Finest Expert: Great idea, but can it change industry practice?

I love coming across sites I haven’t yet read about.  It’s the discovery of the new and unknown. 

FinestExpert.comis a new Alpha web site I came across when doing some apartment unit value research.  The FinestExpert.com ad is at the top of many Ziply pages.  Here is the FinestExpert.com introductory description:  

FinestExpert.com gathers and analyzes over 4-million active properties nationwide to provide the most up-to-date statistics on rents, values, expenses, and projected returns.

By pre-analyzing these properties every day and performing all the necessary financial calculations, FinestExpert.com shows you at a glance those properties that truly pencil out, and most closely meet your investment goals.

FE-Score makes selecting the best properties easier than ever.
This proprietary, first-of-its-kind scoring system boils all the financial data down to a single number to rate the investment potential of every property. You know instantly how each property compares to the others, without pulling your hair out. What a concept.

What a great idea!  However, I fear their job is going to be harder than it looks. 

First, from my experience, good real estate investing is about more than just the numbers of a real estate investment or rental property.  If it were just about the numbers, there would be a lot less risk in real estate investing because it would all boil down to a finite number. 

But, good investing is about mining the hidden value of a property - the value the numbers of a property don’t and won’t show you because they do not yet exist.  It’s about knowing neighborhoods.  It’s about vision - seeing the value others don’t see because it doesn’t yet exist.  And it’s all about local knowledge.  Reading their promotional materials, they don’t seem to get these key aspects of real estate investment. 

To round out their site, they should be finding and connecting to data and information sites that will help and support the site user (the potential investor).  As an investor you need information about the local job market, demographics, local trends, local business, local politics and the fundamental economics of the location. 

That said, building specific numbers are important and the idea of a single number that allows you to compare investments based on that number has value.  But how reliable the underlying assumption numbers are is key.  FinestExpert.com doesn’t say where or how they get their I&E numbers.  Consequently, you can’t determine how reliable they are.  If they can share how they developed their numbers, the savvy real estate investor can determine how to tweak and modify them to match the real estate investors personal investment model. 

Actual income and expense numbers are often held very close by owners.  As an owner, I don’t provide any income and expense numbers to anyone who hasn’t signed a confidentiality agreement.  Some owners won’t provide private financial data to anyone who hasn’t put up a refundable deposit.  I have, in very competitive markets for a trophy property even seen owners require a non-refundable deposit just to get a look at the prized income and expense numbers. 

So, I have to wonder how FinestExpert.com is gathering their financial data numbers.  I suspect they are driven by a formula, rather than the actual I&E numbers of a property.  I mean just the entry of all that unique and specific data for millions of properties would be a time-consuming, tedious and overwhelming task. 

The other large issue I see is from where will they gather the for sale and listing information?  While some investment property is listed on a local MLS, many buildings are listed on individual company web sites.  Some are on Loopnet.com or other investment sites.  Some are not listed anywhere. 

Historically commercial and investment brokers have not worked together as well as the residential brokers have worked together through the MLS model.  The result has been a disconnected and closed group model for investment and commercial brokerage.  Much of the power for investment and commercial brokerage has been in the hands of a small number of companies who understood the value of information and tended to not share it unless required to do so by some outside force.  How well FinestExpert.com mines their listing data from these dispirit and sometimes uncooperative sources will be the real value of the site. 

If they can gather information that is currently spattered across various non-intersecting data sources into a single convenient location, they will have solved the long standing problem commercial property has faced:  the lack of a single or reasonably limited number of locations or resources for listing information and data. 

I spent some time wandering their site.  It’s easy enough to get around and I didn’t come accross any dead ends.  Property listings are mapped, which is the current trend for listing presentations.  The numerical financial data is well presented.  I didn’t get a feel for how easily the presented data could be exported or manipulated for a personalized presentation or a manipulation of the financial data in a third party financial program such as Excel. 

However, their listing data seems limited at this point (remember they are in Alpha).  There were no listings for apartment buildings in San Francisco, although there are a number of buildings currently for sale.  “Multi-family” buildings didn’t seem to be multi-family at all, as they all came up as single units.  But that’s about growth, not a criticism of the service.  As time passes, their database should grow, increasing the amount of information available and the value of the service to the end-user investor. 

For the moment, if you are looking to purchase condos or single family homes as rentals, this site is worth trying out and playing around with.  You may just learn something.  However if you are looking to purchase property with multiple units, you will probably have to wait for the Beta release before you can test the service in a meaningful way. 

Take a look and let us know what you think.  We’re interested in hearing your thoughts about FinestExpert.com.

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Merrie Turner Lightner is a full time property owner and manager with 25 years of experience in the rental housing industry.  She serves as vice president and CFO of Lightner Property Group.  Ms. Lightner is an attorney and routinely provides expert witness and consulting services in areas such as standard of care, wrongful death, personal injury, mold, lead paint and habitability in residential landlord-tenant cases. 

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