Making sound geographical and renovation investments is a key to real estate profitability. While many investors rely on past experience and anecdotal evidence to determine how to deliver the highest returns, this lacks quantitative reasoning.
A Chicago-based platform called Enodo Score plans to bring analytical evaluation to the equation.
“We apply science to help real estate professionals make data-driven decisions,” said Marc Rutzen, co-founder and CTO of Enodo Score. “We provide the opportunity to quantify, in real dollar terms, what an improvement is going to do to raise rent and occupancy. From an investment perspective, this is something that hasn’t been available before.”
Value Add Tool / Enodo Score
Essentially, Enodo takes much of the guesswork out of ROI-driven decisions, such as modernizing a home to cast a wider market net and allowing investors to reap the long-term financial rewards.
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“Instead of saying ‘Tenants seem to prefer granite countertops, so we should install them,’ property owners can say, ‘Tenants will pay x more for units with granite countertops, so we should install them,’” he said.
Rutzen started in real estate development after graduating from Columbia University with a masters degree in the field back in 2007. He worked in the industry for four years and discovered how inefficient operations were, he says, including the extended deal closing processes. He met the founders of Enodo Score after pitching a mobile app in January of last year and was brought onto the team shortly after.
Data-driven renovation investments
Enodo Score aggregates data across the U.S. on nearly 800,000 multifamily properties. The company collects records on rent, occupancy, amenities, square footage and unit mix, to name a few.
Search Tool / Enodo Score
Property data is combined with demographic and economic figures pulled from the U.S. Census and location hotspots based on transit, retail and walkability. The information is compiled into a predictive algorithm that combs through markets and determines what factors drive the highest returns, including different renovation investments.
Users can add a new development to markets across the country and predict performance based on interior characteristics and amenities. Existing developments can be moved around with a drag-and-drop tool to see how they would play in a different market.
Drag and Drop Tool / Enodo Score
“What we’ve done is hyper-localize the analysis, so we’re taking into account the driver of values in a particular area – and they are different in every area,” Rutzen explains. “Our approach is to build a different equation for every market and let you feed information, then spit out the output to make better investment decisions.”
Quantitative data for property mangers
The application of such data goes beyond multifamily investments and renovations, but to marketing as well.
“We’re looking at this platform as something that can help you optimize your marketing materials as a property manager,” Rutzen said. “If you know balconies bring a higher rent premium than a pool, which amenity are you going to list first when you craft your marketing materials?”
Enodo Score sheds light on how to attract renters, from the initial stages of choosing location and making the most cost-effective upgrades, down to developing the right terminology to bring more eyes to your listing.
At the moment, Enodo Score is beta testing among a closed group of 10 to 15 testers. This initial round will help the team refine the platform enough to begin the open beta for approximately 50 testers to ensure all equations are accurate, the interface is smooth and the platform understandable.
Rutzen says the company plans to release the paid product around Christmas time, but Enodo Score is determined to keep improving even after the release.
“We’re still looking for beta testers and excited to get this out to the public,” he said.
