What tools or data would make your investing better / easier?

Question

I think about data a lot. In fact, it's what I do for a full time job (data scientist). Part of what attracts me to BiggerPockets is the valuing of clear metrics such as COCROI, being careful about estimating potential rental costs, and adhering to investing rules such as 1-2% rule that give high-level guidance as to the return on an investment. I like numbers people.

In this regard, I have been thinking about how to build a data product or products for the community that would help save investors time or give wholesalers more targeted marketing. Nothing too fancy, but just a suite of tools that could help streamline your investment process or give you an advantage over competitors. For example, not long ago I helped someone obtain estimates on homeowner age. My friend gave me a list of addresses and I was able to track down the homeowner age pretty systematically (and with a high degree of accuracy). This helped my friend know who to call first, as he had a demographic he was aiming for.

I am writing this to kind of get a 'feel' of whether the community would find something like this valuable enough to pay for it. Like wondering if people would pay a small service fee to obtain this data. Or what types of gaps exist in the current tools you use. Is there anything that would save you time as an agent, wholesaler, or investor? I would be really interested to know and chat about this with you.

Account Closed · Answer

I recently began grabbing the csv data from Zillow and Realtor and plugging it into Data Studio, but unfortunately it's really broad strokes. The idea is create filterable information by zip code or county over time, like $/sf averages, median prices, drops, listings, and so forth. Basically, see what I can glean from the publicly available data columns within the area(s) I want. Mix crime data or things like that in there and you can (maybe, eventually) Moneyball it down to one number for the investability (my own word) for a zip code. Wouldn't that be sweet? I spent a lot of time last year doing the same thing in a pet project for drag racers which I enjoyed but ultimately wasn't profitable. Selling people on the idea that big data can help them is extremely difficult.

What I am really interested in - and my agent hasn't been able to give me the csv quite yet because I don't know if it exists - is data on each individual purchase and the amenities. Granted I'm new so I could be wildly off track, but I'd think that when flipping in an area (especially if it's a new area) it could be beneficial to know that x% of homes sold within y timeframe have n amenity, x% have m amenity, etc. When overlayed against $/sf or price, my thought was to see exactly how much return on investment certain upgrades get for a given zip and which are "must haves" in a flip and which might be a waste of time and money. With the right amount of scraping and database management though, that stuff could be pulled from Zillow I suppose.

Hopefully that made sense. I'd be super excited to see what you come up with though, whether for marketing like you say or something else like my example above. Overall, I think the DFY software could appeal to tech savvy folks that see the literal dollar value that it saves in marketing (saving me from sending 1,000 postcards a month for example), but that'd be up to you to prove that through various case studies depending on which way you go with the software.

Renjie Song · Answer

@Kurt Schuepfer Fellow data scientist and real estate investors here. I think lead generation is always gonna be huge. For example, I recently started a mailing campaign with data I collected from the city's building department. I didn't use any fancy algorithm, but did try to clean up the data as much as I could, and applied a few filters. So far, we are closing on 2 buildings out of 200 letters, so the ROI is not bad if not including my own time. I will be trying data vendor like ProspectNow next to see if I can scale up the process now that I know direct mailing is not a waste of time and money. A lot of time I feel like getting high quality data is more than half of the work. The rest is a numbers game and good negotiation.

Similar to what James was saying I think a tool to understand and identify potential markets will be really useful as well. There might be companies like Mashvisor already kinda doing that, but I don't think they have the analysis down to the zip code level or outside major metros yet.

On the operation side, i can think of a tool to not only track the expenses but also let owners know if their property managers are doing actual repairs and if the costs are reasonable. I think there is always an agency problem here, so a tool to help manage that will be helpful.

I am curious what data you used and how you predict owner age based on the addresses. Just added you on LinkedIn. Would love to continue the conversation.

James Hamling · Answer

As City Data has and provides that information already I would have no interest in paying anyone for historical data that, as i said, City Data provides and is very very good at.

The data I would most want, Market Vectoring.

For those who don't know, vectoring means direction with magnitude. This data set would be a metric representation of the market direction and strength of that direction, be it growth, decline, appreciation, depreciation.

I created my own algorithm for calculating such data and disseminating it into a charitable data representation, but that is just me and my own understanding of how I feel things should be weighed and measured. It requires a lot of data inputs so I would find great value in the ability to plug in an area code and get a Market Vectoring for the strategy and property type I am looking at.

The valuable data needed is those measuring and pegging the future, historical data is easy and readily available.

Bryce DeCora · Answer

Software developer here building a CRM focused on managing different communication methods between clients.  Adding an age estimate to the generated contacts associated with a property would be great.  This kind of information can be obtained from a skip tracing API, but gaining access to this data via API is very expensive.  How did you estimate age in your algorithm?

Kurt S. · Answer

Thanks. This is the type of comment I am looking for.

I suppose the value of the algorithm I built for age is just the scale. I don't think the average wholesaler would know where to find that data and to do so at scale. Probably much easier to pay a small service fee and just have me do the grunt work to code up the process.

Market vectoring sounds really interesting. Are you typically doing this for short term market projections? I would love to take some of the inputs you use and throw them into a machine learning model. The turnaround time is faster than a lot of people realize. I've got a lot of code already built. I would just need some training data and inputs and I'd be ready to go!

What tools or data would make your investing better / easier?

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