Using AI to Invest in Land? How Terrascope Is Making Investing Easier and Smarter

What if we told you that investing in land is about to get a lot easier and smarter? Listen to this episode to learn how Terrascope is making the process of investing in land easier for everyone! We’re not talking about buying and selling but instead using AI to invest in land.

Terrascope is the first AI real estate agent for finding and browsing rural properties online. Terrascope uses a cutting-edge machine learning algorithm and intelligent design to provide a brand-new online property search experience by reimagining the rural real estate search process. Our search algorithm learns each user’s unique preferences to recommend the best listings like an expert real estate agent.

Learn more about us at: www.terrascope.io

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Using AI To Invest In Land? How Terrascope Is Making Investing Easier And Smarter With Kehan Zhou

Lots to unpack here for sure. The land is a weird asset to appreciate. I'm using it as a pun here because it's difficult to understand that generically in real estate, if you are investing in urban areas, often there's a piece of land and a lot of demand to build things. It's easy to predict future cashflows, assuming the zoning works out or in typical real estate, you buy a home and any type of commercial real estate produces income.

The land is a different type of asset and animal. The industry is different. Land doesn't produce income. It's very difficult to get typical loans on land from banks. Maintaining the land, and the fire hazards that come with it. The construction nightmare has given the lack of access. How would you contrast land as an investment asset versus urban assets?

It's a very different class. We can look at the last financial prices in 2008 as a way to understand how land is different from other parts of real estate. Everybody knows that because of the mortgage crisis, the housing market tanked in 2008. Some properties were sold for $0.70 on the dollar, 40% down. It's crazy. We all heard horror stories. What people don't know is that even during the worst time, the land market only dropped by less than 5%.

That's interesting because the land market is very secure. It's more similar to a safe-haven commodity like gold than the real estate market in the way that it has a lot more security to it. It doesn't appreciate the way that the urban market can blow up like what's happening in your city or San Francisco a couple of years back but at the same time, it's good at preserving the value. That's the first unique character of this asset class.

The second one is appreciating and understanding that land is a very difficult task and that has traditionally deterred some older people, either investors or people who want to move to the rural space to look into the market. It's more opaque and because you can drive to rural properties very easily, it has a higher area of entry. When you look at particular properties, there are also many more variables to consider than urban properties because you have to think about ease then, water quality, internet, and road access. There are so many more variables.

We recognize that. What we are doing at Terrascope is that there are two things we are doing to make the process easier. One is that we are using AI to learn your preferences intelligently and everything happens in real-time. We are educating you about a process without overwhelming you with 50 different filters. Experimenting with those filters is very challenging.

That's the first reason we chose to use AI to help reduce the overwhelm. The second thing we are doing at Terrascope is that we are supplying a huge amount of rural areas with specific variables like water quality, weather, and recreation options to allow the people to understand the properties much better than they could on any other website.

Let's dive into this a bit. I'm a PropTech investor and there's no shortage of companies trying to improve the residential real estate experience in urban areas or any area. When you are dealing with an asset like a home, you've got county tax assessor records and a building you can guess the square feet. Usually, there are records of the square feet in the tax assessor's office.

Land is a safe haven commodity than the real estate market in the way that it has a lot more security to it.

There are a lot of things you can tag and feed into an AI engine. There's so much that can build a type of price index for a home. You've also got the local neighborhood as well and also comps. Land doesn't seem intuitive to build AI around. Often the land owner themselves hasn’t got an up-to-date survey. Data is all over the place. Help me understand how does AI factor into building a better rural real estate search tool?

One thing to clarify here is that we don't only do land. We also do rural properties like a farm with a building on top of it. It's not just vacant land. It's part of our portfolio but we have so many different other properties. To answer the question, how does AI factor into the process, on the search side, what Terrascope does is it mimics the way a real estate agent would interact with a buyer.

When we think about the way real estate agents work is that they are constantly asking their clients what they think about the property. They are taking that feedback and incorporating it to help you pin down the perfect property for you but there's no online equivalent. What AI does in the search process is that we built an AI agent that's able to understand your preferences based on your feedback on each listing. They use that to build a very unique user preface model to help you find your property. As we are showing you more recommendations and giving us more feedback, we are improving that process.

