briefcase | invest smarter | Issue #128

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“They say AI will take away my job, but only an idiot would take this job.” — Clay the Intern, Briefcase

The naysayers think AI is the end of civilization. We take the “with AI on our side, we'll be faster than a cheetah on roller skates" stance.

Why?

First of all, ChatGPT can’t even figure out 4th grade history without handholding. So we’re still a tad far from Skynet and Schwarzenegger duking it out in the streets of LA (that’s a Terminator 2 reference for all you Gen Zers).

But second, AI tools —in their current state— are great at taking the mundane grind and boredom out of tasks. As we’ll see below, AI can help us accomplish much more in less time.

At least that’s what we heard.

So we asked Clay The Intern to look at what was out there in terms of AI for real estate. After looking at some of these AI tools, we’ll be honest and that we’re feeling a bit like this lately…

Onwards to our thesis which prompted this week’s edition…

Since CRE investments have huge capital risk, CRE firms are always going to look for an edge. This makes them natural early adopters of technology, and we’re seeing it with AI already:

And yea, we knocked on CRE quite a bit lately. But the truth is, there are some seriously sophisticated players in that industry. It’s worth looking at what they do, and if that chart tells us anything it’s that AI and real estate are about to become tighter than a pair of jeans on a hipster.

So what’s out there in terms of AI for the real estate industry? Here’s what Clay the Intern found:

📜 Descriptions: Companies like ClosingCopy let realtors put in a full bullet points to describe a house, and their AI-powered genie spins out an MLS description, and copy of paid marketing, and social media. Delegating the task to the under-motivated assistant whose attention is focused on TikTok is now a thing of the past.

🙋🏾‍♀️ Lead Generation: Companies like 6sense can assess potential leads by analyzing data from social media, online listings, and public records. Ok, so it’s a web scraper? Not so fast. The AI then predicts which individuals are more likely to be interested in buying or selling properties, enabling realtors to target their marketing efforts more effectively.

📸 Virtual Tours and 3D Visualization: Using AI algorithms, companies like Zillow and Anax3D can stitch together regular images to create 360-degree virtual tours. The technology is evolving to offer virtual staging for empty spaces.

🤖 Chatbots and AI Assistants: Realtors drink as much Red Bull and coffee as a bunch Twitter engineers being ‘motivated’ by Elon. Being round-the-clock available does that. But with chatbots and AI-powered virtual assistants to like Freshworks, a lot of that can be eliminated.

Typically only the larger real estate players had access to expensive market data tools. But AI is changing that.

📊 Analysis: Tools like Zilculator and TOP PRODUCER can identify patterns, correlations, and trends that human analysts might miss by processing this data. This analysis can help investors make more informed decisions about pricing, market conditions, and investment opportunities.

💸Property Valuation: AI can also assist in estimating property values by considering various factors such as location, size, amenities, and market demand. Tools like Houseprice AI and C3 AI use algorithms to learn from historical sales data to develop valuation models and provide more accurate property appraisals. This information helps realtors and sellers determine appropriate listing prices and negotiate deals effectively.

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AI tools like Trudi are equipped with capabilities to analyze and understand tenant messages or emails to extract key information. This enables landlords to efficiently categorize and prioritize incoming requests, ensuring that urgent matters are addressed promptly.

These new software platforms can help automate and streamline resident engagement strategies, rent reminders, maintenance requests, language translation, and much more.

But, property managers are leveraging AI enough. According to a recent survey, 63% of property managers aren’t using AI, and only 37% say they believe this technology can make their role more efficient.

Leasing is a major part of managing real estate, and can be time-consuming. New tools like Visual Lease and Occupier can help with legal compliance, tenant screening, rent pricing analysis, automated documentation, virtual tours, and lead generation.

It's important to note that while AI can streamline many aspects of the leasing process, it should not replace the human touch completely. Personal interactions, tenant screening interviews, and customized negotiations are still vital elements for establishing a positive landlord-tenant relationship.

AI allows us to analyze vast amounts of data, identify patterns, and ultimately make smarter decisions and predictions. For developers and builders, this will enable enhanced decision-making.

Construction is all about project planning and scheduling, where AI can be used for predictive analytics, risk management, quality control, and even defect detection.

For example, Buildots is a construction management platform that leverages AI, hardhat-mounted cameras, schedules, and designs to generate a model of an active construction project.

What has more friction than a hair salon filled with balloons💈? Mortgage applications. We’ve all been there, the process of getting a mortgage is painful. Until it meets AI.

Automation is coming in hot and heavy to the mortgage industry. Ocrulus, for instance, is a document automation software for mortgage providers. It has recently integrated OpenAI to automatically process documents such as bank statements, pay stubs, and mortgage applications.

Black Knight also has an AI-powered mortgage solution, Underwriter Assist, which uses AI and mortgage-specific algorithms to extract data from documents like W2s and pay stubs.

Using AI, lenders will soon be able to fund mortgages in days, not months.

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👩‍🚀 Houston, We Don’t Have a Problem: Reportedly, the city has been the best-performing real estate market of the last decade — TRD

🦅 Flight of the Concord: According to realtor data, Concord, NH, was the country’s hottest housing market in April — Realtor.com

🤷🏼‍♀️ But Where Will The Kardashians Live? Rich-and-famous vacation hotspot Nantucket surprisingly voted to allocate tax resources for affordable housing projects — Bisnow

📉 Commercial Volume: Transactions slipped to the lowest levels seen since August 2020 — CoStar

📈 Commercial Volume: Is forecasted to drop in 2023 to $425 billion, down from $730 billion in 2022 but will rebound in 2024 to $525 billion and $695 billion by 2025 — ULI

🤔 Still Missing: Small multifamily, aka missing middle, is still missing from the housing fabric with starts flat over the past few years — NAHB

🤑 Trilly Club: Nvidia joins the trillion-dollar valuation club as AI heats up the chipmaking industry — Yahoo! News

🏡 More Homes! More Homes! The “More Homes on the Market Act,” seeks to amend the tax code to incentivize homeowners to sell their houses — HW

😓 Trouble Ahead: Tighter immigration legislation in states like Florida threatens to upend the construction industry — TRD