How to Grow a Commercial Real Estate Company
By Percy Nikora, Owner/Co-founder
In the CRE (commercial real estate) business, growth is essential to survival in the market. When you’re working with investors, you want to be continually adding to your portfolio and doing as much as you can to increase your revenues for them. For years, this was largely dependent on who you had working for you, how many hours you worked, and how lucky you were. Today, you can use technology.
CRE is Ripe for Disruption
Technology is an incredible resource for growing your CRE business. It can’t replace everything, nor can it be used in every role, but there are many ways to harness different technologies to automate or streamline processes in CRE investment.
People and companies have already started to adopt more technology into their process, but it’s not the norm yet. Tech adoption is still in its infancy. Penn Capital is at the forefront so much so that we are asked by leading vendors to improve products and give feedback to improve their CRE tech, and we’re also implementing tech to enhance our own operations.
Tech has the potential to fill many gaps in the CRE industry and, for example, we use it here at Penn in the following ways:
Market research that’s assisted by data analysis platforms and deep databases speeds along the process of finding suitable markets for investments.
Due diligence is easier when you have platforms and software at your disposal that helps you evaluate details efficiently, analyze the numbers in a deal, and accelerate the research process. We find this help as much with identifying deals that make sense as it does in quickly eliminating those that do not so that we do not spend resources of time and money on deals we should be passing on.
Enhance Investor Relations
Investor relations are easier for everyone when the process can be automated. For example, we use a proprietary investor relationship portal that allows every investor to log in and get real time updates about their investments, including pictures of the asset during construction, access to updated analytics and important documents.
In property management, tech applications can range from expense tracker platforms to physical smart devices installed within the asset. Smart devices, such as video doorbells or smart locks, are a differentiating factor that can make your building safer and more attractive in certain markets.
Every decision you make in CRE is guided by mounds of data. Using the right tech, you can make it easier to access that data, sort through it, find connections, and look for patterns that help with decision making.
By leveraging technology correctly, you can gain an advantage. Tech can be applied almost anywhere in CRE, but it must be providing real value. Don’t use tech just for the sake of using it. Anywhere that it can replace a lot of manual steps or streamline systems, it’s valuable. Otherwise, it’s just another budget waster.
Our mantra is that we are a technology enabled real estate company. We aren’t a tech company, but we do leverage technology to get better results for our investors.
Sign up to receive our educational newsletter and to gain exclusive access to our next investment opportunity.
Who you hire affects how your company works. You need the right people in the driver’s seat to get you where you want to go. For us, the first priority is industry expertise and after this, we look to see how well a prospective team member understands the benefits that automating a process can provide by enabling it with tech.
This is a guiding principle for us because of how vital tech is to our business model. We prefer to look at things in a holistic fashion rather than creating siloes that don’t interact effectively.
Innovation is a core value at our company. By hiring experienced people who understand the benefits of using tech and innovating, we’re setting ourselves up to adapt well to future industry changes and to stay at the top of our field.
Benefits of Tech in CRE
What do you gain by using the right tech? Depending on what you’re using, the answer will vary. Some of the most common benefits we find include:
- Cost Reduction
- Time/Effort Reduction
- Increase Throughput
- Data Analysis
- Decision Assistance
The benefits apply to many different types of tech. Whether it’s a smart lock system, a complex database, cloud accounting software, or an investor relations platform, using it properly can lead to many great outcomes.
In general, we like to use technology because we find it is helpful in reducing the amount of work we have to put in to get better results – making us more efficient overall.
Leveraging Technology to Grow Your CRE Company
If you’re talking about growth through tech, there’s one key thing you need to understand. Using tech doesn’t mean working less. You will still have long hours if you truly want to get results. What it means is improving the quality of the output and reducing the time spent to create that output – in our case, making us more efficient overall.
Tech helps streamline processes that take a lot of human resources which can be reduced or eliminated completely. You will be freeing up your time to do more important tasks, rather than simple tasks which can be automated.
Many processes in CRE can be automated or streamlined through the use of strategic tech resources. For example, in addition to the investor relations portal we’ve implemented, we also harnessed software that makes our accounting and distributions easier. All our K-1s are distributed electronically through the portal for tax season. Another part of distribution automation is electronic payments. Whereas we used to have to send checks and follow up on them constantly, we can now make direct ACH transfers, including automating the process for regular payouts to investors.
The program also helps us calculate waterfall payments and other related data. Everything done on our accounting program is cloud-based, so every relevant party can access the data and make necessary adjustments. If we need to hand it over for an audit or any type of review, we can instantly generate a report and export it them directly. This is a huge step up from an Excel spreadsheet and paper accounting – practices still commonplace at many real estate companies.
Tech isn’t the answer to every problem in CRE. It’s not the silver bullet that’s going to make you successful. However, if you leverage the right kinds of technology to aid your growth, you can gain a competitive advantage and differentiate yourself in a market that is otherwise behind the times.
Why Angel Investors Should Consider Real Estate Investment By Percy Nikora, Owner, Co-Founder Introduction There’s no doubt about it. Angel investing is a lot of fun. Angel investors get a front-row seat to cutting-edge technology, new product development, and more. There’s a lot of interaction with brilliant, inspiring people who are eager to launch…READ MORE >
The Tax Benefits of Investing in Multifamily Real Estate* By Ed Rogan, Owner, Co-Founder The benefits to investing in rental property are undeniable. Owners can take substantial write-offs, including mortgage interest, depreciation, and a host of other expenses to preserve the property’s cash flow. So why don’t more people invest in commercial real estate?…READ MORE >
What Gets Me Up in the Morning and What Keeps Me Up at Night – Multifamily Real Estate Investing With Percy Nikora, Co-Founder What gets me up in the morning is, again, there’s so much opportunity out there, if you know what you’re looking for. Again, Penn Capital is still in its early stages. There’s…READ MORE >