Data Driven Real Estate Investing

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Neal Bawa – Grocapitus and MultifamilyU

 

Podcast Overview:

00:00 Bringing IV therapy to Madison
05:39 Navigating Franchise Regulations
07:47 IV therapy goes mainstream in Tokyo
12:50 Curated med spa offerings
14:44 Choosing Hydrate IV Bar for Madison
19:02 Starting with franchise questions
20:37 Building a Health-Focused Community
24:53 Benefits of Vitamin D Supplementation
27:55 Challenges with supplement patents
32:20 Functional medicine consultations at Hydrate
34:08 Patient advocacy and safe care
39:05 Frequency of sessions per week
41:33 Supplements and their credibility
47:04 Choosing the right location
48:42 Optimizing franchise location space
52:48 Hiring nurses for IV procedures
56:16 Spa services and mobile options

Podcast Transcription:

Neal Bawa [00:00:00]:
We are currently at 1% of the data center needs that we have where humanity is going through the greatest change in its existence. Greater than the invention of the wheel, greater than the invention of fire, greater than the invention of the personal computer and the Internet put together. We have never seen anything of this Type. The smartphone wasn’t even 1% of the AI revolution. And we think of the smartphone as the greatest invention of our times. It’s nothing compared to AI.

James [00:00:37]:
You have found Authentic Business Adventures, the business program that brings you the struggle stories and triumphant successes of business owners across the land. Downloadable audio episodes can be found in the podcast link found@drawincustomers.com we are locally unwritten by the bank of Sun Prairie Calls On Call, Extraordinary answering service, the Bold Business Book as well as Live Switch. And today we’re welcoming, preparing to learn from Neil Bawa of Growcapitus. I’m told, Neil, you are the mad scientist of multifamily. Is that true?

Neal Bawa [00:01:10]:
It’s a moniker I present at many conferences. So I presented at over 101 of the times when I was walking up to the stage, they were announcing and talking about me. The announcer said, the mad scientists of multifamily. And that got a nice gasp out of the audience and I was like, I like this. And so the next year I went to the conference, he introduced me as a mad scientist. And then eventually I was like, people like this concept because it helps them understand that I’m data driven. I’m very AI focused. And so it’s an interesting moniker.

Neal Bawa [00:01:41]:
I don’t have the dark brown hair, but I mean that’s how I roll. So I let it be and eventually it became part of our story.

James [00:01:51]:
That is incredible. So tell me the story. How did you end up with the moniker of the mad scientist of multifamily? That’s not something people throw randomly around.

Neal Bawa [00:02:00]:
Yeah, so look, I’m not a real estate guy, not a real estate royalty. No one in my family is in real estate. I’m a technologist. I’m from India, came here as a computer scientist. Data science is my area of interest. I’m an amateur data scientist, but my degree is in computer science and I ran a tech company from 1999 to 2013. Very successful, not a start up, you know, hundreds of employees. And we sold it in 2013.

Neal Bawa [00:02:28]:
And my interest in real estate started when the senior partner in the firm, I was a junior partner, basically said in 2003, we are not going to rent, we are going to build our own campus. And this wasn’t a multifamily campus at that time. It was an office campus for a business. And, you know, we had 150 employees, and we were renting from somebody. And he didn’t like that. So he, under his guidance and his expert advice, I built the first campus in 2003. We took 12 months to build it. We had no investors.

Neal Bawa [00:03:00]:
We had no bank. It was just all cash. We built it ourselves because the business was quite profitable. At the end of that process, I realized just the extraordinary, shockingly high benefits that you get when you use depreciation, Right? Cause this big campus, 27,000 square feet, and I just all of a sudden was making. Taking a lot more money home. I wasn’t making more money. I was just taking a lot more money home because the depreciation of that building was phenomenal. And that got me hooked into real estate.

Neal Bawa [00:03:30]:
Because at one time, I remember after that building was done, James, I remember saying to my wife, I think real estate is the best authorized tax scam in America. Now, obviously, I didn’t know depreciation back then. I didn’t understand accounting. Now I understand that there’s nothing scammy about it. You know, depreciation is a legitimate right. And you take it for real estate. You can also take it for other things. But for real estate, it’s.

Neal Bawa [00:03:56]:
It’s extremely beneficial compared to any other form of depreciation, any other business. And so I realized that I, you know, I had the big fat tax salary, and I was living in Taxifornia, so I was basically working for the man. 50% of my salary was going to state and federal. And so I said, I need to find a way around this, because I read a book by Robert Kiyosaki, and I remember the statement, it’s not what you make, it’s what you keep. Right? And I was like, I ain’t keeping much of my salary. So I was like, okay, I need to get into real estate. So I went back to my boss and said, you know, what we did with this campus was really great. Let’s do it again.

