Ramp Representative (1:25)

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Jerry (1:38)

Wow. That is exactly what my company needs.

Co-Host (1:42)

Yes. And exactly what I also need. Go to sleep, Jerry.

Ramp Representative (1:47)

Upgrade to Ramp for free today and get 250@ramp.com. that's ramp.com r a m p.com cards.

Stripe Representative (1:55)

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Justin (1:58)

Welcome back. The Science of Flipping Family. This episode is all about AI. I just recently had the blessing and fortunate opportunity to be speaking in front of a large group of real estate investors. From hedge fund managers to syndicators to small fix and flippers. And the entire subject matter was about AI how is AI going to affect our precious real estate vertical? And the cool part about this event is there was three other speakers, so to speak. We had a panel that we really had a lot of time to answer different ways that we believe AI can really impact us. And so I want to give you guys a little insight on what went down on this panel and how we were able to show AI being so powerful in the real estate Space. Now, I know AI is kind of that key word right now, and it's the buzzword and everyone's talking about AI and what, you know, platforms can do. What? And trust me there, everyone knows the major platforms. I get that. We didn't get too far into the major platforms like ChatGPT. Now, we did talk about prompt AI, right, where you're prompting certain AI technology to do certain things. We talked about it. But really where we took the conversation was in a much larger scope, a much larger frame of the impact AI is going to have on real estate as a whole. One of the first questions the moderator asked us as the panel was do we believe that AI is going to basically take over the space for real estate? Which depending upon where you're at in your journey of real estate, that could be something you're thinking about. Maybe it's not, but it is something that some of the big players, the hedge fund managers, the very, very large syndicators, some of the banks, they had intrigue on that question. And the reason being is because if, if some of these larger players, the hedge funds, the banks, the syndicators, insurance companies had a really big intrigue on this question. Property management had a really big interest on this question because some of these larger players, and I'm talking about National Property Management, not Mom and Pop, I'm talking about national because they still rely so heavily on human capital. Okay. And so I actually was the first one that spoke up about this and I kind of went off and the reason why I went off is because I believe, and it's just an opinion, I believe there will be no way to fully automate the real estate space. Now, do I firmly believe AI is come and is going to play Impact and impact the real estate place? Yes. It's just too big, too smart, moving too fast. It is going to have a massive impact. I'm not ignorant to that. But still my belief within the space is there's going to always have to be some human component inside each transaction. Right. We were talking about title companies was another one that had a massive interest in understanding. Is AI just going to take it over? And let me give you my perspective on this one thing. I run a company called Rocketly AI. Rocketly AI. I built the company with my co founder and you guys should check it out. If you are a small operator in the real estate space. I'm plugging it now. Rocketly AI. It will help you massively if you're doing any level of marketing spend to your company. Okay? Now so I'm very familiar with AI, the impact of AI and where it can go. But I don't believe for the operators, and I'm talking about the people operating the insurance companies, the title companies, the real estate, you know, mom and pop fix and Flippers and even the hedge fund companies, the people actually operating it, I don't believe they'll ever be able to be fully removed. The reason being there's a lot of nuance within real estate. I don't believe there'll ever be a one size fits all analysis AI component. This question led in directly. You know, the, the question regarding is AI going to take over the real estate? Real estate space led indirectly to, you know, is there a program or an AI that can just make analyzing properties faster? Inaccurate. That one task alone, in my humble opinion, and listen, I'm not the smartest person out there. I'm not the, the sharpest tool in the shed. I just have a lot of experience in real estate. I don't believe based around the nuance of real estate, right? A storage facility versus apartment, a four unit versus a five unit, a single family asset versus a duplex, a 400 door complex versus a 1200 door complex. There's so much nuance and there's so many people on the money side, right? The people who invest, the companies that invest, the hedge funds that invest, that have different buy boxes, they have nuanced criteria that will fit their buy box. I just do not believe that there will be any type of technology that is a one size fits all. Do I believe there could be 42 versions that might be implemented? That might be a possibility. But then my point to this entire scope of questions was you have to inspect what you expect. I'll say that again, you have to inspect what you expect. So if you expect this technology to