AI and The PRS: How Will it Affect You and Your Tenants?

You don’t need us to tell you that AI is everywhere these days. Well, more accurately, talk of AI is everywhere these days.

There are many takes on this from ‘it’s the future of the universe’ to ‘it’s the end of humankind as we know it’ and to be honest it’s too big and too contentious a subject for us to even scratch that aspect of it.

What we can talk about is the effect AI might have on the private rented sector. Already there are companies who claim that their AI-based offerings can do everything from finding tenants to managing your portfolio.

Just how realistic these claims are is what we’re going to look at here. In theory AI might be able to automate a lot of the time-consuming tasks faced by landlords and property investors, but is there any credible proof of that?

As long-established property investment professionals, we understand the demands of the PRS, so let’s have a look at what AI claims to offer and whether or not it can make good on those promises.

Note: No AI was used in the writing of this article!

What is Artificial Intelligence?

We’ve borrowed Wikipedia’sdefinition as they don’t have skin in this game:

“Artificial intelligence (AI) is the capability of computational systems to perform tasks typically associated with human intelligence, such as learning, reasoning, problem-solving, perception, and decision-making.

It is a field of research in computer science that develops and studies methods and software that enable machines to perceive their environment and use learning and intelligence to take actions that maximize their chances of achieving defined goals.”

That is a fairly clear but wide-ranging description, which covers everything from systems which can assess huge amounts of data in order to deliver medical diagnoses, or draw an anime version of your pet.

If you want a better understanding of the scope of AI, read the Wiki article from which that definition is drawn – it’s a vast subject. How can AI, in one form or another, help those who are involved in the property investment market?

AI and property investment

If we start from the premise that AI is a consummate data cruncher, then it should follow that any task which requires wading through large quantities of information is a task that can be profitably automated.

Looking at the offerings which are already appearing and aimed squarely at the PRS and property investment, we are seeing a number of sophisticated search tools which their vendors claim will make sourcing properties easier and faster.

This is because AI can be trained to ‘understand’ what you’re looking for and then assess property listings to find the best matches. So far, so good.

In practice this does require property listings to contain all sorts of information which they might not. For instance, if you have a hankering after a property with a south-facing aspect, AI will need that to be listed in the property description.

If it isn’t, it may disregard a property, or we suppose, if it knows the location and address it may be able to access services such as Google Maps to determine the property’s orientation… Scary stuff.

That degree of intelligence will depend on the tool’s programming and training, however it is not unreasonable to expect search tools using components of AI to become ever more sophisticated and capable.

Some proponents suggest the AI may make checking out potential tenants easier, although they seem to be suggesting the use of increasingly sophisticated search tools. It remains to be seen whether this suggestion is truly valuable.

The other major benefit of AI is the automation of tasks which currently make heavy demands on the time of investors and landlords. A good example here is routine or emergency maintenance.

Street has a product which claims to use AI to alleviate a large percentage of the burden on agents and landlords. Tenants can report issues online and an automated system will assess the problem and prioritise it.

It will also offer troubleshooting tips and regular updates, all without human interaction. This allows tenants to report problems at a time which suits them and to use an online portal, rather than making phone calls.

Such a system can also be set up to offer reminders when routine maintenance is due, and may be able to seamlessly schedule such maintenance without input from a human.

This appears to be the sort of area where automated systems, allied to a degree of AI, stand to benefit all concerned, and theoretically free agents and landlords up for more important duties.

AI and tenants

How might AI help tenants, both in their search for the ideal property but also in their day-to-day life as renters?

In terms of finding a property, AI enabled searches could allow tenants to be very specific about what they want. Location, proximity to their workplace, type of neighbourhood, schools etc.

Once they’ve identified suitable properties, the use of AI-enhanced virtual tours will allow them to see the property in detail without having to physically visit, being able to view properties from the comfort of their phone or laptop.

The addition of AI-powered chatbots will allow them to ask questions about the property and get instant answers, saving them, and the landlord, time.

Once they’re happily ensconced in their new home, AI-driven systems can potentially allow them to ask questions at any time, and get answers.

