SmartZip, a Web site that offers rating and research tools for real estate investors, including color-coded investment heat maps, launches today.
The company offers automated scores for individual properties on a scale of 1 to 100 for "growth" and "income" and also scores cities, metro areas and counties.
At launch, SmartZip.com has data and ratings for about 12 million properties in California and Florida, with plans to expand nationwide.
The growth score is geared toward those who are seeking above-average appreciation "and are willing to tolerate higher risk in … price volatility over time," according to SmartZip’s Web site, while the income score is for those who "prefer a steady stream of monthly cash flow and … want to minimize volatility in cash flow and total return."
The site’s ratings are based on a range of information including housing, demographic, economic and lifestyle data — including past trends and future projections.
SmartZip is one of several investor-focused real estate sites to launch in recent years, and it follows players such as InvestorLoft.com, Krunching, eRealInvestor and T-ReX Global, to name just a few.
FinestExpert.com, a site that claims to score the investment quality of more than 4 million active listings, launched earlier this month. And then there are foreclosure-related property data sources that also have an audience of investors, such as Foreclosure.com, ForeclosurePoint, ForeclosureRadar and RealtyTrac.
SmartZip was created by NorthPoint Corp., which provides real estate investment and mortgage brokerage services, and was spun off as a separate company though NorthPoint remains an investor.
Frank Richards, co-founder and chief executive officer of NorthPoint, is co-founder and chairman of SmartZip.
The site received $2.05 million in a first round of venture funding from an investment group that included Northpoint Financial group, private-equity forum peHUB.com reported in March.
The site features a top 100 list of the highest-rated properties by growth score and income score, as well as a top 10 list of investment markets.
Coral Springs, Fla., was at the top of the list on the night before the site’s public beta launch, with a 76 growth score and a 68 income score (100 is the highest possible rating). Ten-year appreciation for that market was listed at 42 percent.
The site’s individual property pages feature property information from brokers, aggregators and other sources, and use images from brokers or Google Street View when other photos are not available.
The property details show basic information such as address, number of bedrooms and bathrooms, date built, square footage of homes and lots, as well as details on the estimated monthly cash flow, price per square foot, the 10-year estimated value, appreciation, job growth and population growth, among other information.
Affordability and 10-year return on investment data is also included.
The growth and income scores for each property are compared to city-level, metro-level and state-level scores.
A calculator at the site allows users to change details on the property such as purchase price, percentage of the down payment, closing costs, the loan type and interest rate, among other variables.
Other tools allow users to estimate and calculate rental income, property tax, insurance, homeowners association fees, maintenance fees, and other variables to arrive at an estimated monthly cash flow.
Heat maps can be customized based on several variables, including growth-focused or income-focused strategies, cash flow, job growth and population growth, among others.
The company offers to put consumers in touch with local agents – the feature is sponsored by real estate brokerage companies — when they want more details on a given property. …CONTINUED
As with automated valuation sites such as Zillow and Cyberhomes, data is available for properties regardless of whether they are for sale. And as with any automated model, there can be weaknesses and greater or lesser degrees of accuracy depending on the nuances of a particular property and neighborhood, SmartZip acknowledges.
"No quantitative model is perfect, and SmartZip does not represent purchase decisions be based solely on score," the Web site states.
Avi Gupta, vice president of product management for SmartZip, said the ability to compare the overall investment rating of entire markets side by side is a unique quality for the site.
And while SmartZip does offer property valuations, Gupta said it should not be viewed as a competitor to Zillow. "We view ourselves as an analytics company," he said.
"These kinds of tools are going to grow the market. Today, real estate investors are 20 percent of the market – there’s no reason they shouldn’t be 40 to 50 percent of the market," he added.
Gupta also suggested that investor-focused online information can "contribute to the turnaround" by empowering investors with more detailed property data. Already, he said, there are markets where "you can buy a home in California … for well below its replacement costs."
Tom Glassanos, president and CEO for SmartZip, said technology is shedding new light on the field of real estate investment.
"Investing in real estate feels to me a little bit like buying stock 25 years ago. It used to be it was a big mystery. There wasn’t a lot of information. It wasn’t particularly transparent," he said.
He noted that pent-up demand and large inventories in some markets make it a ripe time for investment, though the "fear factor is way up" because of economic uncertainty.
"Our goal is to make real estate investing as prevalent and easy as buying a stock," he said.
While the site is free upon launching, there are plans to charge for subscriptions and for leads generated by the site.
Sean O’Toole, founder and CEO for ForeclosureRadar.com, said, "I’ve been surprised by the recent number of Krunching and eRealInvestor knockoffs.
He said that it’s good for real estate sites to incorporate online features for investors, such as searches by cap rate, noting that his own site has added investor-focused tools in addition to its foreclosure-related property data that is the centerpiece of the site.
"Clearly, Realtors would do well to think more about the needs of investors. They should look closely at these sites for inspiration on how to improve their own offerings," he said.
But as Realtors and others learn to better cater to investors, "I think the window of opportunity will close for these (new sites)," he added.
Tim Mueller, a customer of NorthPoint’s real estate investment services prior to the launch of SmartZip, said the new site should be useful for both novice and more advanced investors.
Mueller said he has an investment portfolio of 12 rental homes scattered across the country, and the site could be useful to gauge declines or improvements in the value of the property and "figure out the next step," whether it’s a good time to exit or buy another property.
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