Neal Bawa [00:04:31]:
And so we built a bunch more campuses. I think four or five campuses were built and improved coming up to 2008. And so each year, what would happen is I was keeping more and more of my income because of all the depreciation that I was getting. And so I was saving and saving and saving. And so I’d ended up with, you know, pretty large amount of money by the time 2008 hit. And then when that happened, all of a sudden, property values plummeted. They went down. And so I would go to, you know, my family events and everyone would just bash real estate.

Neal Bawa [00:04:58]:
Everyone’s like, this is horrible. Don’t buy real estate. It’s horrible, horrible. It’s going to crash. You know, it’s worth nothing, blah, blah, blah. And you can imagine everyone was saying that because, you know, all the television, on the tv you’re just hearing bad news, bad news. Every day it’s bad news. It can only go down further.

Neal Bawa [00:05:11]:
You know, millions and millions of homes are in foreclos. And I’m like, I don’t understand this. I don’t understand. I mean, I’m from the Warren Buffett school of investing, which is, you know, when things are cheap, you buy them. So I’m like, but I don’t want to make a mistake. You know, I have this money, this, that I’ve saved up over the last five or six years. I want to go out and buy as many single family homes as I can. But I don’t want to make a mistake.

Neal Bawa [00:05:34]:
What if I’m just an idiot that knows nothing? So I decided that I would basically educate myself. And I did that in the typical way that, you know, technologists and engineers do. I said, I’m going to mine as much data as possible and try to get insights from that data. So I started mining websites like Bureau of Labor Statistics and Zillow and Trulia and Redfin and you know, all these other sites that realtor.com that you’ve heard about in the real estate area. And I’m mining gigabytes of data and putting them into a statistical analysis software called R. The software is R and statisticians know it. And you know what R does? It makes it easy for you to take huge amounts of data that you know nothing about and give you insights, right? These days, AI does it and it even does it better than the software. But back then there was no AI.

Neal Bawa [00:06:23]:
So the software would give you insights, it would give you correlation. So you could say something like, show me real estate profits that are made in this city and this city and this city and correlate that real estate profit with these various things that I’m looking at. What is the highest correlation? Is the correlation of profits highest to population growth or job growth or income growth or home price growth or crime reduction or schools. Where’s the correlation? The connection? The biggest, right? And then based on that correlation, I’m now mining data for 10, 16 cities in the U.S. i’m mining data for 323 metros, right? That’s how many MSAs we have in the U.S. and I’m trying to get this software to learn enough about these cities to say things like, in the next two or three years, the chances of this city going up in price is much higher than the chances of that city. And compare those cities in their potential for home price increase, for rent increase, right? By looking at massive amounts of data and looking at the structure, looking at the past, looking at past performance, this stuff sounds easy to do. It wasn’t.

Neal Bawa [00:07:39]:
It took an entire year to set this stuff up. But at the end of the year, I was the only guy outside of the big companies that had this database of massive amounts of information. As I said, population growth, income growth, home price growth, job growth, crime reduction, school quality for every market in the us And I was basically comparing it. And so at the end of 2008, the database was ready. And what the database told me was, this is the greatest time in a hundred years to buy real estate. So I was like the idiot I am. I basically went to one of my family parties at the end of 2008 and gathered everybody together and repeated it. And I sort of expected to be treated like a hero.

Neal Bawa [00:08:26]:
My family immediately banned me from all parties because they thought I would infect others in the family with my stupid ideas and everyone would lose millions. They had money too, but nobody wanted to waste it. So I got pissed off. You know, I love my family, and they basically didn’t want to invite me to parties because I thought that I was kooky and would do, you know, was doing stupid things. So I’m like, okay, I am going to go and talk to other people like me. I live in Silicon Valley. Best place on the planet for kooky people like me. So I opened a meetup.

Neal Bawa [00:08:59]:
You know, this is. I went to meetup.com, created a meetup around the data science of real estate, and I hosted it inside of my company. I had huge conference rooms that 100 people could fit in. I thought, 100 people will show up. Funnily enough, four people showed up the first time. But they were the right people. You know, one guy was from Apple, one guy was from LinkedIn, one guy was from Google, and they were data scientists. And so I’m like, you know, I’m not a data scientist, but I have an interest in this.

Neal Bawa [00:09:25]:
I’m an engineer and I’ve gathered all this data together and this is what it’s telling me. And these guys are like, No, I mean everyone’s saying, you know, real estate is horrible, USA is horrible. How can you, your data be saying this? And then I had them look into it and because they were data scientists, they were curious, they looked into it, they said, I think you’re right, this may be the greatest time to buy real estate ever. So we started holding meetups every month. And you know, the second time I held it, 10 people showed up. The third time we were 20 people. The fourth time we held it, we had over a hundred people, mostly technologists, mostly, you know, software engineers from, from, you know, that were interested in data science. They’d heard that this guy Neil Bow has gathered a database of some kind and other people helped me.

