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This is why residential real estate is becoming more popular as an investment option

IMMO Investment Technologies helps financial giants to buy up apartments and rent them out at a profit. Read on to find out why the “Living as a Service” model is considered to be promising.

Start-up business model “Living as a Service”

“We are IMMO … and we are disrupting the real estate industry. […]”- This is how the fintech start-up IMMO Investment Technologies introduces itself to potential business partners and customers on the business networking platform LinkedIn. The company, founded in 2017, has specialized in the search for private residential properties as well as their purchase and the associated payment processing, which is carried out via appropriate asset managers. After renovation and furnishing, the purchased properties are rented out for profit: a business model that the experts at EU startups call “Living as a Service”. Since IMMO’s end customers are usually not private individuals looking for accommodation, but rather institutional investors and thus high earners, this has been criticized. Managing director Hans-Christian Zappel made the following statement to WirtschaftsWoche: “As a rule, we are not the ones who offer the highest price.” He also adds: “For emotional reasons, private individuals are often willing to pay more.” With his statement, Zappel refers to the critical assessment that the company would compete with private individuals looking for housing.

Corona crisis as a catalyst

Due to the pandemic-related decline in demand for office and retail buildings, institutional investors are looking for alternative investment opportunities and are focusing in particular on the residential real estate segment – Zappel told WirtschaftsWoche. The demand for properties in this area continued to rise, since in addition to institutional investors such as insurance companies, family offices and pension funds, private individuals who want a city-center location are also interested in low-risk investment opportunities in a low-interest environment that still generate returns. Taking these facts into account, Zappel sees himself as a “problem solver” for all those who are looking for a convenient and quick solution for the implementation of their investment.

Success through artificial intelligence

According to the information available to the experts at Spotfolio, special algorithms are intended to reduce the costs of project management for the property in question by digitizing and automating certain processes. Specific features, such as the location, number of square meters and the year of construction of the property, are to be analyzed in order to be able to make a preselection based on these and to submit an assessment of the property.

Customers receive optimized and individualized suggestions that not only increase the chances of success in finding the right property, but at the same time limit the time frame for this process. 55 employees are currently involved – 25 of them are employed in machine learning and data science alone – who work on the evaluation algorithm of the system based on 280 data points.

This is how IMMO finds suitable residential properties

According to WirtschaftsWoche, IMMO Investment Technologies uses not only searches on common real estate portals but also broker and bank cooperations to find suitable properties. Copied from the motor vehicle trade, sellers can optionally also bring their property directly to the startup. In this way, the asset managers, whose investments in IMMO amount to around 60 million euros, have already acquired 150 properties in Munich and Hamburg. Expansion to Frankfurt, Cologne and Düsseldorf is planned, the implementation of which is already financed with around 14 million euros. The investors include other fintech companies such as the London company Talis Personal-Financial.com, the German company VC company HV Holtzbrinck Venture and Fintech Collective from New York. Rocket Internet manager Mato Peric is one of the best-known individual investors.

Not only the approach of IMMO Investment Technologies is based on the “Living as a Service” model. Before the start-up, other companies had already proven that the concept works. The US company Invitation Home, for example, manages over 80,000 properties according to WirtschaftsWoche, and there were criticisms here regarding the condition of the houses. A concern that IMMO does not yet share, as these are usually freshly renovated properties that are offered by the startup.

Image Sources: Travis Wolfe / Shutterstock.com

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