Property investing, simplified — that’s the goal of Phillip and Jacob Elbert, the founders of Investiocity.com. The father-and-son duo have a lot to say about real estate investment — they come from a family of Realtors and say they have created the most sophisticated proprietary investment algorithm on the market that they call the “Zillow of investment properties.”
Investiocity’s algorithm connects buyers to potential investment properties by searching Multiple Listing Services and weeding out listings that don’t meet investment criteria. The algorithm then scores each property based on factors like yield potential and needed renovations.
The Elberts say site traffic is picking up — analytics show that the site has experienced a 225% uptick in page views and a 26,000% uptick in the amount of time spent on each listing — and they plan to disrupt the market even further by expanding Investiocity nationwide.
Investiocity began as a daily newsletter, founded on one simple principle: What if there was a way to make investment homes easy to search for?
“About seven years back, my sister was trying to buy an investment property,” Phillip said, explaining that the process was lengthy and burdensome. “We had kind of come up with the meat and potatoes of the algorithm back then. Just over a year ago we decided, let’s take this math and run it through some properties.”
The site took about seven months to build, and the investment property listing database today features an artificial intelligence-powered algorithm created by Phillip, a programmer by trade.
“Originally, we had difficulty translating pen and paper to something on a large scale,” Phillip admitted. “Now, the algorithms train themselves.”
Phillip’s son and business partner, Jacob, is a Realtor in the Houston area. He says he’s experienced the time-consuming task of searching for investment properties with clients firsthand.
“Realtors don’t love to work with first-time homebuyers — it’s a time sink,” Jacob said. “We offer a launching point. Go in, see what you’re looking for and save everybody time and money. There’s nothing worse than a Realtor doing weeks of work for absolutely nothing, and that’s way too common.”
But what exactly sets Investiocity apart from other Multiple Listing Services like Zillow or Redfin?
The founders say there are several key features, starting with property rankings. Each property on the site is assigned a ranking from one to 10. This ranking says how much work a property is going to need, as well as proprietary things in Investiocity’s algorithm like estimated growth rental yield, property comparisons, nearby property averages and neighborhood snapshots.
“The MLSs are clunky,” Jacob said. “We can give buyers immediate and concise answers on their monthly ROI, and it’s now automated so everyone can use what we do.”
Investiocity also shows users how the properties are ranked — although the algorithm behind this feature is secret. “If you look at any listing, it’s clear why it’s ranked the way it is,” Phillip said.
“Most sites are the same. It’s a map and a list of properties,” Jacob said, “Which has its purpose, but multiple big real estate websites are doing that, and you can’t really tell the difference if you cover up the logo. We’re only pulling the best investment properties.”
More expensive homes that need minimal remodeling might be a better deal for investors looking for a quick return on investment, Jacob explained, while higher-ranked properties that cost less could be the right fit for first-time investors.
“All the other real estate sites show exactly the same stuff. When you’re looking for a primary home, you’re looking with your heart, not your head. It’s different when you’re looking for an investment home,” said Phillip. “When we rank properties from 10 down to 1, the ability to be biased is what sets us apart. Zillow has to be unbiased. They have to include every property. We don’t.”
Unlike other MLS services, Investiocity doesn’t connect potential buyers with in-house Realtors.
“We want it to be very unbiased in that sense,” Phillip said. “We don’t want to push any work toward any Realtor in particular. It feels scummy.”
Investiocity’s systems scan every MLS automatically — any new listing will be picked up and ranked, consequently strengthening the rankings of existing properties on the site. Rankings also update as listings update — price changes and other factors will influence a property’s ranking.
Investiocity has also expanded recently with two new features: a marketplace comment section where service providers, vendors, Realtors and investors can provide insight on properties — for example, upgrades or remodels a property may need — and there’s a city map comparing similar properties in the area.
“When you think about generational wealth, a lot of it lies in real estate investment, but people don’t know where to start,” Phillip said. “The map helps people who understand where they want to buy, but not what.”
The site still features a daily newsletter, similar to the one it was founded on. The newsletter includes the top five properties ranked in the last 24 hours and also includes a random sampling of properties ranked highly but on the market for more than 90 days.
“Those are properties it might be easier to get a cash offer on,” Phillip said.
Investiocity operates in Houston and Austin. The Elberts are looking to expand into four new cities by the end of the year, eyeing Dallas and San Antonio as well as markets in Colorado and New Mexico.
“We want to give people the ability to start property investing,” Jacob said. “Most people don’t want to call the realtor and say ‘Hey, look, I’m curious about investing.’ This helps people dip their toes in the water.”
One of the largest roadblocks to expansion has been financing — the father and son say they “bootstrapped” the company themselves with their own funds. They say their service will always be free.
“We will never charge end users,” Phillip said. “So it’s a matter of trying to figure out how to pay for it.”
The founders say their site is a valuable resource to Realtors, both as a search tool and as a source of data. According to Phillip, Realtors who visit the site give themselves a huge head start — they won’t have to sort through regular properties that don’t meet their clients’ criteria.
“If they’re looking for something for their client, they can find them a really good deal and then come out as the hero,” Jacob said. “I can show clients properties that might be out of their budget on the front end, but will offer them a lot more monthly income as an investment property, and I can show them the data to back it up.”
“Our data also helps Realtors sound really professional. We arm them with knowledge,” he said. “If I can explain that a property has an amazing gross rental yield, all of the sudden my client thinks, ‘This kid knows what he’s talking about.’ They’re ecstatic and I’m ecstatic.”
“At the end of the day, we want to educate users and save Realtors time. It doesn’t have to be a search for a needle in a haystack,” Phillip said. “It’s a brutal, hard market, and anything we can do to save Realtors time and streamline the process is a win for everybody.”