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Real Estate Investment Challenges and its Use Cases

Dr. Jagreet Kaur Gill | 24 January 2022

Real Estate Investment Challenges and its Use Cases

Introduction to Real Estate Investing

Real estate investing is a process in which investors invest in property and give those properties rent to get income. The first thing that comes to an investor's mind is how much money they should pay for specific real estate property. Some more questions that come to investor minds are:

  • Whether they need to invest in property or not?
  • What is the right time to invest in property?
  • Is there any risk in an investment?
  • How much will the investment be worth in 24 months?
  • Is this the best neighborhood?
  • What is a good time to sell?
  • What is a good time to build?
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Answering these questions using facts becomes difficult for them. Investors are often confused with evaluating investments and property types. Investors made decisions only based on their gut feeling and first impressions, which is not an optimized approach as there is no base for those decisions.

What are the Challenges of Real Estate Investment?

The challenges of Real Estate Investment are listed below:

Market Volatility

The real estate market is volatile. No doubt there are tremendous opportunities but some uncertainties. Pandemic and geopolitics change the situation suddenly, making the conditions challenging for investors. An investor’s strategy works a lot to handle these types of situations. They need to have already been altered about the situation. Decision analytics could help future forecast scenarios based on the condition, alerting investors to plan accordingly.

Increased Liability

Liabilities are increasing daily; it appears that new regulations are mandated to operators or property managers. Investors running their rental portfolios should be wise enough to work out a deal with professional property managers to limit the liabilities that government intervention is swiftly creating.

Limited Inventory

Limited inventory is becoming a new challenge for investors. According to the Austin Board of Realtors, the number of active homes in November was down 56% in Travis county, and sales were up 21.67% compared to November 2019. Thus it makes the market very competitive. Finding properties where investors can get profit is hard. Decision analytics could help investors by comparing the property for different locations at a central place and then recommending the most valuable property.

Income Uncertainty

There is significantly less income surety for investors. Analyzing risks and checking tenants fully to ensure that investors will get solid income streams is equally essential.

Cap Rate Compression

Operating income for assets makes investors helpless as capitalization rate compression combined with the uncertainty of the pandemic. Thus investors need to review fundamentals and understand the opportunities, cost, and value. Understanding who, what, and where an investor is investing is significant in cash flow streaming.

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Sudden Changes In Loan Quotes

Sudden changes in the loan quotes process is a big challenge for investors resulting from perceived market instability due to pandemic. It can be addressed by working with a knowledgeable mortgage broker specializing in investors’ product type so that if lenders surprise them, a replacement can be called from the bullpen.

Growing Use Of iBuyers

In the U.S, iBuyers are a big competitor for many markets. In real estate investing, becoming transparent with the seller is very important to get to know what is strictly offered to them. There should be no hidden fees or deductions from what an investor is offering.

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Decision Analytics in Real estate property valuation

Decision analytics in real estate provides a detailed and personalized report to answer investors’ questions and queries and analyze investment risk. Our property valuation solution gives a detailed report by considering various scenarios that answer investors’ questions.

Additionally, it predicts the future to access the property and rental values. The system gathers data about public records, transportation, market, area crime rate statistics, and school district ratings to generate property value.

Investors can use this solution to:

  • To check the property indices to get to know the future of investment.
  • To know the property value based on the facilities of the neighborhood.
  • To forecast the future of property and investment.
  • To know the success rate of investment and previous investment success.
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Why do we need decision analytics in Real Estate Investment?

Real estate service providers who deliver bespoke, customer-centric property solutions have satisfied customers. Insights from their data can help better to meet the needs of their existing customers and the real estate owners.

The Internet makes it possible to search, buy or rent property online using big data. Big data makes it possible to find data on proximity, real-time traffic estimations, areas of late-night activity, noise levels, restaurants, parks, outdoor activities, finding customer reviews, eliminating some buyer confusion, analyzing investing risk, and choosing a property with ease.

Data empowers them to make smarter investment decisions. Data analysis makes accurate predictions about risk and market trends. Big data is transforming the real estate industry into a well-calculated information process. Let’s discuss some more points to know why we need decision-analysis in real estate investment.

  • Risk mitigation: It helps to reduce risk while investing. Realtors and buyers now have access to some critical data of property.
  • Simple Evaluation: An estate agent does property valuation to set property prices. AI helps to give correct value to the property without any bias based on its features. Big data can make appraisals based on years of market data, making it a tool for buyers and sellers. It offers a way to make accurate appraisals coupled with viewing the property.
  • Customer Understanding: Big data helps real estate agents to understand what their customers want and helps them respond with personalized offers based on their customer data.

The market strategy allows us to move on to current consumer trends more accurately and quickly.

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Use Cases of  in Real Estate Investment

The use cases of decision analytics in Real estate investment are defined below:

Property Valuation

Decision analytics helps to predict property value and decide to invest and offer a property based on it. Property valuation helps to predict or value property with an optimized price. Moreover, With time and situation value of property changes; therefore, it needs regular evaluation.

Property price indices

Frequent reports on price and quantity movement help inventors assess the appropriate time to buy a property. Moreover, assist sellers in knowing the most opportune time to sell their assets.


Time and circumstances of any location can change the price in real estate, and the investment needs the far vision to calculate the future costs.

Development Plan

Implementing a development plan according to the demand and situation will maximize the investor’s ROI (Return On Investment). Therefore checking trending development plans according to customer demands is very important.


The output of real estate varies according to venue and situation. According to the local factors like economic activities and supply-demand patterns and trends, prices may fluctuate in different locations of the same city. Some neighbourhoods like luxury condos, mass-market houses, townships, and more may perform very differently in a town.

Cluster analysis examines these distinctions, and data science unrevealing these mysteries. It also highlights the different time bombs when the pricing is likely to be similar.

Investment Evaluation

Checking investment risk and evaluating an investment is equally important. Considering essential factors to check investment health may guide the investors for making decisions and taking corrective actions.

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Investors have started using AI and decision analytics to evaluate the property to gain more and more benefits from real estate investment. The solution finds the correct value of a property and forecasts the future demand and value to check investment benefits. It determines the neighbourhood features of property and access rent and property value accordingly. Moreover, it provides extra benefits for the investors by providing their success rate and returns from investment.