Real estate investors and developers often need to act fast on opportunities. They count on your experience and market knowledge to help determine if they’re acting on the right opportunity and approaching an investment with the right strategy. Two tech startups, Arx and CREtelligent, aim to help brokers, investors and developers speed sound decision-making.
CREtelligent is a platform for assessing risk at every stage of the purchase, ownership and sales cycle. Arx (arx.city) is an early-stage startup that applies sophisticated financial modeling to property data. Both companies were 2022 participants in REACH Commercial, a technology scale-up program operated by Second Century Ventures, the strategic investment arm of the National Association of REALTORS®. We talked with Anthony Romano, CEO of CREtelligent, and Tomas Garcia, co-founder and CEO of Arx, to learn more about their platforms and how real estate pros might benefit from their product offers.
As an executive with companies like CoreLogic and First American Financial, Anthony Romano was steeped in processes to automate residential transactions. He didn’t see any parallel effort in commercial real estate, he says—not until CREtelligent. Romano joined the company as CEO in 2018, and the company launched its Radius platform in 2019. The platform facilitates site selection and lending decisions—and helps owners keep tabs on ongoing market risks.
Romano calls Radius a one-stop shop for due diligence. “We have a suite of early insight data reports around micromarket demographics, property characteristics, environmental risk, property condition risk, carbon footprint and so on that help people identify risk and opportunity, all before they sign a letter of intent.”
During the transaction, users can use Radius to order all the compulsory due diligence services, including appraisals, Phase 1 environmental assessments, ALTA surveys and zoning compliance reports. “And then post transaction, you’re able to manage your entire portfolio at an individual asset level,” Romano says, “any asset class, any property type. We will update on a quarterly cadence the change in risk profile on that property. Any risk factor that somebody would like to monitor, we’ll monitor on an ongoing basis.”
CREtelligent operates in all 50 states. Users pay a monthly subscription fee—or by the service. “So it’s affordable for a one-man shop, but the big firms also have a lot of folks using it,” Romano says.
The company is working on a variety of enhancements, including tools to help users evaluate ROI for different property uses, and is exploring expansion outside the United States.
Tomas Garcia was an investment banking analyst with Goldman Sachs before leaving the company to go back to school. One day, his brother, Hernan, called with a question: “Do you want to do some development?” The answer was yes, and the brothers began to fix and flip homes. To inform their investment decisions, they created the first version of what would become Arx.
“Other developers and agents kept asking how we were finding our investment opportunities so quickly,” says Garcia, who holds a JD-MBA from the University of Chicago. Hernan, an architect, has a degree from the Harvard Graduate School of Design. “That’s when the lightbulb went off, and we said, ‘Maybe there’s more to the technology that we should be focusing on.’ ”
“What we want to do is empower folks to deliver more housing to the market.”
– Tomas Garcia
Unlike tech platforms that aim to make existing processes more efficient, Arx “flips the script,” Garcia says. “We take the massive amount of real estate data that’s currently available and use advanced algorithms to simulate future investment and development scenarios for every residential property in a market.” So instead of identifying potential development opportunities and penciling them out individually, “you are finding the best investment and development opportunities for your specific criteria,” he says. At the International Builders’ Show in February, the company was runner-up in the Most Innovative Start-up competition.
The platform is currently operating in only two cities, Los Angeles and Seattle, and is focused on teardown projects. Garcia plans to incorporate additional strategies, including build to rent, renovation for sale or rent, and accessory dwelling units. “We’re getting a lot of questions on ADUs,” Garcia says. In both Los Angeles and Seattle, ADU permits skyrocketed after legislators eliminated barriers to ADU development.
The system is built for expansion to other markets. “My brother and I are mission-driven from a social perspective,” Garcia says. “This country is facing a housing crisis. There aren’t enough transactions getting done. What we want to do is empower folks to deliver more housing to the market.” Arx, he says, is “the democratization of access to highly advanced financial and technology tools. If you can give that to as many people as possible, that’s how you bring more transactions to the market.”