Does anyone ever find that real estate investing is overly simplistic, a bit elementary. Slap a 3% market/expense/rent growth rate, pull a sometimes arbitrary list of lease and sale comps, +50-75 bps on exit cap (or -50-75 bps depending on fund strategy), claim a YoC of x% on a capex project based on the resulting guestimated rent increase, etc.... You could probably go on for days with some of these more arbitrary assumptions.
It seems like there should be a better way, and the emotional pull of an interesting/fun property, or bonus compensation based on acquisition volume seems it would muddy the waters, making it difficult to hit what are sometime excessively optimistic goals.
At what point does the industry change, adapt to the world of data and advanced analytics that we live in, implementing predictive analytics, modern portfolio theory, machine learning for data analysis? Are there any firms currently taking an abnormally research weighted approach to their strategy? It seems like there should be a better way about this, but none (at least publicly) are touting any advanced research driven strategies.
If any of you know of firms doing this, or experienced strategies involving this, would love to hear about them.
I think this depends entirely on what specific discipline within real estate you are talking about. For acquisition of an existing operating property, sure...there is enough data available to pinpoint where certain line items will trend in the future.
Not really the case for development. There are so many hundreds of changing variables in a development project that getting into this level of granularity is a total circle jerk that is a waste of time. Provided you are in the ballpark on your cost and income/expense assumptions, that should give you a decent barometer for whether a project will be successful...beyond that, hardcore data analytics isn't going to tell you how fast your project will get entitled, what contractors will bid on your job based on how full their pipeline is, etc.