The second part of the AI factory to do this is something that’s still in working progress. Sometimes, the land owners are not up-to-date on the variables. That is very visible in the listings that we get directly from MLS. Some other properties are on the waterfront or not correctly tagged as the waterfront. Some of the properties that are tagged as waterfront are miles away from the nearest water body.

What we do at Terrascope is that we use the AI engine to recreate all these variables on our backend. We are doing geo-analysis on each listing to figure out, “How close is it to the water? What are the recreation options? How close is it to the airport? What are the comparable listings around? What is the average price should be?” We contact all this analysis to essentially enrich the listing data that we will receive from MLS, which are bearable.

I want to own a bit of a friendly debate here. AI needs volumes of data to be effective. When you give the example of an AI agent replacing the role of a real estate agent, let's be frank here. Real estate agents on one hand help find the right fit for you but ultimately, they are there to convince you. A lot of home selling is convincing. It's an emotional decision, at least on the consumer side.

On the investor side, emotions don't work. It used to be about numbers. How can AI do much when there's a lack of supply and land out there anyway? Isn't it more about convincing the consumer and being persuasive than matchmaking? How would you respond to this issue of lack of data and AI being effective?

Lack of data is a great question. Recommendation algorithms down you are very prevalent in the retail and social media space. The reason it hasn't been made into real estate is precisely because of this. Real estate data goes stale very quickly. The listing one is off the market and no longer there. Part of the training that you do with that data also becomes less effective.

We have algorithms that extrapolate these data temporarily to allow us to still use the information we get from our users and there are user preferences. The second question you asked is interesting as well. When you said the lack of supply, we experienced that firsthand. Sometimes, there is no right property within their search criteria.

This is where AI plays a huge part as well. If you are using a filter-based search like Zillow, when there's no property, you can look at an empty result. It's so binary but the AI plays in that well because our search method is not a hardcore filter. It’s more about understanding what you care about. It’s because we are able to do that, so after the optimal listing rundown, we can then be like, “I know that you like waterfront property but this one is not exactly waterfront. It has a small stream going across it. Would you like to see that?” It allows us to go outside of this filter box, be more innovative and then extrapolate more imagery outside of things you normally wouldn't see on a filter-based search.

Give an example of what people want. Waterfront is a big thing. If you take a step back, Bill Gates is the largest owner of farmland in the US and Jeff Bezos makes the list as one of the largest landowners. He's number 25. Why are all these people buying land? What do people look for in buying land? You don't have to answer it from the investor's perspective. I'm more interested in the consumer perspective. What do people want from land?

We have a blog and for that, we interact with a lot of people who made the great leap. We interviewed a girl who moved from her city to Colorado. The story behind is very interesting. There is a huge mental health epidemic that's going around from a consumer perspective. I'm not talking about Bill Gates. I'm talking about everyday users.

A lot of people are very stressed out about what the land provides. It’s super unique in this sense of security and ownership. When you live in a condo, you can say you own that condo but other people share the same piece of land with you. It's very hard to find that sense of security but when you have land that first of all is concrete, you can set up your vegetable garden and then have security.

There are a lot of comforting aspects above owning your home and your share of the Earth that makes people feel very secure. That is the pretty side. The other side we are seeing is this pursuit of a simpler lifestyle. It also ties into mental health. It's hard to look when you are in a city. Even if you don't live afar you are going to see billboards everywhere. There's this information override that's happening.

From our conversation with people who made the leap, they appreciate the fact that there are not a lot of distractions in the rural area. They do gardening or go on hikes. That energizes them in a way that they never felt in the cities. It's a very diverse set of reasons but what drives is this pursuit of safety, comfort and in a way, healing from this very stressful lifestyle people experience.

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About Zain Jaffer

Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780M.

His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30,” “Inc. Magazine’s 35 Under 35,” and the “SF Business Times Tech & Innovation Award.” He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.