Tenants often ask questions which have been asked, and answered, many times, but they’re new to them. None of us enjoy wading through lengthy FAQs, so asking a chatbot may well be more efficient for all concerned.

If AI systems can be taught to answer those questions, that will free up agents and landlords to do tasks which require the human touch.

Will tenants accept AI?

The success of AI in dealing with tenants is crucial to achieving the efficiencies promised by vendors. Housing Digitalpublished a piece on this, and their findings are both interesting and useful.

In short, if tenants know that some services are being provided by AI-based systems, they are more likely to accept those services, presumably because they know where they stand. Transparency is key.

The point is also made that engagement and acceptance depends on the individual tenant’s digital literacy. This is probably not an issue with younger tenants, but older residents may struggle with the concept, and online services generally.

Should landlords accept AI?

Artificial Intelligence is potentially a very powerful tool, but it’s also an imperfect one. As a landlord, there are a few areas where we think you would be well advised to make sure that your AI is doing what it should.

Legal

If you’re operating in Scotland, ensure that the AI you’re employing gives the right advice and performs its tasks in a way that is compatible with Scots law as it applies to landlords and investors.

These are international products, and while the provider should ensure that it is properly compliant, if there is a problem, the buck will find you first, regardless of where it eventually stops.

Data accuracy

The old IT trope “garbage in, garbage out” applies to AI just as much as it applies to standalone applications, possibly more so.

You have a duty to ensure that the data your systems run on is accurate, and remains accurate. There is an argument, which has merit, that AI systems should be firewalled from the wider internet where possible to prevent inaccurate data.

AI systems which do make use of publicly available information; producing yield forecasts or rent estimates,  you should ensure that they are optimised for the smaller Scottish market and its less extensive data pool.

Oversight

Finally, and foreshadowing our summary, remember that you have to maintain oversight of your systems, just as you would any other part of your business.

No tool can be switched on and then simply left to its own devices, certainly not one as powerful as AI, and you will have to accept that you will have to dedicate human resources to checking AI output.

An error, no matter how logical it was to the system, could cause you problems or losses which you can well do without.

Advice from the property pros

The potential of AI within the PRS is immense, however a word or two of caution to begin with.

This aspect of AI, is in some respects, a relatively new technology and there are voices warning that the current AI hype is something of a bubble, which will burst as bubbles are wont to do.

That said, companies which develop systems for the PRS incorporating elements of AI are almost certainly worth talking to, as AI excels at relieving hard-pressed workers of data-intensive, time-consuming tasks.

Well designed systems can also function predictively, flagging routine maintenance, alerting landlords to upcoming safety certificate renewals, rent reviews handling viewing enquiries etc.

If you’re a landlord with one property, it’s possible that you may have to decide whether the benefits outweigh the costs, however if you have a portfolio to manage, features like these could be a godsend.

We would also suggest that AI systems shouldn’t be seen as a way to reduce headcount – some very large businesses have done exactly this – Klarna springs to mind, and are furiously back-pedalling after poor results.

Rather see them as a way to allow your current, experienced staff to concentrate on doing the things we humans do better, building relationships, making the more nuanced decisions which ensure that tenants are happy.

In summary…

There is little doubt that we will see a growing relationship between AI and the PRS, the potential is too persuasive to ignore.

It’s important to remember that like so many businesses, the PRS is built on trust and relationships, and AI cannot do that nearly as well as humans can.

No doubt Ross and I could find an AI tool which could find, market and sell investment properties, but would our customers trust it? Would it be able to offer advice tailored to their circumstances?

We believe that the answer is ‘no’, and as an aside, it’s important that any AI system is properly developed and not affected by the vast swathes of nonsense which flood the internet these days if it’s to be accepted and trustworthy.

Artificial intelligence is a tool, not a replacement for experienced professionals, and we think that if it’s used as such, it will prove invaluable to many working within the PRS.

If you’d like some good-old human advice about your investment adventure, please get in touch and set up a meeting, and many thanks for reading!

Written by Chris Wood, MD & Founder of Portolio

Get in touch on 07812 164 842 or email [email protected]