Neal Bawa [00:10:08]:
You know, I’d made mistakes. You know, people tweaked it and said, here’s a better way of doing it, there’s a better way. So it went along in 2009 and eventually we sorted and sliced and diced the database. Eventually we were like, okay, I think we have the right list. At the top of the list, James, surprisingly, very surprisingly, I live in California, was a city in California. Basically the software was saying that this city has dropped the most from peak to trough to the bottom, which was 2009 and probably will rise the most over time because it’s dropped so much. It had dropped 69% from peak, right in that 2008 crash, the US market dropped 30%. Some markets dropped 40 and 50 and 60%.

Neal Bawa [00:10:52]:
But very few markets had dropped 69%. There’s a good market called Madera California. And I was very excited that it was in California. So I jumped into my car on a Saturday morning and I drove 144 miles from Silicon Valley to go to Fresno. This is Madera, is a part of the Fresno Metro. And I go out there and I go sit down with an agent and I say, you know, what can you, what can I buy? And he’s like, oh this, all these, you see this entire row of this road and on both sides I’m seeing brand new homes. They’re four bedroom, brand new, probably built in 2006, 2007. These are all empty, you can buy them off.

Neal Bawa [00:11:29]:
And I’m like, okay, how much do these cost to build? And he’s like, you know, I mean, probably 200, 250,000 is what they cost. Okay, how much can I buy them for? 90,000? And I said, well, how can I buy something that cost 250,000 to build for 90,000? He said, because there’s thousands of them. Empty. Kaufman and Broad built these homes, and they had all these farm workers that use stated income to buy these in 2005, 6 and 7. Those people have all left now. And so basically, this half of the city is empty, right? So that’s why they’re available for $90,000 each. So I’m like, so eventually someday the value has to come back to 250,000, right? And that might take a very long time. He said, yeah, it might take 10 years, actually.

Neal Bawa [00:12:09]:
Just so you know, between you and me, it took about five. So I’m like, okay, so why isn’t everybody buying these? Like, if they cost 250,000 to build and 90,000 to buy and they’re brand new, why doesn’t everyone buy them? They said, well, because we don’t have any tenants. We need tenants, right? Because people are not willing to just buy them and sit on them for five years without any income. So I said, why don’t we have income? They said, well, because the economy is down. You know, this 2009, you know, economy is not doing well. All the tenants are in Fresno, and Fresno’s 22 miles away. I said, okay, I jump back into my car, I drive to Fresno. I go into another realtor’s office, and I say, I want you to sell me an old property.

Neal Bawa [00:12:49]:
And he’s like, no, I have all these new ones. I said, no, I want an old one. Like 1990s property. So he sells me the property at Summerfield Drive, 2483 South Summerfield Drive. So I buy the property for $80,000, something like that. And then I go to my Ukrainian hacker, I was working with a Ukrainian hacker for dashboarding from my company. And I say, I want thousands of leads, tenant leads for this one property. He’s like, what are you going to do with thousands of leads? By the time you get 20 or 30 leads, you’ll fill it, right? I said, no, I need thousands.

Neal Bawa [00:13:22]:
He said, okay, well, then I have to write some software and script and hack, you know, Redfin and Trulia and zillow and apartments.com. i said, yes, I’ll pay you to do that. And I paid him a couple thousand dollars, and he hacked them. And all of a sudden, that property was always on top on these websites because he was clicking and repeating, like, every few minutes, his script was moving it back to the top. And I’m getting. The phone is ringing off the hook. I hire a Filipino lady, you know, her name was Michelle. And I say, michelle, every incoming call that comes in tell people this Property, the one in Fresno is full, but we’ve got 10 other properties that are in Madera, 22 miles away.

Neal Bawa [00:14:00]:
They’re brand new, four bedroom and therefore $995 a month rent, all inclusive. Right. And if you go see those properties, we will give you a $50Amazon or gas card site, basically regardless of whether you rent or not. So 90% of the people, James, thought that we were some kind of scam and so they would hang up on us. 10% of people were like, okay, so you’re going to give me a $50 gift card even if I don’t rent the property? Sure, I’ll jump into my car, I’ll go out to Madera. And so we started getting people that wanted to go and see the properties in Madera. So I went back to the Madera agent and I said, hey, I want to buy 10 to 50 of these properties, but I can’t afford to give you cash. You have to let me show them to tenants.

Neal Bawa [00:14:46]:
If I sign a contract with the tenant, I’ll pay you cash the next day for the property. He was like, okay, because I mean the agents were desperate. They had, you know, hundreds of properties to, to, to move. So people started coming in. Every 10th or 15th person would fall in love with the property because compared to Fresno which had 50 year old properties at 1500 dollars now, I had brand new, never lived in four bedroom properties built by Kaufman and Broad for 995 bucks. So people are like, you know, I’ll commute. There’s no traffic between Fresno and Madera. So I basically would fill a property and buy a property in cash every month.