be a hundred percent accurate 100% of the time, the only way to know that is if you inspect it manually with people that it hit the target on a bullseye. Right? And so it was a big talking point, just about the, the component of analysis that I just really firmly believe there could be 42 or 4,000 different versions of some automated bot that is going to calculate the returns and do all this kind of stuff and some of it is already out there. Do I believe it's going to take over? No. Right. I just. Anyone that is going to be investing in the asset, anyone that's going to be putting the money out, and that includes hedge funds, small mom and pops, et cetera, they're not going to 100% rely on technology because technology itself can fail. Right? That is, it's foolish to think that just because technology is 100% accurate and so you need to inspect what you expect all the time and that goes through all your business, et cetera. Now the other component that I said really heavily makes me pretty firmly believe that AI cannot take over the real estate space is the human to human component on negotiations. Let's just make the argument that there's enough AI out there that we do get to a place where all analysis is done via AI. Okay, well now what? So you just send over an offer via technology. Okay, and then who's receiving that offer? Is it technology? Well then who owns the asset? Probably people, probably a company, probably a hedge fund. You think they're going to allow technology to say yes or no to whatever offer that comes through? And so again the, the, the hand to hand negotiation component, and I believe this to be in all spaces, I believe always should be a person, I believe it should always remain in our hands because I believe negotiations and sales in general, there needs to be empathy, there needs to be emotion, there needs to be some stuff that just a black and white technology bought. Although sure, you can make an argument that all these voice AIs are just as good. I just don't believe that for a second. They're fine for what they are, but they aren't ever going to replace us. Right? That's my belief. This went into the conversation about title companies. Title companies. You know, there's always been conversation around even not Bitcoin, but chalk. Blockchain, Blockchain replacing title companies, replacing escrow officers. And all this stuff can now happen on the blockchain. So that's been happening for years now we have AI technology. Now everyone's leaning into this idea that, you know, okay, well now we can remove escrow agents and title agents and all these different things. I gotta be honest with you guys, I don't see that happening at all. Now again, I'm not saying that there aren't going to be components of AI or even blockchain coming into the real estate space and playing a part. But this crowd in our room filled up fast. If you guys have ever been at these conferences, this was the IMN conference, not the INMAN, but the IMN. There are some rooms that have eight people and then some rooms who have, you know, 100 people. Our room had 100 people. Everyone wanted to hear about AI. And I just again believe that the nuance of title insurance coverages going and finding, you know, any liens. There's a lot of technology that can do this stuff, but is largely dependent upon human capital, human resources to get the job done in over the finish line. If you've ever done deals, you know, that know, at the closing table, it can be frustrating. Buyers don't show up, sellers don't show up, all sorts of different things, right? It's not just spitting out, you know, title insurance in a hud. Right. There's actual, this is why many states, fiduciary states, there's closing lawyers, like quite literal lawyers, right. And so I just fully dismissed this idea of title because I just think again, just like anything, there's not going to be a robot transacting the deal. Just like sales, right? Just like negotiation. There's just not going to be. And, and by the way, I sit here today, the year's 2025, right? Like, okay, fine, in the year 2090, maybe, maybe this episode will be totally obsolete. But the reality is, I believe in my lifetime, the lifetime I'm going to be doing real estate. I don't believe it can fully take it over. And quite honestly, if it does, I think we have much bigger problems and I think our society is going to change so drastically. And I'm not trying to get my opinion too far on this episode. But I mean, I just think society in general would be in a way different place if all of a sudden AI and technology and blockchain just fully take over all this stuff. As many of you know, I'm constantly on the move, juggling multiple businesses, traveling and ensuring I get my morning workouts in. Staying fresh isn't just a preference, it's a necessity. But let's face it, after back to back meetings, juggling two kids at home and the hustle and bustle of everyday life, body odor can become an issue. But here's the deal. Mando has revolutionized how I stay fresh. This isn't just another deodorant. It's clinically proven to control odor better than a shower of alone with soap. My favorite scent, Bourbon Leather. It's fresh, is subtle and doesn't clash with my clone. 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Commercial Break Host (15:10)

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Jerry (16:39)

Ugh, I can't sleep.

