Tech Stack of Modern Real Estate Companies
How should emerging companies in RE think about tech?
There is a lot of conversation around emerging businesses in real estate and what is the role of technology in them. Coworking, coliving, fractional ownership, HMOs, vacation rentals, etc. are all real estate business with a few layers of services added on top of them that use technology to streamline the entire business and deliver a great experience for the customers.
But are they tech businesses? How should these companies think about technology? Should they build technology themselves or buy something that’s available off-the-shelf in the market?
The average company uses 139 different SaaS products - How do you bring it all together?
In this article, I hope to try to explain how many modern real estate companies should think about tech, and the best practices therein.
Who is this article for?
If you are either an owner or manager of real estate, this article would be relevant to you. Specifically, I believe this would be most useful for -
Owners or managers of rental real estate with 1,000+ units in their portfolio (or 50+ properties/assets)
Real estate developers who have atleast 5-10 properties/assets under development at the moment
Real estate brokerages with 100+ agents in their network
Companies that are scaling quickly and hope to reach the above benchmarks in the next 1-2 years
Any other real estate businesses that are highly interested in building a core technology base for their business and are willing to invest heavily to set up the same
Underlying Principles About Your Tech Stack
While every company builds and approaches technology differently, I would recommend they have some core principles they should align around. Below are some of the most important principles IMO -
Don’t Build Capabilities Which are Available in the Market: There are enough softwares available which do almost everything your business needs. You definitely don’t need to ‘Build your own CRM’ unless there is something truly proprietary about your approach to customers
Be Clear on Data Ownership: When licensing or subscribing to software, ensure you are clear about who owns the data. Sometimes, it is the software provider, sometimes it is your company - Most of the times, it’s your customer who own their data (you probably have rights to their meta data)
Focus on Flexibility and Ability to Customize: Most large and growing companies have workflows and processes which diverge from the mean. Most software products are built around the lowest common denominator, which is probably 75% of your organizations requirement. While this would be acceptable in smaller companies, large companies will need more flexibility
Optimize on Speed to Market above all else: Most companies that decide to build their own tech fail to understand that it takes a LOT of time to build technology, and costs a LOT of money (Most in-house products never see the light of day). Optimize on speed above all else - Make sure you technology ecosystem positively impacts your customers ASAP
Primary Components of The Tech Stack
Every team/function within your company will probably want to use technology that’s specific to their function, so you would need to be prepared that you’re likely going to be piecing together a bunch of different software, and there is no ‘one size fits all’.
Some of the key software requirement in your organization probably include -
Marketing and Channel Management
Sales and Business Development
Property Management System
Finance and Accounting
Internal operations (Communication, HR, Payroll, etc.)
Depending on the specific nature of your business, you might have a few more components in your tech stack (And that’s totally fine).
Building Abstractions On Top of Existing SaaS
While the term ‘abstraction’ in computer science has a more technical explanation, I’ll give it an easier explanation here. Abstraction is the process of simplifying an existing system by building on top of it, and ignoring parts of the system that you don’t need
Say there’s a CRM which has 10 features, of which 6 are relevant to you and 4 are not. Abstraction is the process of using those 6 features - and possibly customizing them to suit your requirement - and ignoring the other 4.
This is the fundamental I urge everyone to understand about building in-house tech systems in today’s world. Most of the requirements your organization has, is probably available already with some existing software vendor. You can probably access them by subscribing to their API platform. To build a great technology stack, you should -
Identify a set of existing SaaS solutions your organization wants to use (like in the section above)
Ensure they all give you access to their API platform
Figure out how they all need to talk to each other (Mapping business requirements/flows)
Build integrations and custom workflows through abstractions on top of the existing SaaS products
That’s it - It’s that simple. This solution is faster, cheaper and better than any other way you might choose to build your tech.
By building a system like this, you ensure that -
You are leveraging existing solutions and building only what’s unique to your business
Don’t waste precious capital in rebuilding this which are available in the market already
Go to market with lightning speed
Don’t waste time/effort/money in maintenance of a bulky tech stack
Let’s take an example of this and understand what this means in the next section
Example of Modern Tech Stack for Rental Real Estate
Let’s take the example of an institutional landlord who is owns and manages 500 rental units. The company chooses to work with a bevy of softwares to serve their business.
Salto Systems - Door Access
Quickbooks - Finance and Accounts
Glynk - Tenant Experience
TheHouseMonk - Property Management System (Disclosure - I’m the Co-Founder and CEO of TheHouseMonk)
Stripe - Payment Collection
Hubspot - Marketing Automation
The abstraction layer for your company, which essentially becomes your core technology IP, serves as a layer which talks across different systems your teams and company are using.
A simplified diagram of this is below -
Let’s say you have a unique workflow in your organization, wherein once a new tenant makes a booking, you need to assign them a key card for door access, create their account on your accounting software, send them a ‘welcome’ email and SMS, and update your management dashboard of the same.
You would normally have to convince each of these SaaS companies to comply with your unique workflow. Many would disagree for these customizations, while the rest would add it to their pipeline for a future quarter. Only a few would do it on priority.
By building your own tech, you can simply automate and build this workflow by yourself and deploy instantly. This enables you to save cost, move quickly and show impact!
Having looked at 1,000s of companies in Real Estate and PropTech, I’m fairly convinced this is possibly one of the best ways to build tech. It combines the best of aspects of building yourself, along with the best aspects of buying from the market.
What do you think? Would love to hear your inputs!