Neal Bawa [00:15:22]:
And I did that for two years for myself, my family, my in laws, dozens of properties. I would publish that information on the meetup group. Eventually my group, just my group ended up buying 600 of them, right? Because I mean the Apple guy, he was making four times what I was making, right? So he had like huge amounts of money. So like everyone is making money. We’re all data scientists. There’s no service, there’s no product, there’s no consulting. We’re just a bunch of tech guys that are like, don’t you understand this, that we have this property that we pay $90,000 to and we immediately get a thousand dollars in rent, right? Immediately. And then we would go back and refinance them, right? So we didn’t have enough money to keep just putting down 90,000.

Neal Bawa [00:16:09]:
90,000. So once the property had tenants, we’d go and refinance it. We’d Pull down, pull out $60,000. And then we’d use that and rinse, repeat. And so we’re doing this and other people are noticing what’s going on here. So one guy comes to me and says, why don’t you publish this thing that you’ve done with your statistical analysis thing, simplify it and publish it so that anyone in the US can rank cities. I said, no, this is a really complex thing to do. It took me a year to do.

Neal Bawa [00:16:35]:
He said, yeah, but you figured out all of the concepts, right? People should have the benefit of all the stuff that you learned over that year. Why don’t you simplify it? I was like, okay, why don’t you help me? And he said, I’ll help you. So we wrote a course called Location Magic, which was a 60 minute course that allows you to compare any city in America to any other city in America for real estate profits, right? Because you’re trying to figure out which city is the most profitable. And we put it up on a website called udemy.u–e m-y.com. there’s millions of courses on Udemy. And I’m like, maybe I’ll get, you know, a couple hundred people a year that will be interested in the data science of real estate. And, you know, geeky nerdy people like me. If you go to my course today, if you go to udemy.com and search for Neil Bauer, you’ll notice 15,000 people are taking the course.

Neal Bawa [00:17:26]:
15,000, right. So it turns out that a country of 330 million people has lots of nerdy and geeky people that like the data science of real estate. So before I knew it, James, people were calling me to conferences and I would basic, these are real estate conferences, right? Everybody’s a real estate guy. This guy’s saying, I have a $500 million datab, you know, portfolio. This guy’s saying, I have a billion. And I’m the guy that’s standing up on, on, on stage and saying, I have no investors. I’m not a real estate guy. I don’t have a real estate business.

Neal Bawa [00:17:58]:
I’m just here to tell my story. I’m a technologist that runs a technology company and I’m just here to tell you my story. But people love that because everybody else was pitching something, right? They had something to sell. And here I am, 2009, 10, 11, 12, 13, 5 years I’m going to these conferences. I have nothing to sell, because what could I sell? I mean, I just had some ideas that I wanted to Deliver to people. So now people are calling me to these conferences. They’re giving me free tickets to the conference, free business class tickets and hotel. And I’m enjoying it.

Neal Bawa [00:18:26]:
Now, of course, I realize I should have, you know, made them pay for it, but didn’t know any of those things back then. And over that time, I’m developing a brand, I’m developing a following. There’s all these people in the Bay Area following. There’s all these people and the conferences following me. And so in 2013, I sell my business and I have a gigantic tax bill. Absolutely massive. Can you imagine? I mean, if you have a multimillion dollar tax bill in California, you’re paying 13 and a half percent to California, 37% federal, 3.5% Obamacare. So you’re paying 53% of your income to the tax man.

Neal Bawa [00:19:01]:
And I’m like, f. Like what? You know, I need to find a way out. So I go to my CPA and I say, look, I do this single family thing. By that time, by 2013, you know, the prices had gone up, so I didn’t want to buy single families. He said, look, you should buy multifamily. And I said, so if I buy two or three multifamily, my tax bill will go down to zero. He said, no, that’s not going to happen. So I said, you know, what should I do? I don’t have enough money to buy more than two of them.

Neal Bawa [00:19:25]:
These are big buildings, like 200 units. He’s like, have you heard of syndication? And I’m like, I don’t know what syndication is. He said, the way syndication works is you find 50 investors, they give you $100,000 each. So you take $5 million of their money, you put in a million, and then you go buy a building. So I said, okay, but how does that help me? He said, because in syndication, the general partner also gets 30% of the depreciation of the limited partners. So you get your millions depreciation, but you also get 30% of their five millions depreciation. Now you have a lot more depreciation. Now your tax bill can go down to zero.

Neal Bawa [00:20:01]:
And this was July 2013, and a light bulb went off in my head. I said this. Really? People will let you take 30% of their syndication? Said, yeah. I mean, because you’re making money for them. You’re buying and managing this building. So, you know, you get 30% of the profits at the end, and you get 30% of the depreciation upfront. Like, wow, this sounds too Good to be true. I do the research.

Neal Bawa [00:20:22]:
It seems legit. I get involved, and here we are 12 years later. I am now a full time real estate person, even though I spend four hours a day doing AI and I have 1350 investors. I’ve invested about $350 million of their money into a billion dollars of real estate. More than half of it has been sold. I’m not buying anything at this point of time. And that’s about it. I mean, you know, yay for nerds and geeks.

