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There have been a lot of hot technologies to generate a buzz over the years, but this one feels a bit different.
The rapid adoption of ChatGPT and other generative AI tech has led to a major investment and opportunity for Microsoft (followed by a buggy demo of Google''s AI ChatGPT competitor, Bard), and the halo effect of anything related to Artificial Intelligence has spread from tech stocks to crypto and across almost any function and industry you can imagine.
The growth of ChatGPT's user base in particular has been incredible and has created a widespread excitement far beyond most of other recently hyped tech. It's not often that an early stage technology like this has captured such mainstream attention.
Despite the mad dash to get involved in everything AI and feel of a potential bubble around the space, this technology has the potential to be a true game changer in a number of areas including education, programming, content creation and, yes, real estate.
The Case for AI in Real Estate
Early iterations of AI have already started to change the way we live and work, whether you realize it or not, even in real estate. While we're in the early stages today, AI has the potential to revolutionize the real estate industry, from the way properties are marketed and sold to the way they're managed and maintained and, for investors, how they select their sponsors.
Consider the potential impact on search listings. While Microsoft is hoping to steal search market share from Google, current search engines aren't optimized for real estate. Imagine the impact should Zillow, RedFin or Realtor.com effectively integrate generative AI into their platform sand the value that could be provided by combining MLS integration with the real time data intelligence for both buyers and sellers.
From a broker perspective, the promise of AI should probably cause less anxiety around job security than it might for a programmer. The personal touch and value a broker provides is unlikely to be replaced by AI anytime soon, but the technology should be able automate, personalize and replace a number of mundane tasks, leaving more time for the broker to acquire, show and close more listings.
Similarly, it's clear to see where AI could help with inefficiencies, increase velocity and create more customization and personalization in underwriting, insurance, and any number of functions across both residential and commercial real estate.
Practical Applications for AI
AI algorithms can analyze vast amounts of data to determine which properties are likely to sell quickly and at what price. This information can be used by real estate agents and brokers to create targeted marketing campaigns and make data-driven pricing decisions.
These same algorithms can also be used to analyze social media and other online data sources to identify potential buyers and sellers, helping agents reach a wider audience and close more deals.
AI has the potential to change the way properties are managed and maintained. Algorithms can be used to analyze property data to identify maintenance issues before they become major problems.
Imagine, for instance, having the ability to analyze data from sensors placed in HVAC systems, electrical systems, and other equipment to detect potential issues before they become major problems. This would help property managers to save money on repairs and maintenance, and ensure that properties are maintained in good condition.
AI's Potential in Multifamily
Multifamily investing should also be able to take advantage of AI. It could allow us to have better access and analysis of market data to identify the best opportunities for multifamily investments based on our specific business model. Where are the next up and coming markets, which are most likely to see increases in job creation and population? Where are the risks and opportunities in market rental rates, how can you quickly pivot to changing market corrections, and which properties will maximize ROI for your investors?
Further, all of us would love to be able streamline processes such as tenant screening by providing an automated way of verifying applicant information quickly and maximize our occupancy levels with the best tenants, ensuring that only qualified applicants are approved at our properties.
From an investor's perspective, it may help cut through a lot of marketing and claims and help determine which sponsors are the best fit for them and who are the best operators providing the highest ROI.
This is the type of actionable data that will help both GPs and investors make quick, smart decisions about where to invest, what types of properties to invest in, how much to invest and who to invest with.
Key takeaways:
Once you get past the hype of ChatGPT, Artificial Intelligence and Machine Learning I has the potential to change the way properties are marketed and sold by providing brokers with more data-driven insights into the market.
AI has the potential to change the way properties are managed and maintained by providing property managers with data-driven insights into maintenance and repair needs.
AI can help changing the way multifamily sponsors are made by providing investors with data-driven insights into the market.
AI is transforming the real estate industry by providing real estate professionals & investors with data-driven insights that can help them make better decisions and maximize their return on investment. The impact of AI on the real estate industry could (should?) be far-reaching and has the potential to revolutionize the way properties are marketed, sold, managed, and invested in.
As the technology continues to advance, it is likely that we will see even more innovative applications of AI in the real estate industry in the years to come. At Blue Lake Capital, we're excited about the possibilities ahead and we're already putting some AI and machine learning tech to work for us while considering how to lean into the potential even further. It's an exciting time for all of us.
As always, Be Bold, Be Great, and Keep Pushing Forward.
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About Ellie Perlman
Ellie Perlman is the founder of Blue Lake Capital, a commercial real estate investment firm specializing in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.
A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificial intelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.
Ellie is the host of REady2Scale, a podcast that highlights the assets, processes, and strategies for the multiple approaches to successful real estate investing.
She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.
Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Managemen
You can read more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.