Justin (16:41)

What is it now?

Jerry (16:42)

It's the company. It's chaos.

Justin (16:45)

What's chaos now?

Jerry (16:46)

The numbers, the expenses, the books. What if we get audited?

Co-Host (16:51)

No one's gonna audit you at 3am Go to sleep.

Jerry (16:54)

I can't sleep.

Justin (16:55)

You could if you used ramp.

Jerry (16:59)

Who said that?

Co-Host (17:00)

I don't care because they're right. Go to sleep and sign up for Ramp in the morning. Jerry.

Ramp Representative (17:04)

Ramp is the corporate card that handles all your tedious financial operations, automatically integrates directly with your ERP and gives you complete control over every transaction. Ramp gives you everything you need for bulletproof books and a better night's sleep.

Jerry (17:17)

Wow. That is exactly what my company needs.

Co-Host (17:21)

Yes, and exactly what I also need. Go to sleep. Jerry.

Ramp Representative (17:26)

Upgrade to Ramp for free today and get $250 at ramp.com that's ramp.com r a m p.com cards issued by Sutton bank members.

Stripe Representative (17:35)

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Justin (17:37)

Again, if you just think about the transaction of a single family home, let's remove the hedge funds, let's remove insurance companies, let's remove title companies. Just think of your, your home, your transaction. Do you think you have some feelings, emotions in the idea of selling your home, some pride of home ownership, some frustration of your home, whatever it may be? Do you think that plays into the role of how you would sell your home? And the answer is going to be of course, right? And so it kind of just boils down to that basic concept of think about your own home. When you're thinking about, can AI take this industry over? Is AI we went all the way into property management, right? Is AI fully going to integrate into property management so that there's no human component? How when the two people that either own the home or live in the home are people and there's emotion and there's stuff that goes on, how is AI going to take this over? Right? And I do believe AI can play a part in some of these bigger companies like insurance, right? So that they can underwrite a property a little bit quicker on the location and, you know, stuff of that nature. Is it close to water? Is it not close to water? Are there fire hydrants around? I'm very aware that there is going to be components AI can play within. Insurance, title companies, property management, even building these buy boxes. I'm aware of. There's a component of it. I would dismiss the entire idea that it's going to be fully taken over. Now, I'm not the biggest tech person, I'm not the biggest AI person. There are people listening this right now. You guys are emphatically way further down the road on understanding and learning AI. You may be fully disagreeing with everything I'm saying. You may be thinking AI is coming over and taking over everything. Okay, that's fine. I just, maybe it's intuition, maybe it's a gut feeling, maybe it's just the concept of again, owning your own personal home. The feelings you have about your personal home. If I were to sell, and I'm not looking to sell, you know, I have emotion behind it. If I am met, my emotions met with a black and white cold machine, a bot, AI, whatever, then I'm, I'm gonna go cold. And a lot of times then we're gonna have a standstill whether we're gonna get sell something because it does become black and white. It doesn't become emotional. I'll give you a short story real quick about how I bought my home. It was a for sale by owner on Zillow. Very difficult neighborhood to get in. There was nothing listed. And I said, oh, wait a minute, maybe there's people selling it for sale by owner, not on the mls. So I found a beautiful home. I live in it. I bought it, right. The reason I was able to buy it is because I reached out to the homeowner directly. The there was. It was currently an escrow. The buyer and the buyer was kind of balking a little bit and wanted some things. The seller was kind of like, I don't really feel like doing this. I built a very good relationship with the seller. The seller basically said, justin, if you are 100% in and you're willing to put a $40,000 earnest money deposit, then I'm going to draw a fine line in the sand with this buyer. I'm not going to be giving. He's asking for a lot. I'm not going to be giving is a yes or no on my side and he is going to either have to accept it or not. The buyer did not. The buyer wanted. I forgot what he wanted, but he wanted some things. So it fell out. Escrow. I immediately wired in $40,000 as an earnest money deposit and went through my due diligence of. Basically I only needed 10 days because I knew what I was looking for. I had an inspection here. It passed inspection from roofing to electrical to plumbing, etc. Etc. I then wired in another $400,000 for my down payment and we bought the home. Now, how would a bot have been able to handle that? A bot would have been able to be black and white. There would have been no nuance. There would have been no subjectivity. There would have been nothing. And I just don't believe, ladies and gentlemen, that AI can come over and take over our industry. I believe agents will still be around for a very long time. Although again, even with everything that's going on with the agents, I believe there's some nuance that will happen with agents. I believe their, their businesses will change over time, you know, and so I don't think there's a black and white answer, except this is what I do believe to be black and white. AI will not 100% take over our space. Can AI be very instrumental in certain things? Yes, that is the black and white. Now the. Some further questions that went in. This is very cool to hear from the property management side is understanding and evaluating risk. That was very cool to hear is understanding how do you reduce your downside risk whether you're buying rental properties, whether you're buying fix and flips. And we had a very large national property management company that was on there that has. It's a basic tech company. As a matter of fact, the entire thesis for this property management company is you can run property management via technology with very little to no human capital.