James [00:20:55]:
It’s so funny because the joke was the kids in high school that are jocks, those are gonna do people that are working for the nerds and the geeks.

Neal Bawa [00:21:04]:
Yeah. I mean, I can tell you this, James, I have only ever come up with one saying in my life, one saying, but I think it’s a good one. Okay. And the saying is, the Bible was wrong by one letter. One letter. Because it is not the meek that shall rule the earth. It’s the geek. It’s the geek.

Neal Bawa [00:21:27]:
Right. Richest man in the world. Geek. Second richest man in the world. Geek. 3rd richest man in the world. Geek. You see a pattern, James? You see.

Neal Bawa [00:21:36]:
Do you see a pattern?

James [00:21:37]:
I do, I do. That’s they’re rich. People may not like them, but they got money. That’s true. Yeah.

Neal Bawa [00:21:44]:
I mean, Elon is a uber geek.

James [00:21:46]:
Yeah. Yeah. We didn’t know it could get that high. Tell me the syndication thing. You decided to start your own syndication then?

Neal Bawa [00:21:55]:
Yeah.

James [00:21:55]:
At what point did your family turn around and they were willing to let you come to their party?

Neal Bawa [00:22:00]:
Oh, that didn’t, you know, it was maybe three or four months. And they eventually realized that, you know, maybe I had something, you know, some interesting thing. And my family then went out and, I mean, they’re richer than me. They went out and bought a bunch of them. So, you know, I think. I think that all went ended well. It was just a short period of time, but by that time I’d gotten hooked onto doing the meetup and doing my stuff. So I never stopped.

Neal Bawa [00:22:21]:
I think the family just gave me that push of proving myself and saying, I think I’ve got something here. If I can get five other data scientists who are professional data scientists, I’m an amateur, right? To say, okay, he’s got something, then I’d feel better about it. And even if I lost my money, at least I would say, look, these other four people thought I was doing the right thing.

James [00:22:41]:
Sure. Tell me a story about the management of those houses in. Was it Madero? Is that what you said, Madero. So you’re buying all these places or you and other investors are buying them? Somebody’s got to manage them.

Neal Bawa [00:22:54]:
Yep.

James [00:22:54]:
Who did you get to manage them?

Neal Bawa [00:22:56]:
So you know what’s interesting is now I have thousands of units, right? So thousands of apartment units. And there’s professional third party companies called property managers that manage these things. But when I started managing them, you know, I bought one property and then a couple months later I bought the next one and my wife got interested into it. So I was like, you know, I mean, she’s a schoolteacher, her job, you know, she’s a kindergarten school teacher. So her kids leave at noon, she still has to be in the school at 3 o’ clock and she’s working on papers and there’s plenty of time. She’s like, I want to manage these. And I’m like, I don’t think that’s a good idea. I mean, you don’t live in Madera.

Neal Bawa [00:23:31]:
It’s 144 miles away. But my wife is a very clever person. She said, don’t worry, just go to Craigslist and put a post on there saying I’m looking for a local part time property manager and a local. And another ad for a local maintenance person. I said, okay, you know, I put the ad there. She basically found people that were living in Madera as people that would show the properties to people and then she found local maintenance people and I sold a bunch of those properties. I think I’ve sold four or five of those properties. I still have a dozen under my name.

Neal Bawa [00:24:05]:
And then, you know, we also manage our mother in law’s properties and she doesn’t let me sell them and now I can’t sell them anyway because one of the problems with depreciation is, you know, if you’ve taken six or seven million dollars of depreciation out, if you sell them, all of that six or seven million dollars of depreciation will be captured. So imagine I’ll have to pay 2 or 3 million dollars in taxes if I sell these properties, right?

James [00:24:27]:
That’s right.

Neal Bawa [00:24:28]:
So what I’ve done exactly. So what I’ve done basically is I’ve taken all the equity out of them, right? So I’ve refinanced them, you know, 20, 20 interest rates worth three and a half percent. So I refinance all of them, took all the equity out and moved the equity to other things. And so I’ve kept them and my wife manages them. What I’ve done is I’ve built AI or artificial intelligence dashboards and software for her that helps her manage this stuff. So there’s a lot of automation and a lot of, you know, AI is my passion. And so I’ve built a lot of things that help her do her job so that she doesn’t feel like a property manager. She does have an executive assistant who’s a Filipino.

Neal Bawa [00:25:09]:
She does have, you know, several maintenance guys. She has several people that show the property. But just an example of how successful she’s been with it. The last time she visited Madera was seven years ago. And we have, you know, 14, 15 properties there seven years ago, and she’s keeping it 96% occupied.

James [00:25:29]:
Wow, that’s impressive. That is impressive. Tell me about that. That town. I imagine it recovered.

