Breaking Down AI’s Impact for Tech-Savvy Real Estate Investors

Artificial Intelligence (AI) is everywhere – from tech blogs to conferences – but what does it actually mean for your real estate investment business? Yes, AI is often discussed as a game-changer, but many claim it leads to conversions and growth without offering any tangible details. Real estate investors, especially those who’ve seen the hype around "Get Rich Quick" workshops, know the difference between buzzwords and real, actionable insights.

So, how can AI truly impact your business? Let’s explore its potential in PropTech and the broader commercial real estate (CRE) investment world, focusing on long-term value, rather than the trendy moment.

Why AI is a Big Deal in PropTech

PropTech has one of the largest opportunities in terms of datasets – surpassing most other industries. Consider the vast amounts of public data available for properties, mortgages, transactions, foreclosures, ownership, and demographics. Residential and commercial spaces each have unique sources, and here’s a look at the players:

• Residential: Industry leaders include BlackKnight, AttomData, Property Radar, Batch Data, and PropStreams.
  
  
• Commercial: Key data providers include Costar, CoreLogic, and Reonomy.
  
  

For residential, we have a few key indicators to identify distressed properties and make decisions on them. However, in commercial real estate, the complexity of underwriting is far greater, with numerous variables to account for.

Unlike residential real estate, CRE underwriting hasn’t been fully automated. AI signals can’t yet determine with certainty whether an investment is "good" or "bad" – there are just too many moving parts. In CRE, market fluctuations, unexpected expenses, and the inherent risks mean that no investment is guaranteed to deliver consistent returns.

So, what can AI do in CRE if it can't automate underwriting yet? Let's break down where the most significant AI opportunities lie.

The Four Key Areas for AI Innovation in CRE Investments

In CRE, the potential for AI to enhance business operations falls into four major categories: Capital Raising, Operations (Asset Management), Deal Sourcing, and Underwriting. While underwriting remains a challenge, AI has immediate room for innovation in the other three categories.

Let’s dive into each one:

1. Deal Sourcing: AI in Action

In the past, brokers held all the cards. Attending multifamily events, you’d find industry leaders like CBRE and Marcus & Millichap dictating terms. Their mantra: if you can close a deal quickly and reliably, they’ll feed you off-market opportunities. However, in 2025, that power dynamic is shifting. Deals worth pursuing are rare, often coming only once every few months.

So, what should investors do? Underwrite more deals and build relationships with brokers – but don’t let brokers have all the leverage. Build a stronger, more consistent pipeline of potential deals.

Here’s where AI can come in:

• Track Broker Response Times: AI can track how quickly brokers respond and send automated follow-up reminders, ensuring no deal slips through the cracks.
  
  
• Tier Brokers: Use AI-driven data enrichment tools to categorize brokers based on deal volume, quality, and responsiveness.
  
  
• AI Sentiment Analysis: Track communication (calls, emails, messages) to identify the communication styles that resonate with each broker, ensuring more productive interactions.
  
  

2. Capital Raising: AI-Driven Investor Insights

One of the toughest challenges for CRE investors is capturing and understanding investor data. High net-worth (HNW) individuals and their investment interests aren’t public information, making it tough to tailor your capital raising efforts.

Here’s where AI truly shines:

• AI Enrichment Tools: By leveraging AI-powered tools, investors can gain insights into a prospective investor’s likelihood to invest, engagement level, interests, target returns, and more.
  
  
• Focus on the 20%: AI helps to predict which investors are most likely to invest, allowing you to focus your efforts on the high-potential group that will convert, rather than wasting time on less-engaged prospects.
  
  

AI can narrow your focus, improving capital raising efficiency, and potentially leading to better investment outcomes with far less effort.

3. Operations (Asset Management): Maximizing Efficiency

For asset management, the primary focus is on improving operational efficiency, particularly in property management. AI can help in a number of areas:

• Occupancy Rate Optimization: AI can analyze data patterns and market conditions to predict the best times to increase rent, adjust lease terms, or attract new tenants.
  
  
• Automated Follow-ups: How quickly should you follow up with prospects? AI can determine optimal times to reach out based on prospect behavior, improving engagement rates.
  
  
• Tenant & Property Manager Tracking: AI can provide automated oversight of property managers and tenants, alerting you to any operational issues that need your attention.
  
  

With AI in operations, you can ensure better tenant retention, optimized leasing strategies, and more efficient management of your properties.

4. Underwriting: AI Still a Work in Progress

Underwriting remains a challenge, as there are too many variables to account for in commercial real estate investments. While AI tools can assist in gathering data, analyzing historical trends, and providing insights, a fully automated CRE underwriting model is still in the works. Market fluctuations, unexpected expenses, and more factors make it difficult to rely on AI alone for investment decisions.

That said, AI can still play a supporting role:

• Market Trend Predictions: AI can help investors understand market fluctuations, providing more accurate forecasts and identifying potential risks earlier on.
  
  
• Data Analysis: AI can help analyze vast amounts of historical property data, trends, and variables to support human decision-making.
  
  

Conclusion: AI is Here, But It’s Just Getting Started

Remember, AI in CRE isn’t about making the perfect decision—it’s about enhancing your decision-making process and allowing you to focus on the most lucrative opportunities.