How do you feel about the use of technology
in property investment?
Do you think it is a good thing?
Technology does make our lives easier in a
number of ways. The Internet has revolutionized how we communicate with each
other and it was only going to be a matter of time before technology became a
useful tool in property investing.
In this post I want to discuss FinTech and
PropTech and the impact that I think this kind of technology will have on the
property investment industry. First of all let me explain what these both are
if you are not too sure.
FinTech stands for “Financial Technology”
which you probably already worked out. It is a term used to describe applications
and other digital technologies used in the financial services world. In recent
years there has been significant growth in the number of applications that
customers can use for financial services.
There have been a number of business
startups dedicated to FinTech over the last few years. The applications that
these companies create often challenge the traditional financial business
models that have existed for years.
The creation of technology like blockchain
has seen many companies, large and small, rethink the way that they do
business. Blockchain is a decentralized system that creates immutable records
(cannot be changed) and is very different to the traditional “client-server”
based technology that has been used for years.
Blockchain is the technology behind Bitcoin
and most other crypto currencies. The UK leads the way with FinTech which is
not surprising considering the position of London as a worldwide financial hub
for financial services and trading.
No prizes for guessing that PropTech stands
for “Property Tech”. This is not some brand new thing aimed at smartphone
users. It has actually been around a long time and giants in the residential
property business such as Rightmove and Zoopla have been using it for over 10
PropTech is a lot more than just the
digitalization of the property market. It has the potential to offer us a great
deal more than that. PropTech can provide answers to questions such as how we
feel about the purchase of property and the value that we get from doing this.
The residential property market seized on
PropTech first as it provided a way to present property portfolios online to
attract those interested in renting and purchasing. In more recent times
property developers have taken a keen interest in AR (Augmented Reality) which
can be used so that customers can experience a “walk through” of a property.
Other possibilities are certainly there
such as using PropTech for people wanting to control their experiences around
property. Think about controlling the temperature and lighting of your home
remotely or find the most suitable parking space in the shared parking area of
your apartment block for example.
The UK government is committed to a digital
revolution in the world of property. The current housing minister for the UK,
Esther McVey, has plans to release the data that local bodies hold to assist
PropTech in the UK to grow and thrive.
will FinTech and PropTech affect Property Investment going forward?
I believe that PropTech is going to provide
us with different ways of making property transactions in the future and
accessing some of the available properties on the market. It has the potential
to make property transactions a lot simpler and faster than with the
conventional methods that are still widely used today.
I can see PropTech and FinTech combining by
providing another way for people to invest their money or even borrow money.
For example you should be able to use your property as collateral using both
FinTech and PropTech in the future if you require a loan. You could also use
your current assets to make an investment or part investment in another
There are a number of companies focused on
property equity these days. With property equity an investor will be able to
purchase shares in a single property or an entire range of properties. There
are a number of financial benefits to property ownership as you know – and this
technology will make these available to a lot more people.
One of the biggest problems in the UK at
the moment is that the average house prices prevent a lot of people getting
their foot on the property ladder. They do not have enough of a down payment to
buy their first property despite various government incentives. Some people
actually prefer to deploy their money elsewhere rather than spending huge sums
So the concept of buying shares in a
property is going to appeal to these people as well as others. Technology has
made this happen and now many people who have been unable to get into the property
space can now do so with a computer and an Internet connection.
If you want to invest just a few hundred
pounds in the share of a property you can do that. For those that want to
invest thousands they have the ability to do that as well. I think that FinTech
and PropTech provide property investors with another way to diversify their
Having small shares in several different
properties is less risky than having a large share of a single property. When
you think about it there is a sizeable risk to purchasing a single property and
making a good return with it. You can never predict how house prices are going
to go and there is always a chance that you will not be able to rent out your
When you own more than one property the
level of risk rises even further. Things can, and do, go wrong with property
transactions. You can lose a lot of money trying to purchase a property and the
sale falls through for some reason.
Once you acquire the property then you are
trusting your experience and knowledge when it comes to making a worthwhile buy
to let return on your investment or the profit that you are looking for with a
about Property Crowdfunding?
If you have not seen my post on property
crowdfunding then please take a look at it here. Property Crowdfunding is a
great example of how technology provides greater opportunities in a market.
There are a number of UK based property
crowdfunding websites now and their popularity is growing. There are a lot of
young people using these websites to invest in property because they know that
it is the right thing to do. They see it as a good way to plan for their future
and their retirement.
Although I have not made any transactions
using property crowdfunding yet, it is certainly something that both interests
and excites me. I firmly believe that I will be able to access other property
investment opportunities that I would never have been able to on a personal
level or through my property investment business.There are bound to be some teething problems with PropTech but so far it
has made a positive impact and I believe that this will continue. So my
recommendation to you is to embrace this technology and have a look at some of
the new opportunities that it can bring you as a property investor.