Stripe Representative (23:21)

Stripe is the go to choice for AI companies. From early stage startups to scaled enterprises. 78% of the leading AI companies use Stripe to go to market quickly and scale globally. That includes pioneers like Nvidia, OpenAI and Perplexity. Stripe has developed cutting edge tools to improve everything from fraud detection to checkout optimization. Whether you're aiming for incremental gains or planning for enterprise transformation, see how Stripe can help@swepe.com this podcast is sponsored by Ramp.

Jerry (23:51)

I can't sleep.

Justin (23:52)

What is it now?

Jerry (23:53)

It's the company. It's chaos.

Justin (23:56)

What's chaos now?

Jerry (23:57)

The numbers, the expenses, the books. What if we get audited?

Justin (24:02)

No one's going to audit you at.

Co-Host (24:03)

3Am Go to sleep.

Jerry (24:05)

I can't sleep.

Justin (24:06)

You could if you used Ramp.

Jerry (24:10)

Who said that?

Co-Host (24:11)

I don't care because they're right. Go to sleep and sign up for Ramp in the morning. Jerry.

Ramp Representative (24:15)

Ramp is the corporate card that handles all your tedious financial operations, automatically integrates directly with your ERP and gives you complete control over every transaction. Ramp gives you everything you need for bulletproof books and a better night's sleep.

Jerry (24:28)

Wow. That is exactly what my company needs.

Co-Host (24:32)

Yes, and exactly what I also need. Go to sleep, Jerry.

Ramp Representative (24:36)

Upgrade to Ramp for free today and get $250 at ramp.com that's ramp.com r a m p.com cards issued by Sutton bank members.

Stripe Representative (24:46)

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Justin (24:48)