Neal Bawa [00:25:37]:
Yeah, yeah. So it was a fast recovery because, you know, it dropped a lot. So I think on average, the $90,000 home that we purchased is now worth about 400,000. And again, we sold a few of them, but then we realized that it was best to just hold them for cash because the tenants are good quality. The problem, of course, is, you know, single family homes, they don’t have scale, right? So once I went into multifamily, when you buy a 10, 200 unit multifamily, you’re buying a business. It’s like buying a bunch of Taco Bells, right? So it’s a business and you’re buying it based on the income of the property. The problem with single family is you’re buying it based on comps. If the property next to you is the same size, and it was a million, this one’s worth a million.

Neal Bawa [00:26:21]:
Even if the rent that you get is five, you know, 3,000amonth, it’s still worth a million. Well, that’s not going to ever make any money for me, right? So because single family is not based on rental, you know, values, it’s based on comps. After a while I realized that that would never scale. That was not a business. You weren’t buying a business with multifamily, though. It’s a business. So, for example, if a standard multifamily property produces $1 million of income or net operating income or NOI, right? It might be worth some multiples of that. You know, usually 15x or 20x.

Neal Bawa [00:26:56]:
If for whatever reason, the rents in that whole market went down 20%, this property now, its net operating income has gone down to 800,000, right? Well, now this property is worth 20% less. Same property, right? Same number of tenants, but it’s worth 20% less. I like that. Because that appeals to the data scientist and the technologist in me that look, I’m buying a business, if its income goes down, it’s worth less. If its income goes up, it’s worth more. So if I can do something to increase that income, I’m in a good place. And so I once I went to multifamily, I didn’t look back. What I like about multifamily is my average multifamily.

Neal Bawa [00:27:37]:
200 units is sort of the average. We have some larger ones, 320 units, 240 units, 200 unit. Property usually has five or six employees. So there’s a property manager, an assistant property manager, a lead maintenance tech, a porter, or a junior maintenance tech and leasing agent. Right. So you got at least five people that on a full time basis work at this property and several of them live at the property because you usually give them discounted rent. Like if you want, like you want your lead maintenance guy to live at the property in case there’s a pipe that breaks at 2am in the morning. And so you give them, you know, 30, 40% off.

Neal Bawa [00:28:15]:
And they always take it because, you know, it’s just convenient for them to live there and get a discount. I like that, James, because that means that it’s scaled. Now, for my single families, there’s one place in Madera where we, you know, have a storage unit and we put all of our appliances, air conditioners and things like that there. But at a multifamily, I mean, there’s actual space in the clubhouse behind the clubhouse, usually where there’s a big 3, 400 square foot area that you store all this stuff in. So all of your maintenance is done that way. Your lead maintenance guy is good enough to do laminate work, to do resurfacing of countertops, to paint. So you’re not paying External maintenance people 75 or 150 bucks an hour. You’re paying in the Southeast, I’m paying about 26, $27 an hour.

James [00:29:06]:
Wow, that’s awesome. That is cool. Tell me about the investors that you get.

Neal Bawa [00:29:13]:
A lot of my investors are sort of geeky and nerdy like me. I’ve had 200 plus doctors. I have about 150 that are CEOs or technologists, people that are writing software and code. Half of them live in the San Francisco Bay area. The other half live everywhere else in the US Because I present at conferences. So people follow me and what they’re interested in. I mean, these are very busy people. They’re working 12 hour day jobs.

Neal Bawa [00:29:43]:
What they’re interested in is getting high quality investor updates. So unlike most people that might update their investors once or twice a year, I update my investors four times a year. So I’ll do two written updates and two webinars. And the webinars are very high quality, proper slides, screenshots of what’s going on at the property, videos of what’s happening, and then two long investor updates. These days, of course, they’re written by AI and then we create beautiful graphics also created by AI. And that allows our investors to feel like they know our property. That allows our investors to feel like they understand our property. And we always using AI, we record every single meeting that we have with our property manager.

Neal Bawa [00:30:27]:
So we meet with them on Mondays and Tuesdays. And These meetings are 45 minutes long. Right. The meetings are recorded using Zoom Enterprise. It records the transcripts. And then we have these softwares that we’ve created where we throw in the transcript and it actually finds a horror story. So every time we send an investor update, there’s a horror story about some dog that bit somebody or some gunshot at some property. And you might say that’s a bad thing to tell your investors.

Neal Bawa [00:30:58]:
No, the investors always think we would be dealing with it if Neil isn’t dealing with it. Right. He’s got a team dealing with it. And so we always tell horror stories at the property we’ve had in the last 12 years. We had a property that caught fire, six units burned down. We’ve had three or four people died at the property, including one murder. We’ve had guys beat up their girlfriends and call the cops. You know, we’ve had dogs bite people, we’ve had cats bite people, which is rare, but it happens.

Neal Bawa [00:31:32]:
And so I think you have to understand, I mean, the people that live in apartments are not the most organized and not necessarily the most law abiding people. And so, you know, these apartments are not necessarily places where I would live. Most of them are not class A, though I have some class A, they’re mostly class B, class C. So it’s really the Starbucks barista that’s living at this property. And so a lot of investors are interested in the pitch, which is let’s buy properties for the common man and let’s improve them. Maybe you go from laminate countertops to granite countertops in some of the units and some of the tenants pay up a little bit more for it. Let’s take out 20 year old appliances and put in nice appliances. Let’s put in nice Lighting, let’s convert the carpets, which are dirty and old, to laminate.

