How Technology Can Ease Investor Fears During Economic Uncertainty

As fears of a recession trickle throughout the economy, investors are increasingly worried about their commercial real estate portfolios.

In a Deloitte survey, 48% of CEOs said they expect revenues to decrease next year. Over the last eight months, interest rate hikes and record-high inflation have negatively impacted what began as a booming market at the start of the year, leaving investors bracing for what may come next.

In response, companies like AppFolio Investment Management have designed tools to improve communication with investors while making the investment process transparent.

“CRE investors are concerned about the future value of the money they’ve put into private equity funds or joint ventures,” said Michael Sebastian, industry principal at AppFolio Investment Management. “Unlike the stock market, their money is locked up in assets. This leaves investment managers with the need to track their clients’ money efficiently.”

AppFolio Investment Management is a commercial real estate software-as-a-service company that offers investment managers a way to simplify business operations and maximize returns for their clients. With AppFolio’s investment management software, investors are provided with real-time analytics in one easily accessible portal.

Due to a combination of supply chain delays, inflation and hefty interest rate increases, CRE investment is expected to drop globally by 8% from last year. In this environment, Sebastian warns investors that hesitancy can lead to inaction, resulting in missed opportunities.

“There's a lot of money sitting on the sidelines right now,” he said. “Many acquisitions are stalled at the moment and distressed assets will be coming up, though we can’t predict the exact timeline. To be prepared, companies should take the next three months to implement software so that they’re ready to fundraise faster and get their investors ready to use the portal when the market moves.”

The importance of using technology to enable clear communication with investors cannot be overstated, Sebastian said. For companies to achieve candid communication with their investors, they must think in terms of simplicity and mobility.

Sebastian said that oftentimes, investment platforms can be difficult to implement into business operations because it takes an in-house IT expert or department, which can be very costly. Although there are several other technology vendors in this space, many are based on old technology that’s tough to use, he said.

AppFolio decided to do the opposite and design a system that is intuitive and simple for all users. Not only does AppFolio’s method help companies cut costs and save time, but it also provides greater convenience when training new hires, Sebastian said.

“There's no better time to get a system that streamlines your investor communications, manages assets efficiently and gets distributions out,” Sebastian said. “We’re in a market where timing is everything, so having a platform that your investors trust is essential.”

Mobility is another key component to transparent communication in times of economic turbulence. With the majority of the workforce saying that their job can be done remotely, it’s imperative to have software that allows for collaboration and visibility without hassle. 

“If you're out of the office and need to pull up an investor's record, you can do it from your laptop or phone,” he said. “Investors can also pull up their portal if they’re on-the-go. We like to call this having that network effect — where you can show off to your friends at a cocktail or holiday party how well your investments are doing right from your app, which can be a very effective way to increase your investor base through viral word of mouth.”

Sebastian noted that investment managers’ needs evolve quickly during complex economic times like these. Managers should take advantage of more modern tools available today like Appfolio Investment Management to automate more of their tasks and prepare for the changes coming in the market.

“If you have a system that's really simple to use, then people will use it effectively,” he said. “What we find is that you can grow your company with our platform, take on more investments, but not add as much headcount reducing your overall cost, ultimately growing your company and increasing revenue.”

This article was produced in collaboration between AppFolio and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.