And so I started listening to how they presented their ideas and I found it to be very intriguing, right, that all the underwriting for the tenants could be done through technology and AI and bots. I understood, you know, kind of all their points about making sure again, the downside risk of a bad tenant, how you can basically use all the screening and all these different things, how you can find tenants through technology and, and then you can manage it through certain levels of technology. And then kind of the point I brought up as a landlord and I asked, this is a panelist that I basically asked him and it was great. By the way, I Basically just said, hey, when it's time for said tenant to leave, is there going to be technology or a bot that's going to come in and give me a number of how much money I need to spend to repair or fix the home as they lived in it for 2, 3, 4, 5, 6, 7, 8, 9, 10 years? He said, well, no, that there's gonna have to be a contractor involved that kind of gives you an estimate. And I said, okay, fair enough. And, and I only asked not to be rude or to, you know, I, I just asked because I just believe as much as we can systemize screening a tenant as much as, and by the way, again, it is the, you know, proper expectations, you need to inspect what you expect at all times. So I didn't want to, you know, pepper him, but I would make an argument, you know, letting technology simply, you know, underwrite whether a tenant is worthy. You know, ladies and gentlemen, I hate to say this, but there's not the most scrupulous people out there doctoring some documents and, you know, PDF editors and all these other things that people can submit to technology and have no human component. I don't believe that to be the best decision. Right. You know, I know that people out there doctoring documents and income and, and whatever the things are, they can go out there and there's enough again, technology that you can make it look pretty seamless. I mean, I just remember Covid and people were saying that they were taking their positive COVID test and just editing it on whatever, I'm guessing, PDF editor and turning it negative and submitting it, and then they would be able to travel or whatever the case. Like, this isn't that hard to change things. So then we're talking about allowing a tenant to occupy one of my rentals that all we did was allow technology to say, yes, they have the income and yes, they have the credit. Is that really where we want this to go? And I'm going to argue no. This is. Again, I didn't want to pepper in myself. I just, you know, knowing what I know about finding tenants and filling tenants and having tenants and dealing with tenants like, holy moly. Like, if you are just going to let technology make those decisions, I believe on a pretty large percentage basis you're going to come into not the tenant you wanted. Right. Again, this is, and maybe I'm old school, guys, maybe you guys are listening to this and say, Justin, I totally disagree. I think this is going to be totally easy or, or, you know, it'll get to this place I just believe you want great tenants who won't trash your home and will pay on time. Allowing tech to, you know, make that decision for you is, to me, pretty shortsighted. This goes back to inspect what you expect. If you expect technology to make that decision, then you still have to inspect it. Well, guess who's inspecting it? The people. Right. We had a great. There was another panelist in the insurance space and he had some really good points on how impactful tech will be in insurance. I was probably very. The most enlightening thing for me that I thought was so cool was the insurance play and how AI and technology are going to play. Such a massive factor within how people under or how companies underwrite assets and how it could potentially get lower cost. Because I think we're all aware if you've been in real estate here for the last year and a half or two years, you understand what has happened to insurance. I mean, it's just insane. My own home insurance is insane, let alone all the rentals I have and things of that nature, which, you know, at the end of the day, it changes numbers, right? Insurance increasing changes the profitability. It changes. Is this asset going to be good? Is it not going to be good? And so I thought it was really quite interesting to hear the perspective on insurance. And again, because it's underwriting risk, essentially it can take a whole lot of data points that are already within the Internet and technology and within government, you know, the cities and counties, information. And so I thought that was really important and it's all important, but I thought it was really interesting, I guess. But then as a whole, I think the entire panel and the point I was kind of making really resonated with most people is.

Stripe Representative (30:22)

Stripe is the go to choice for AI companies. From early stage startups to scaled enterprises. 78% of the leading AI companies use Stripe to go to market quickly and scale globally. That includes pioneers like Nvidia, OpenAI and Perplexity. Stripe has developed cutting edge tools to improve everything from fraud detection to checkout optimization. Whether you're aiming for incremental gains or planning for enterprise transformation. See how Stripe can help@swepe.com this podcast.

Ramp Representative (30:50)

Is sponsored by Ramp.

Jerry (30:52)

Ugh, I can't sleep.

Justin (30:54)

What is it now?

Jerry (30:55)

It's a company. It's chaos.

Justin (30:57)

What's chaos now?

Jerry (30:59)

The numbers, the expenses, the books. What if we get audited?

Justin (31:03)

No one's going to audit you at.

