way, hosts can focus their efforts on the bigger-picture tasks of effectively scaling and building a brand (or just enjoying that extra passive income). 

Par for the course

Although PropTech is a relatively new player in the short-term rental market, it is set to become the industry standard. The benefits it offers both new and experienced short-term rentals are simply too great to ignore. 

We here at Rabbu are very excited about the future of the short-term rental industry. Looking to get started or scale quickly? Let us know below and we’ll be in touch.

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