Nine Four Insights

Optimizing NOI Amid Uncertainty

I’m sure you’ve all heard the expression “cash is king”, and given the uncertain times, it probably holds true now more than ever. How does this actually apply to PropTech? On the venture side, it most likely translates to higher scrutiny when deploying funds, whether to existing or potential investments. On the real estate side, it’s likely to translate into cutting costs, wherever and however possible. At the end of the day, to have control of their own destiny, companies need to be profitable. There are many paths that lead there, but only two absolute inputs: revenue and costs. Companies can increase their revenues or cut their costs in order to increase operating income, however, in a post COVID-19 world where almost everything is shut down, the former is almost impossible for most industries. That’s why we’re seeing significant opportunities in optimization technologies, specifically. In this post, we review a few of the many ways, PropTech, specifically, can help industry stakeholders optimize operations.

  • Decrease reliance on middlemen: The less middlemen in a process, the more margin increases and prices decrease. That margin can be passed down to end customers (the user or buyer of that product). By going directly to end customers, companies can re-capture some of that previously wasted margin and even give some back to the end customer. A good example of a use case here is Nine Four Ventures Portfolio Company SmartRent’s self-guided tours product. By enabling potential tenants to view apartments on their own, residential owners and operators are able to save money by cutting broker fees.
  • Dispute Resolution: During large (mainly, expensive) disagreements, if there is no clear source of truth that parties can trust and agree on, it is easy for lawsuits to follow. For instance, on a construction site, if a developer asks for a change order because something was completed incorrectly (i.e. put in the wrong place, too late, etc), the developer will usually have to pay for the change because they are the ones asking for it and there is no way to prove that there was a mistake on the general contractor’s part. However, with technology like that of Nine Four Ventures Portfolio Company OpenSpace (“google street view” for construction sites), developers can reference back to completed work and save on charge order fees.
  • Increase Efficiency: The more efficient we can be, the less we’ll waste. The less we waste, the more we save costs. This applies to all facets of real estate, from energy efficiency for landlords (i.e. Enertiv, Facilio) to pricing efficiency for insurers by increasing information availability (i.e. Arturo, Cape Analytics), and everything in between.
  • Increase Productivity: Enabling employees to move quickly helps cut staffing costs. A good example of this is Nine Four Ventures portfolio company Bowery Valuation, whose software enables CRE appraisers to streamline back-end processes and therefore increase throughput and productivity. Another good example here is Nine Four Ventures Portfolio Company Built Technologies, which helps lenders “waste” less time with menial tasks by using software to move their legacy workflow (i.e. pen, paper, excel) to the cloud.

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