NUTS & BOLTS
TECH TOOL REVIEW
SFRTrek: The Next Generation AS RESIDENTIAL REAL ESTATE INVESTING CONTINUES ITS MARCH TOWARD MAINSTREAM ACCEPTANCE AND MATURATION, CAN ‘INVESTMENT AS A SERVICE’ BE FAR BEHIND?
by AndrewWaite
oftware as a Service, or SaaS, is the term given to software applications that are sold as a Web-based subscription ser- vice. The previous generation of application sales required a user to buy a software package and load it on his or her personal computer. The Microsoft Office Suite was such an example, withWord, Excel, PowerPoint and other applications. Keeping the software up to date was the end user’s responsibility. SOFTWAREASASERVICE Software providers found that these thousands, if not millions, of users with many different machines and operating system versions were difficult to support. These developers decided the next gen- eration of applications should adopt a model surprisingly familiar to first-generation computing. This consists of a hosted solution (echoing a mainframe) to which users could sign on remotely from any personal computer or mobile device. They access a remote application and their personal database via the Web. Salesforce and Microsoft Office 365 are examples of Software as a Service, where all of the difficult and repetitive administrative minutiae, updates and support functions are managed centrally. The benefit of this model is to leverage the computer and administrative skills and resources of a few to benefit many, thus keeping costs down. And this same type of model could be coming to the world of residential real estate investing. S
tions and buyer clubs attract like-minded investors who mostly embrace investing as a do-it-yourself activity. Getting involved in these networks favors the gregarious mental- ity of “a joiner.” It is estimated that at their height, these communi- ties collectively attracted less than 250,000 individuals interested in investing and landlording. This did not mean the members invest- ed, but were prepared to pay a membership fee to join a network of like-minded individuals, receiving discounts on education, goods and services relevant to their investing level. The membership numbers of these communities, as valuable as the benefits offered may be, are just 3 percent of the 8 million to 10 million individuals owning 23 million rental homes. Quite simply, there is massive opportunity in this market. SECURE HIGH-YIELD INVESTMENT In spite of the growing recognition from institutions—led by Wall Street funds like Blackstone (Invitation Homes) and Cerberus (FirstKey Properties)—to wealthy families and wise individuals, single-family residential real estate is considered a relatively inaccessible asset. Real Estate Investment Trusts (REITs) offer a way to invest in a fund returning 5 percent to 8 percent on investment in SFR assets. This yield can be doubled by a fund that com- bines rental income and home price appreciation. A number of investors and Realtors launched turnkey investment mod- els. No matter what their promotions claimed, SFR invest- ment requires insight and knowledge just to understand and keep abreast of providers and markets.
INVESTOR CLUBS & COOPERATIVE BUYER GROUPS
The first inklings of “investing as a service” began as commu- nities of investors organized by associations to provide goods and services to investors at volume price discounts. Investor associa-
LEARNING FROMDISCOUNT STOCK BROKERS The dam broke on a watershed of average investors who wanted
88 | think realty magazine | mar :: apr 2016
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