let's talk

The Role of FinTech in the Real Estate: In-Depth Overview

7 min read

Are you a startup founder, investor, or entrepreneur that wants to create a FinTech product for real estate? Or are you a FinTech enthusiast seeking information on property FinTech?

If you gave a positive answer to any of those questions, you should read this article.

Here, you’ll learn the following:

  • The role of FinTech in real estate
  • An overview of popular property FinTech startups
  • How popular property FinTechs can gain momentum
  • And more!

Let’s dive into the crux of the article.

The Role of FinTech in Real-estate

Property FinTech creates an effective way for real estate investors to cut out redundant intermediaries in real estate transactions.

FinTech helps to reduce costs, reduces friction, and increases investment opportunities throughout the property evaluation and purchase process.

Here’s a brief look at three use cases of property FinTech:

Use Case 1: PropTech Lending

According to Forbes, one of the most significant challenges for real estate investors is the lack of funds. FinTech is solving this problem via PropTech lending.

PropTech lending occurs when a FinTech company issues credit to an individual or firm with the principal aim of purchasing a property.

Numerous statistics and experts’ predictions show that PropTech lending is the future of mortgages. And according to JP Morgan’s CEO Jamie Dimon, “Silicon Valley is coming: ” this singular statement depicts the emergence of technology in every facet, including real estate.

Between 2014 and 2020, the total number of real estate tech deals has continually been increasing, summing up to a total of 501 deals in 2020 alone. The average value of PropTech lending deals also increased during this time frame, rising from $3 million in 2014 to over $20 million in 2020.

The increase in PropTech lending has a significant influence on property investment. A 2018 survey of real estate investors shows that over 65% of survey respondents believe PropTech lending significantly influences the real estate sector. This survey shows that over 31% of property investors want to invest in PropTech lending, while over 25% will partner with one.

Examples of PropTech lending startups include:

This picture describes the first of the options for using FinTech property is PropTech lending

Use Case 2: Real-Time Property Data

Real-time property data refers to information that’s presented as it is acquired. This innovation helps real estate investors and professionals keep track of what buyers are willing to pay based on real-time purchases, with features such as blockchain technology, cryptography, etc.

Every past transaction is timestamped and immutable – this helps to eliminate market price manipulation.

However, a significant problem with this method is that it opens real estate investors to numerous sources of data and price prediction. And ironically, too much data can complicate the entire property price tracking process.

But thanks to machine learning algorithms and advanced analytics, FinTech data analytic experts can now aggregate apt data sources and interpret disparate information sources.

For example, if you’re a real estate investor searching for underused parcels for development, you might want to pull data from recent transactions on the Multiple Listing Service. However, this data shows nothing about their potential in isolation. They reveal past events.

As reported by McKinsey & Company, advanced FinTech analytics of past transactions helps investors identify areas of interest and investigate land potential through a predictive lens. It also helps developers access hyperlocal community data, market forecasts, and land use data to understand a property prospect.

Based on the finding, a developer can now optimize property types, timing, and segment properties based on price.

Examples of FinTech providing real-time property data include:

The illustration shows the second of the real estate industry's FinTech uses is real-time property data

Use Case 3: Risk Management

Risk management in real estate entails identifying, assessing, and controlling threats to a property’s estimated value and projection. At the crux of real estate investment is keeping risk at a bare minimum.

Real estate investors often face two risk types:

  • Systemic risks: This type of risk is caused by natural catastrophes such as earthquakes, tsunamis, etc.
  • Non-systemic risks: This risk type is caused by human activities like governmental policies.

To help mitigate those non-systemic risks, FinTech startups have created Portfolio Risk Analysis software. Such software gathers big data, segments it, churns it, analyzes it, and gives real insight in conjunction with AI.

There has been an increase in demand for FinTech-backed risk management software since 2000, and there are statistics to back this claim up. Here are some:

And a significant impetus for FinTech risk management software growth is that FinTech software solutions for risk management are cheaper than traditional manual research. They are also faster.

Speed and efficiency are crucial to an investor’s success in the real estate industry.