Neal Bawa [00:32:19]:
You know, those kinds of things. Small upgrades, we’re not doing major upgrades. And so the doctors, the technologists, it appeals to them because they’ve been watching some of these, you know, flip shows on tv, but they don’t want to get involved. And so we’re doing that job. It takes us on average 2 1/2 years to renovate the property because we don’t shut the property down. We only renovate units when they turn, right? So whenever a tenant leaves, we take three weeks, we upgrade the unit, we bump up the rent, 150 bucks and then new, new tenant comes in. So it takes a long time to go through a 200 unit property. And that’s the job.

Neal Bawa [00:32:58]:
It’s fundamentally unsexy. There’s nothing magical about it. It’s grungy. Every week you have to beat up the property manager. We’re not property managers. We’re not interested in property management. But we are asset managers. So, you know, I have full time, three full time employees, right? Kimberly, Brad, Mike.

Neal Bawa [00:33:15]:
Their job is to manage 15 properties. And these 15 properties have 15 different property managers because they’re all over the U.S. and so our job is to beat up on that property manager and say, hey, this lead came in on Monday morning and the software shows that you didn’t call them back until Wednesday. Shame on you. You should be calling back in 60 minutes. You agreed with us to do that stuff like that. Repeat, rinse, repeat. And then of course, we use massive amounts of AI.

Neal Bawa [00:33:42]:
We suck out all the information from their property management software. We build beautiful dashboards, and those dashboards are used to shame them. So what we do is we basically pull up the dashboard on Zoom and we say, you realize that your leasing agent is currently ranked number 8th out of 12 leasing agents? They say, why? We click on the link and it basically shows that that leasing agent takes longer to make phone calls, makes less phone calls, sends less text messages, chases people less, doesn’t send out reminders for appointments, doesn’t follow up after the appointments to get applications, and then doesn’t work on the applications quickly enough to get leases. Obviously, no one person would do all of these because they’d be fired. But some property manager is good at one thing and some’s good at the other. And we’re always highlighting that through the use of AI. And so our investors, these investors that, you know, that’s the question you asked me, they like that because we publish these dashboards for Our investors, we say, look, here’s the dashboard. And we don’t tell them our property is the best.

Neal Bawa [00:34:45]:
Obviously, if you have 15 properties, only one of them can be the best. Right. So what we tell them is that we are constantly ranking our leasing agents, our maintenance staff, our property managers, our regional property manager on these metrics with these beautiful, gorgeous dashboards and, you know, things like that that you can see. And our investors like that.

James [00:35:09]:
Nice.

Neal Bawa [00:35:09]:
So we, we are basically a technology company masquerading as a real estate company.

James [00:35:17]:
All right, fair, fair. Tell me, it sounds like you’re in multiple cities across the country, is that correct?

Neal Bawa [00:35:23]:
Yes. So. So we have properties in 10 states, 17 cities.

James [00:35:27]:
All right, have you seen a common denominator between the cities? Because I imagine you’re still using the software or something of it to try to figure out which cities to invest in.

Neal Bawa [00:35:37]:
Yes, I mean we continue to rank cities. Right. So the five parameters that originally were created in that software called Location Magic, which I mentioned 2009, 2010, were, you know, we would rank these cities by population growth, job growth, home price growth, income growth and crime reduction. We did those five. But over time we realized that that was not enough. So now we’ve added a number of factors, another 20 plus factors. Of those 20 factors, the one that’s most important is incoming supply. So a lot of people, James will go out and there’ll be like, you know, they go water cooler discussion on Knoxville is a great city to invest in.

Neal Bawa [00:36:17]:
And so they go to Knoxville and they go to a local property manager, they buy a rental. Nothing wrong with Knoxville, Tennessee. My point though is, do you know if there’s incoming supply in Knoxville? A lot of people are like, yeah, but I don’t care about multifamily supply. I’m buying a single family rental. Okay, here’s news for you. There is one rental market in the US one rental market and there are four pieces to that rental market. At the top of the list is single family rental homes. Before, after that, class A multifamily, brand new multifamily, beautiful amenitized rooftop pools, gyms, Sexy good looking 9 foot ceilings.

Neal Bawa [00:37:00]:
Then below that, class B, right? Property that’s 20, 30 years old. And then below that class C, no amenities, 50, 60, 70 year old building. These are the four parts of the American rental, you know, world. And they all influence each other. And the second part, which is a class A multifamily, in the last three years there’s been an avalanche of supply, a massive amount of supply in more than 50 cities has come in. And because the tier above that is single family, if these guys in second tier basically say, we’re going to offer two months off, then their price basically drops down to the class B level, which drags the single family price down. So what we’ve discovered is even if you’re buying one single property in Knoxville, Tennessee because of a watercolor discussion, for God’s sake, know what this incoming supply in Knoxville is? In the past, people would say, simply, come and tell me, because, you know, I present this at conferences. People say, neil, I mean, the.

