Security Properties, a real estate investment partner in the Pacific Northwest, announced the launch of FirstPass, a proprietary underwriting application powered by artificial intelligence and developed entirely in-house. Trained on decades of the firm’s own underwriting and operating data, FirstPass compresses the initial financial analysis of a multifamily acquisition from four to five hours of analyst work to less than five minutes. The platform has been in active use across the firm’s acquisition pipeline for several months, including transactions currently under evaluation.
Security Properties, headquartered in Seattle, has acquired or developed more than 111,000 residential units across the country over more than five decades. The firm’s new AI underwriting platform, FirstPass, is now used across its acquisitions pipeline to screen multifamily investment opportunities.
FirstPass takes the critical operating statements received during due diligence, including rent rolls and financial statements, and uses a machine learning algorithm to classify the data and enter it directly into the Security Properties underwriting model. The application pulls current U.S. Treasury rates and layers in deal-specific parameters such as transaction date, financing structure, location, rehab velocity and rent growth assumptions. It then generates a forward-looking view of operating performance across a variety of scenarios. Because the process is nearly instant, the team runs FirstPass continuously throughout underwriting and due diligence, updating assumptions as new information surfaces to sharpen the accuracy of each outcome.
The goal of FirstPass is not only to increase efficiency from a workforce perspective, but to dramatically increase the firm’s deal sourcing velocity. A first read on an offering memorandum that once consumed most of an analyst’s day can now happen before the firm commits any meaningful resources, allowing Security Properties to evaluate opportunities across more markets at a higher frequency and pursue only the strongest.
“FirstPass changes the math on how many opportunities we can seriously evaluate,” said Mark Bates, chief investment officer at Security Properties. “We can now run a rigorous first analysis on a deal the moment an offering memorandum hits our desk, before we ever enter due diligence. That means we turn over far more stones to find diamonds. We cast a wider net, and we only pursue the very best opportunities for our investors.”
Rather than licensing a third-party product, the firm built FirstPass on its own operational data, gathered across 57 years of investing through every market cycle, and every output is reviewed by its team of analysts and acquisitions professionals before any investment decision is made.
“The quality of the output is a direct result of the quality of the input,” said Éamon Finneran, senior director of operations and technology at Security Properties, who led the development of FirstPass. “We are feeding the model clean, actual operational data from our own portfolio history, not scraped market averages. And the machine never has the last word. Our analysts and acquisitions team review every result, so what you get is the efficiency of AI paired with the subject matter expertise of a trained human eye. That blend is where the real advantage lives.”