The demand for FinTech-backed real estate risk management solutions is poised to keep rising over the next decade. Here are statistics to support this claim:

Here are examples of investment real estate FinTech startups:

This picture describes the third use of the real estate FinTech industry is risk management

Now that you have some knowledge of some FinTech use cases in real estate, let’s discuss some startups in this sector.

Overview of 5 FinTech Real Estate Startups Worth Learning from in 2022

There has been lower friction in buying a home through financial technology, and transaction costs in real estate have been reduced. At the crux of this improvement are PropTech companies like Opendoor technologies or Blend inventing helpful solutions.

Below is detailed information on some noteworthy FinTech real estate startups:

Startup 1: Opendoor Technologies

Opendoor Technologies is an online real estate marketplace operator for streamlining the sales process of home purchases and sales. The FinTech startup buys and sells residential properties through a machine learning algorithm called iBuying.

As reported by SeekingAlpha, Opendoor technologies experienced significant revenue growth at a CAGR of 58.15%. The FinTech platform reported revenue of $2.26 billion in the third quarter of 2021, representing a 187% increase in its revenue for the 3rd quarter of 2019.

Start Date  Target Market Raised Fund 
2014 Opendoor targets real estate investors that need a detailed analysis of every price influencing factor.

$1.9 billion

What to Learn from Opendoor Technologies

By helping homeowners sell their homes in record time, they’re getting rid of the notion that real estate is not an easy-to-liquidate asset. This business model makes them standout institutional investors with an interest in liquid assets.

You can learn from them as a startup by applying a solution-based approach to corporate and daily problems.

The illustration shows startup Opendoor Technologies, which is worth learning from when starting a fintech startup in real estaten opening a FinTech startup in real estate

Let’s discuss another noteworthy startup, Blend.

Startup 2: Blend

Blend is a cloud-based white-label software that speeds up the mortgage approval process for some of the largest creditors, including U.S. Bank and Wells Fargo.

The platform allows prospective borrowers access to online bank statements, pay stubs, and tax returns. Currently, the platform processes more than $4 billion in consumer loans and mortgages daily, and it currently partners with over 285 institutions.

Data for Consumer Finance suggests that the financial technology company accounts for more than 25% of the $2.1 trillion U.S. mortgage market by origination volume. In 2020, a report from NASDAQ suggested that the platform processed $1.4 trillion in mortgage loans, more than double of 2019 volume.

Start Date  Target Market Raised Fund 
2012

Blend acts as a bridge between loan seekers and creditors. Thus, its target market is the two groups.

$665 million

What to learn from Blend

Blend is primarily on this list due to the company’s management’s ability to serve the interest of both corporate institutions and consumers.

The company effectively guarantees maximum satisfaction to every party stakeholder.

The illustration shows startup Blend is cloud-based software, which should be the focus when opening a FinTech startup in real estate

Beyond Blend, another FinTech startup on this list is Cadre. Let’s discuss it.

Startup 3: Cadre

Cadre is a New York-based FinTech real estate startup. The startup’s online platform uses advanced data analysis to raise funds online and source deals that allow individual and institutional investors to buy at sell stakes in real estate.

The company also runs a StubHub-like secondary market that enables investors to sell illiquid real estate holdings.

Cadre recently launched a $400 million fund for financial advisors, individual investors, and institutions early last year. The company’s CEO and co-founder, Ryan Williams, is a 30 under 30 alumni.

Start Date  Target Market Raised Fund 
2014 Cadre targets both individual and institutional investors that want to purchase a property.

$113 million

What to learn from Cadre

Through the excellence of the company’s founder, Cadre has been able to venture into purchasing and selling liquid real-estate holding–an untapped niche. The company treats all platform users with dignity and ensures everyone gets maximum satisfaction.

This picture describes Cadre is a real estate fintech startup that you should pay attention to.

Startup 4: Roofstock

This is a real estate investment marketplace that allows users to evaluate, purchase, and own single-family rental properties.

The FinTech startup pre-inspects rental properties with information about tenants, current rent, and property managers. It then makes this information available to renters and investors online. Users can compare properties around the country based on real-time data.

Albeit launched in 2019, the company currently has 205 employees and has processed more than $3 billion transactions.

