How To Apply Data Science To Markets, Multifamily, And Property Management

In recent years, companies have been able to understand large data taken from multiple sources and postulate important insights to make intelligent decisions using data science. Data science is applicable in many industry domains like healthcare, policy work, banking, finance, and marketing. One big importance of data science is based on the ability to take existing data that may not be fully useful and combine it with other data points to get an insight. So, it is a tool that an organization can use to learn more about customers. Let us see how to apply data science to markets, multifamily, and property management.

Choosing a multifamily home using data science

Any duplex, townhome, apartment complex, or any residential property that contains more than one housing unit is a multifamily home and if you need to buy one, it is good to check out useful multifamily data to help you make informed decisions concerning it. Intelligent real estate investors know that accurate and timely multifamily data is key to finding a profitable multifamily home for sale. It is with this property data that you can properly analyze real estate or property management deals to make better investment decisions. Else you may buy in vain. Though you can find multifamily data from different sources, you still need to be sure that a source is trustworthy else you would be furnished with the wrong data. Unlike in the olden days, technology has made things quite easier to access reliable multifamily data.

Market analysis and investments

Market analysis and trying to understand the best places to invest in is not an easy task. If you have ever delved into the business a little, you would find yourself using the most extreme spreadsheets that one could ever imagine. There are variables or specific metrics to look at. For example, when using data science to evaluate real estate options for a forecast for future rents, different things come into play. You have to look at population growth, where job growth is, rent forecasts, and the market cap rates. Using data science to choose markets is using people’s money to purchase apartment buildings. Due to the high demand, you need to know your numbers to protect an investor’s money.

Automated valuation models

The use of statistical approaches for valuation is becoming more common globally. Zillow Zestimate is used in the U.S. and SkenarioLabs is used in Finland. The objective of using any automated valuation is to extract data to get an estimated value of a property’s worth in the market. At this value, there would be a seamless transaction between a willing buyer and seller without any compulsion. More advanced data science techniques than indexation are used. Rather than an index, you get a range estimate of an asset’s value. These types of evaluations are also useful for assessing mortgages or loans backing the assets. Automated valuation models help the understanding of the property market in the present by assessing a fair transaction price for a deal today.

Cluster analysis

The performance of real estate marketing can differ across locations. The divergent macroeconomic situations can make real estate vary in different countries. Economic activity or supply can also make cities within the same country vary. All these differences in performance are the reason for considering cluster analysis. This method rigorously identifies patterns in the data and helps determine the groups of properties that are likely to perform similarly and those likely to diverge. It can also be used to determine time periods in which property market performance becomes more or less similar. With this method, targeted models can be built for each group, thereby increasing accuracy.

Property price indices

These days, data-driven computer models make for about 80% of trading. So, every property management transaction represents the exchange of a unique set. Don’t forget that no two properties are identical even when two look-alike units within the same building are transacted. The pricing can be different which poses a problem for property management as to how to use large data sets to understand individual sub-market performance. Data science has a solution. Analysis can be restricted to just comparing price changes on properties that are sold more than once or tracking price changes on the same property over time. The US Case-Shiller indices apply this technique. Hedonic regression techniques take the individual characteristics of each property into consideration to be priced separately. This would control differences across the assets. This is usually practiced in Singapore. Millions of rows of transaction data can be mixed with other data about locality, demographics, property characteristics, and more to produce granular sub-market indices. These methods allow users to exceed human capacity by working on more data than anyone human could manually analyze to produce informed market performance.

Final word

People say that data itself is valuable and this is clear and well supported by some companies like Teranet or Compstak which are very successful. However collating, cleaning, and organizing data sets are valued by so many rising companies. Conversion of raw data into usable analytics is another source of value that Data science seeks to achieve. Analysis and forecasting are opening new opportunities in property management. Skyline.ai is a leading example of using data-driven methods for the purpose of investment in real estate and property management and with the successes, data science is the real deal these days if you want to invest wisely.

 

Michael Pignataro
co-CEO - Operations at 'corePHP'
Michael spearheads ‘corePHP’s software solutions and service offerings. Focus on sales and marketing for the organization. A huge believer in family and has an amazing wife and 4 beautiful children. Loves camping and hiking.

Michael's philosophy is simple: "If you can dream it, we can do it."
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Michael Pignataro

About Michael Pignataro

Michael spearheads ‘corePHP’s software solutions and service offerings. Focus on sales and marketing for the organization. A huge believer in family and has an amazing wife and 4 beautiful children. Loves camping and hiking. Michael's philosophy is simple: "If you can dream it, we can do it."

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