Co-Host (31:04)

3Am Go to sleep.

Jerry (31:06)

I can't sleep.

Justin (31:08)

You could if you used ramp.

Jerry (31:11)

Who said that?

Co-Host (31:12)

I don't Care because they're right. Go to sleep and sign up for Ramp in the morning, Jerry.

Ramp Representative (31:16)

Ramp is the corporate card that handles all your tedious financial operations, automatically integrates directly with your ERP and gives you complete control over every transaction. Ramp gives you everything you need for bulletproof books and a better night's sleep.

Jerry (31:30)

Wow. That is exactly what my company needs.

Co-Host (31:33)

Yes. And exactly what I also need. Go to sleep, Jerry.

Ramp Representative (31:38)

Upgrade to Ramp for free today and get $250@ramp.com that's ramp.com r a m p.com.

Stripe Representative (31:46)

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Justin (31:51)

As a whole, humans will be still a very large part of this space. Someone brought up a great analogy. Like AI and technology is kind of like wine. Not just in the sense that it's going to get better with time, but also there's different varietals, there's different flavors, there's different types of grape, there's different ways to make the wine in different seasons. And so there's a lot of again, nuance to just the idea of AI within our space. It will never be a one size fits all. I believe we all agreed to. It'll never be this one type of platform that's going to be a one size fits all. It serves everybody. Because again, what I brought up on the beginning of this, there's just so much nuance now before. Well, let me say it this way. I do believe you need to get smarter on AI. I do believe you need to understand it. I do believe there's a very big value in it. So I'm not sitting here on AI is, is like a bad thing. I just believe that there are small components within real estate that AI can be very good at. It will not take over insurance. Well, insurance actually felt like it would be faster to take over, but it won't take over title, it won't take over realtors, it won't take over underwriting. You know, it won't take over the human component. And so but it doesn't mean you should be ignoring AI. Most of my team uses AI on a daily basis. I don't day to day because a lot of my friends frankly seat in my companies is a lot more of the people side meetings and zooms. But even that something like the Firefly AI, you know, that component on zooms is very helpful in, you know, recording it, having it being a written version so someone can review. You can throw that into chat gbt, you know, get a Cliff Note version of what went down for the, for the meeting. I mean there's, there's just a lot that should be adopted by many of you listening to this right now. But it doesn't mean this goes back to the thing I'll tell you all the time, it still takes you to do the work. Right. I sat down with Offer Pads head contractor while I was at this conference and talking about construction. And I mean, obviously there's just no way that can get removed. There's just not. I know they're, they're building printed homes now. I get it. I just don't believe there will be a contractor like who's going to do the inside, who's going to do the electrical? There's, it's just going to be needed. Right. There's going to be people needed in the construction side. And I say that because one of the things him and I agreed on heavily is, is the people that are trying to systemize their business to completely remove their business and, and exit, so to speak, and just like allow all this automation to work and allow all these systems to work and then remove themselves. Those are the same people that are going to find themselves either out of business or in a lot of financial pain. A lot. Right. Because they didn't stay in the business long enough to find the results they were looking for. So adopt AI as far as you think you can. Don't get overly, you know, I don't know, excited about it in the sense of what we do day to day in negotiating deals, comping deals, making offers. I don't believe it'll change our world there. Can it start to help a little bit with underwriting? Yes. But again, inspect what you expect and you know, it's going to be a fun journey with or tech's going, scary journey. Frankly, I'm not the biggest tech guy, so it is a little bit scary to me to think about all this. I definitely don't want Terminator to be the end Result or Terminator 2 to be the end result of this where you have, you know, technology and all this stuff. So anyways, take it for what it is, guys. AI is here to stay. It's not going anywhere. Learn the things that are going to be good for you, but at the end of the day, you still got to do the work. So if this was helpful, if this was interesting, you think two or more people need to hear this? Please share this episode and we'll see you on the next episode of the Science of Flipping.