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PropTech: The Future of Real Estate

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Trulia Founder & NFX (www.nfx.com) Managing Partner Pete Flint uncovers what's really happening in PropTech and why you should care (hint: it will be a massive opportunity).

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PropTech: The Future of Real Estate

  1. 1. PropTech: The Future of Real Estate By Pete Flint, Managing Partner, NFX & Founder, Trulia
  2. 2. 2 Market Context NFX 2
  3. 3. 3NFX 3 RE:THE LARGESTASSET CLASSIN THE US $31.8 trillion Total value of residential real estate in the US $80 billion Annual US residential real estate brokerage commissions $485 billion Annual residential US rental payments $15 trillion Estimated value of US commercial real estate Source: Zillow, NAR, Savills, Morgan Stanley, Real Trends
  4. 4. INSTITUTIONAL $ ENABLING NEW MODELS NFX 4 Large increase of institutional real estate capital since 2008 has enabled innovative models. 2009 2017 $800BN $400BN Source: PREQIN
  5. 5. 5NFX 5 HISTORICAL SUCCESSOF PROPTECH ~$8B Mkt Cap Launched 2006 >$2B Valuation Launched 2013 $3.5B Acquisition Launched 2005 >$4B Valuation Launched 2012 $1.5B Mkt Cap Launched 2004 ~$1B Mkt Cap Launched 2007
  6. 6. 6 Investment Focus 1: Alternative Consumer Transaction Platforms NFX 6
  7. 7. CONSUMER CONTROL ENABLES STARTUPS NFX 7 Source: 2017 NAR Home Buyers Survey 8% 11% 15% 24% 24% 29% 32% 36% 37% 40% 42% 43% 43% 44% 51% 51% 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 % Buyers That Found The Home They Purchased Online As transactions are initiated online, new consumer centric transactional platforms emerge ‘05-’15:InformationRevolution ’15:TransactionRevolution
  8. 8. CONSUMER EXPERIENCE IS TERRIBLE NFX 8 commission + titlecosts + originationfees ≈ Frustration with process: Enormous costs to transaction: $20,000 4.3 months to buy 2.8 months to sell Source: Zillow, NAR, Real Trends
  9. 9. Home SellingHome Buying EXAMPLE ALT TRANSACTION COMPANIES NFX Confidential 9 NFXOctober2017
  10. 10. 10 InvestmentFocus 2: Alt. Living NFX Confidential 10
  11. 11. CONSUMER HABITS HAVE CHANGED NFX Confidential 11 Median age at first marriage Source:US Census
  12. 12. CONSUMER HABITS HAVE CHANGED NFX Confidential 12 Number of household members Source: Zillow 2015 First Time Home Buyer Survey 1975 2.6 Medianyears renting 2015 6 1975 3 2015 2
  13. 13. HOUSING STOCK IS STATIC & AGING NFX Confidential 13 Median Age of Owner- Occupied Housing Source:2005-2016AmericanCommunitySurveyEstimates Age (years)
  14. 14. Short Term RentalCo-Living EXAMPLES OF ALT. LIVING STARTUPS NFX Confidential 14
  15. 15. 15 Investment Focus 3: Construction, Management & Maintenance NFX Confidential 15
  16. 16. 16NFX Confidential 16 MANAGEMENT & MAINTENANCE IS ENORMOUS $336 billion HomeDepot+ Lowe’s MktCap $340 billion Annual spendon homeimprovement $251 billion HVAC market2023 >$1 trillion Annual USconstructionspend Source: Harvard2018 Study, USCensus, Markets &Markets
  17. 17. 17NFX Confidential 17 Additional Opportunities
  18. 18. ADDITIONAL OPPORTUNITIES BEING EXPLORED NFX Confidential 18 Internationalmarkets – Exportingconceptstofitlocal markets Commercialreal estate – Enormousmarket,complex industrydynamics Blockchain– Opportunitiestochangehowthisasset classis valuedandtransferred. Transportation – Automationandtransportationnetworkschangeourphysicalspace. 1 4 3 2

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