Back to basics: alt data for real estate investors
It is no secret that the current alternative data market heavily services public equity investors. Of course, these are some of the biggest alt data spenders, so such preferential treatment isn’t surprising. However, this bias leads us to believe that non-equity investors may assume that alt data isn’t relevant to their strategies. Unsurprisingly, we believe otherwise. In this report we take a look at the alternative data options for real estate investors. Specifically, we address 1) issues with using traditional datasets and 2) which alternative datasets could help provide more accurate KPIs.
Friendly PSA: the following information is intended as a high-level introduction to real estate data. If you are already a sophisticated user of this data (or are even just passably familiar with it), then there is a high chance that you will not learn anything new here.
Vacancy rates, property prices, rental prices, square footage, and occupancy rates are some of the many metrics that act as the foundation for real estate investment-making decisions. They provide investors with information on the local market (e.g “is it worth buying a property in this region”), their future tenants (e.g “what should the rent be set at”), and their return on investment, to name a few.
Currently, most real estate investors rely on traditional sources for such information, obtained through a choice of government databases/statistics, private/industry data, and/or boots-on-the-ground scouting.
Unfortunately, these options all possess significant disadvantages. For instance: