By Jack Stubbs
In the current era of commercial real estate tech, many platforms coming to the market are striving to simplify the process for real estate professionals. redIQ, a platform based in New York and launched in 2016, seeks to streamline the analysis of multifamily property data.
We recently spoke to Elliot Vermes, founder of redIQ, about what the platform allows industry professionals to do, how it seeks to enact changes in the commercial real estate market, and what lies ahead for data analysis in the industry over the next 12 to 18 months.
What can you tell me about redIQ (where and when the platform was founded, current objectives and strategies, etc.)? In a nutshell, what does the platform provide?
At its core, redIQ is a platform that makes the analysis of third-party multifamily data— information about properties that are not owned by the analyst—much more efficient. For example, when investors evaluate different potential acquisitions, they review rent rolls and historical operating statements for each property. However, because there is no standard for how this data is formatted, an analyst comparing four properties could be looking at rent roll PDFs in three or four distinct formats (with columns that don’t align or have different names, etc.). Analysts generally spend several hours per rent roll just scrubbing and standardizing the data to make it easier to analyze.
redIQ provides the industry with a solution to this inefficiency. An integrated data extraction, analytics and valuation platform, redIQ captures, validates and normalizes the information in Excel or PDF financial statements in seconds, and then converts it into the users’ own chart of accounts. The data is presented online in an intuitive dashboard, which also features data visualization tools (such as charts and graphs) making it easier for users to compare properties and identify trends.
The elimination of non-value-added work allows acquisitions teams to evaluate a greater number of properties, increasing their chance of finding an opportunity with hidden upside. Investment sales brokers who use the platform gain deeper insight into a property’s performance and its revenue potential. This will often help them justify a higher asking price, which, in turn, helps brokers win business.
Who within the commercial real estate industry does redIQ serve in addition to investors, lenders and brokers? What is the wider geographic and demographic scope of the platform?
The platform is designed for anyone receiving data from unaffiliated third parties in the form of PDF or Excel files. Our client base to date is comprised primarily of acquisitions teams and investment sales brokers—including deal teams at nearly every major brokerage (CBRE, JLL, ARA, Moran, Cushman & Wakefield, and Marcus and Millichap) and many of the leading national investors, including Alliance Residential and The Milestone Group.
To what degree is the platform addressing a broken workflow in the commercial real estate industry? In other words, what value does the platform bring to the industry, and how do the strategies of the platform align with larger trends in the industry?
You can call it “broken” or “highly inefficient,” but the flow of data in commercial real estate leaves a lot to be desired. Not only does the non-standardized nature of rent rolls and operating statements require analysts to spend hours scrubbing the data, but this non-productive work is repeated over and over across the industry.
When a seller lists a property, there are generally a few brokerages vying for the listing, each of whom will be converting the data into their firm’s preferred template. When one broker wins the listing, she will send the information to dozens of investors—and each of them will spend hours performing the same work to make the data align with their firm’s preferred template. Ultimately, the files will be sent to lenders and property appraisers, and at each step of the process, analysts will be spending several hours doing the same non-value-add work.
One of the overarching aims of the platform is to streamline and synthesize data to enhance efficiency eliminate time-wasting at all levels of the process. Can you elaborate on this central idea and what it means for where the commercial real estate industry is heading?
People have long recognized the problems with the current system in which multifamily data is compiled and exchanged in a wide range of different formats. There were actually a few initiatives about 15 years ago to solve this by streamlining the way data was compiled across the industry, but they weren’t successful.
However, it is tantalizing to envision the “ideal” method of data collection and exchange—if there was a single centralized source where all property information was stored in a standard format. This information would obviously not be open to the public, but instead of emailing a PDF rent roll to potential brokers, a property owner would simply grant them online access to the information. The process could be as simple as hitting a “share” button, but it would result in hundreds of hours of time-savings.
In an era of commercial real estate tech, there are many platforms that provide the same services to industry professionals that redIQ does (synthesizing and streamlining PDF/Excel data and reports, localizing the data on a mobile device, etc., streamlining the process, etc). Why should clients pick redIQ over another CRE tech platform? What makes redIQ unique?
There are a lot of technologies serving the commercial real estate space, but none of them solve the same pain points as redIQ. Historically, the majority of CRE tech companies have focused on office and retail properties, which often have complex lease agreements. Data platforms for multifamily properties almost all of focus on property and asset management— helping an an owner or equity investor get an overview into the properties that they already own. redIQ is the only platform that creates a solution for brokers or acquisitions teams that are trying to delve into the financial performance of third-party property information.
How will redIQ ensure that it remains ahead of the curve—and ahead of other CRE tech platforms—moving forward? What will some of the challenges be in ensuring that redIQ is implementing the most cutting edge technology into its offerings?
One of the areas we’re looking at most closely is artificial intelligence/machine learning, in which our algorithms could enhance the data analysis, convert an even great number of file types and flag attractive investment opportunities in the broader market. As an example, we recently released a platform upgrade that automatically flags irregular and erroneous data that was contained within uploaded Excel and PDF files. These errors are surprisingly common—they’re in about half of rent rolls —but redIQ now saves users the time and hassle of manually searching for these mistakes.
In the current day and age, successful products are those that are intuitive and easy to use. Is there a steep learning curve affiliated with redIQ, especially for those who might not be as familiar with tech- and cloud-based products? How scaleable is the platform across different contexts and devices, and what are some of the challenges in ensuring that the software scales effectively?
We’ve tried to make the redIQ platform as intuitive as possible, and we have a support team that is always able to assist anybody who’s having an issue. Because redIQ is a cloud-based software, it works across operating systems. While most of our users access redIQ via laptop or desktop, the platform is also optimized for easy use from mobile devices.