Disruption in the Real Estate Industry

These days, it seems like industry and social changes are happening at a faster pace than ever before.

Take the emergence of companies like Uber and Lyft. Unheard of just a few years ago, these businesses allow everyday drivers to repurpose their cars and moonlight as freelance drivers to earn some extra change.

While the rise of ride-sharing companies has been great for people who want to put their cars to use, as well as people who need a convenient, affordable ride, it’s been a major disruption to the taxi industry.

In this episode of The Real Estate Guys™ show, we’ll examine nine major disruptions to the traditional real estate industry and discuss the way these changes affect YOU.

On the show, you’ll hear from:

Your champion-of-change host, Robert Helms
His right-hand man, Russell Gray

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Major disruptions to traditional industries

Most disruptions don’t appear out of nowhere … even if it seems like they do.

Major trends tend to evolve slowly.

The upside? You have time to react and get in on the game before you’re left behind.

The downside? If you aren’t keeping your eyes wide open, it’s easy to miss what’s going on.

Our first major trend is one that gained popularity quickly over the past few years … and is now on the tip of every vacationer’s tongue.

Trend #1: Short-term vacation rentals

Airbnb. Everyone’s heard of this company, and for good reason.

Companies like Airbnb allow homeowners to rent their homes to vacationers for a night or a fortnight.

For regular homeowners, say a person who’s purchased a vacation rental they only use two months out of the year, short-term vacation rentals offer a way to make money in today’s sharing economy.

And for real estate investors, Airbnb offers a completely new model for hospitality … and often, a drastically higher rate of return.

But for competitors in the traditional hospitality industry, Airbnb presents an unwelcome disruption to an established market.

After all, hotels can’t usually match the amenities, home-like ambiance, or affordable rates of Airbnb options.

So the hotel industry is responding … often by attempting to quash short-term vacation rentals in a given area.

Trend #2: Modular housing

When modular housing first appeared, it was synonymous with “shoddy.”

Today, modular housing means something totally different.

In fact, in many ways modular housing has become the best option for low-cost, high-quality homes.

New technology has allowed modular building companies to become hyper efficient, producing consistent results with less overhead than traditional building methods.

Obviously, this trend is also disrupting a big industry … traditional building and construction businesses.

These companies know what they’ll do about this trend… try to stop or circumvent it. The real question is, do you know what you’ll do?

Trend #3: Worker housing

In some cases, it isn’t a new technology that’s disruptive … it’s the economy. Consider overcrowded, high-priced areas booming with new companies like San Francisco and Vail, Colorado.

In these markets, the demand for housing is there … but the market isn’t responding (or can’t respond, due to geographic barriers).

In some cases, this has opened up a new industry … worker-specific housing, created solely to provide homes for workers flocking to burgeoning technology markets.

In the most extreme cases, however, no one is stepping up to the table. Take Google, for example.

The company recently installed modular homes near their Silicon Valley campus to provide temporary, affordable housing to new employees.

But Google’s solution isn’t permanent … it’s a patch on a problem that will only get worse.

The real solution? Either someone has to figure out a way to add affordable housing to already packed markets … or companies have to make the move to more affordable markets.

As with any trend, we want you to take note … and look for the opportunity in the situation.

Changing technology tools offer new techniques

Although in many ways, the real estate industry hasn’t changed significantly compared to years past, technology tools for homebuyers have expanded dramatically in the Internet age.

First, it was online MLS programs that expanded access to home listings. Today, technology is racing to fill needs and wants as they arise, changing the way real estate works every day.

Trend #4: Online property analysis and walkthroughs

It’s easier than ever before to buy a property without ever stepping foot in it.

Advances in technology, like virtual reality programs that let potential buyers examine homes from a distance, have made physical walkthroughs unnecessary.

Buyers also have a vast array of constantly improving data available to them online.

Sites like Zillow show home values, and it only takes a push of a button to find an area’s crime rates and school statistics.

Trend #5: Social media marketing

While online technology rapidly increases the information available to potential homebuyers, some sellers are taking advantage of Internet trends to get a competitive edge.

Real estate professionals like our friend Ken McElroy use popular social media sites to create interest instead of relying on traditional advertising techniques.

This approach allows sellers to reach key audiences … while driving the costs out of marketing and acquisition.

What’s the benefit of being able to cut edges this way? Well, we hope it’s obvious … finding ways to cut overhead only increases your bottom line … and will help you stay above water if and when we hit a tight market.

Financing, lending, and brokering like never before

Along with new ways to research and market homes come new ways to buy and sell them.

Trend #6: Online brokerages

The online-only trend doesn’t just stop at walkthroughs … these days, companies like Reali operate real estate brokerages entirely online.

As technology advances have made information more readily available to the interested public, traditional realties have seen an overall decrease in commissions.

There are two things real estate agents can do … find a way to redefine their role in the market, and/or find a way to do more transactions.

As new business models facilitated by technology emerge, it’s your job to consider how you’ll re-position yourself to maintain your value proposition.

Although your position and tasks may change over time, your income doesn’t have to change if you adapt.

Trend #7: Crowdfunding

When it comes to buying and financing real estate, new lending models have proved a big disruption to a major industry … the banking world.

In particular, crowdfunding and peer-to-peer marketing allow people to exchange money without utilizing banks at all.

Instead, buyers and sellers can come together without a middleman.

Refiguring traditional ‘rules’ for a changing world

It’s easy to fall asleep and miss the little ripples technology makes in the real estate world … but we think it’s more fun to stay awake and watch them turn into waves.

If you want to be active and efficient in a slow market, NOW is the time to make your move.

That way, you’ll have a competitive advantage when you really need it.

In a constantly changing world, it’s YOUR job to rework the rules.

Trend #8: Nomadic workers

While workers are still flocking to big companies in overcrowded cities, on the other end of the spectrum, technology has enabled many folks to work nomadically.

For more people than ever before, it’s possible to work wherever the heck you want.

How is this trend a disruption? It forces sellers to look beyond local buyers and consider the amenities that will draw nomadic workers to an area.

If investors take this trend into account, they may find demand in places they never would have suspected otherwise.

A changing world requires you to consider so much more than just the roof you put over tenants’ heads. You have to look at the bigger picture.

Trend #9: Cryptocurrencies

Last, but not least, we find the rising cryptocurrency trend of the past few decades intriguing.

There are over 2,000 cryptocurrencies … and in markets with unstable (or even potentially unstable) currency, investors often find cryptocurrencies a logical option.

In our constantly evolving world, there’s so much to think about!

It’s YOUR job as investor to avoid being complacent … to stay aware so you can counter disturbances before they arise … or even better, turn them to your advantage.

Coming up on the radio show, our best ideas on how to navigate when there are storm clouds on the horizon.

Until then, go out and make some equity happen!

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