Start Date  Target Market Raised Fund 
2019 Roofstock targets both renters and investors.

$132.3 million

What to learn from Roofstock

Roofstock shows that rapid growth is possible if you value user experience as a startup. The platform also practices niche marketing at its best as they only cater to single-family homes.

The illustration shows Roofstock's real estate investment market, which is worth looking into when renting out a property

Another startup to learn from is Divvy Homes. Let’s discuss that too.

Startup 5: Divvy Homes

Divvy Homes is a FinTech startup that purchases homes for clients who can’t qualify for a standard mortgage loan and then become their landlord.

The company requires a 1-2% down payment and an opportunity for renters to convert a portion of their monthly rent to a down payment for property ownership. After three years, the customer will own a 10% equity on the property.

Since the company began in 2017, it has stood out as an excellent company for helping people with poor credit scores own a home at an affordable price.

With funding from financial juggernauts like Caffeinated Capital and Singaporean sovereign wealth fund, Divvy rents more than 1,500 homes in nine U.S. states. The company hopes to convert 750 renters to homeowners at the expiration of the first lease.

Start Date  Target Market Raised Fund 
2017 Divvy homes target mortgage loan seekers that are deemed “not creditworthy”.

$1.2 billion

What to learn from Divvy Homes

Divvy is an excellent credit card program and expense management, and the only one that does this for free. Their customer service is awe-inspiring. They help users open an account, obtain credit, and set up a Divvy account.

The illustration shows fintech startup Divvy Homes, which you should pay attention to when buying a house for clients to rent

Reading this section of the article shows that you’re keen on FinTech. However, there’s more to learn.

Interested in Learning More about FinTech?

As a startup investor, entrepreneur, or founder looking to create a FinTech for real estate, you should have in-depth knowledge of FinTech.

Among the multiple information you need, it’s essential to know about owning your financial technology company. Read this article on how to start a FinTech startup for more insight.

Read More

How to start a FinTech startup? Actionable guide

To The Guide

Recommended posts

5 Ultimate Capital Raising Strategies for an EdTech Startup

5 Ultimate Capital Raising Strategies for an EdTech Startup

The EdTech market has grown exponentially over the past decade. In 2010, the industry had a venture capital investment rate of $500…

read more
How to Develop a Software-as-a-Service Application? The Complete Guide

How to Develop a Software-as-a-Service Application? The Complete Guide

Are you a startup founder, product manager, or serial entrepreneur who wants to know how to develop a SaaS platform? If yes,…

read more
An SEO Strategy for Startups: How to Compete in 2022

An SEO Strategy for Startups: How to Compete in 2022

SEO for startups should become your focus in 2022. Its importance is often overlooked because business owners have lots to do, and…

read more
What you Might be Overlooking as a 2022 Startup Business

What you Might be Overlooking as a 2022 Startup Business

Starting any business can be challenging, especially for those who haven’t had any experience in running a business previously. Startups can often…

read more
Tech Stack Tools for Startups in 2022

Tech Stack Tools for Startups in 2022

Do you believe that “Necessity is the mother of invention?” Throughout history, man used tools to make his job more manageable. In…

read more
Hire a Remote Development Team: A Guide to Action

Hire a Remote Development Team: A Guide to Action

Are you a startup founder, chief technology officer, or head of product delivery looking to hire a remote development team? Are you…

read more
How to Hire a Dedicated Development Team in Ukraine: Reasons, Benefits, Process

How to Hire a Dedicated Development Team in Ukraine: Reasons, Benefits, Process

Are you a startup founder, chief technology officer, or head of product delivery looking to hire a dedicated development team in Ukraine?…

read more
The Customer Is Always Right: Why Startups Should Pay Attention To CX Data

The Customer Is Always Right: Why Startups Should Pay Attention To CX Data

The customer experience is the key to any marketing success strategy. Mimicking the age-old catchphrase of ‘the customer is always right, the…

read more
Hire a Dedicated Team of Mobile App Developers: An Overview of Process

Hire a Dedicated Team of Mobile App Developers: An Overview of Process

Are you a startup founder, chief technology officer, or delivery manager that’s considering the prospect of hiring app developers? If yes, the…

read more