Neal Bawa [00:38:04]:
The data. To buy supply data, you have to buy it from costar or elsewhere. They were right. I mean, back then there was no free way to get this data. Now it’s no longer true because of this wonderful thing called AI. All you gotta do is ask, AI, what are the top 10 multifamily brokers in America? It’ll give you a list, right? And then you switch to Codex, which is, you know, chat, GPT’s sort of programming tool, and you go in and say, here are the top 10 multifamily brokers in the United States. I want you to go create a Gmail account and go register for all free newsletters you can find on their website. It’ll do that.

Neal Bawa [00:38:46]:
Then once it’s done with that, we’ll say, now I want you to suck all of the information that’s coming in about multifamily from these top 10 newsletters into a database. It’ll do that. You don’t have to learn how to program. And then you’ll say, now build me a dashboard that ranks cities. Now, what we do is 10 times more complex than what I told you. But what I just told you is enough for most people, because now you’ll be able to see this Knoxville, Tennessee guy at the water cooler. He had no freaking idea that there’s 10,000 units coming in in Knoxville, Tennessee. And the data from CBRE or Marcus and Pillichap, which is higher in quality, is showing me that there’s going to be negative 3% rent growth in Knoxville for the next two years.

Neal Bawa [00:39:30]:
And if I’m buying, my rents are going to go down, not up. All this magic, I mean, literally what I just told you should take me you a couple hours to do with a $20 chatgpt account. This used to cost $20,000 to do three years ago. And if you don’t do it, then you’re not data driven. Then you’re basically just saying, I’m acting

James [00:39:50]:
like I’m data Driven, throwing money at the wall. And we’ll see what sticks, right? We don’t have a ton of time left, Neil. So I want to chat about Mission 10K. What is Mission 10K?

Neal Bawa [00:40:02]:
It’s our mission to basically build 10,000 rental townhomes in the U.S. we’ve currently paused the mission in almost all places because Congress has a very nasty bill which says that if you build townhomes for rent and you’re building 200 of them, then within seven years you have to sell those townhomes to individual occupiers as opposed to, you know, selling. Normally we build a 200 unit townhome community, we sell it to Blackstone, or we sell it to some, you know, big company that continues to rent, you know, rent those townhomes and that’s our exit. But unfortunately, this new bill means that, you know, people may be forced to, people like us may be forced to sell our property piecemeal to 200 individual sellers, buyers, which would completely destroy the business model for Mission 10K. So we mostly put it on pause while we wait to see whether Congress actually passes this bill or not. Hopefully they don’t, because I think it would be very destructive. But the mission was simple. Americans do not want to live in apartments.

Neal Bawa [00:41:06]:
Let’s give them townhomes to live in. Maybe not a two car garage, maybe a one car garage, maybe small backyard instead of a large backyard, but now you’re living in a home, nobody above and below you.

James [00:41:19]:
So there. I’ve listened to podcasts about real estate and corporate investing causing real estate prices to go up. So is that what the bill is essentially trying to minimize or avoid?

Neal Bawa [00:41:30]:
What they’re trying to do is to. What they’re saying is, well, if you’re building a townhome or if you’re building a single family home for rental, we don’t want you to take away from the rental, take away from the single family inventory of the US because you’re building on the same land that otherwise a builder might build a home on. In some ways that makes sense. But the bottom line is what it’ll end up doing is it’ll end up hurting all townhome for rental construction in the US and we won’t be able to do it like, so our company has put, you know, what we’re doing with Mission 10K on hold because of it.

James [00:42:10]:
Gotcha. Okay. And then you also have an educational portion of your business, is that right?

Neal Bawa [00:42:16]:
So it’s not a paid educational portion of our business. I believe in Wikipedia. I love Wikipedia. I think Wikipedia is one of the greatest models in the world. There’s no one making money on Wikipedia, right? Wikipedia is a volunteer model. So I wanted to be the Wikipedia of commercial real estate. Whether it’s single family, whether it’s multifamily, whether it’s self storage, hotels, you know, industrial and so multifamilyu.com is our website where we record eight beautifully designed webinars that are one hour each. There’s usually 30 minutes of questions about different interesting topics in single family.

Neal Bawa [00:42:57]:
So obviously once a year we do single family. Once a year we do multifamily. Once a year we’ll do other things like Airbnb, you know, industrial, self storage. How are these verticals doing? Where’s the opportunity? Of course, once a year we rank cities. That’s called location magic. And tens of thousands of people sign up for webinars. These are all data driven people. Of those people that sign up for webinars, we don’t have a tier, we don’t have a subscription, we don’t have an upsell, there’s no educational product.

Neal Bawa [00:43:26]:
1% of those people become investors with us and that’s all we get out of it. So in every webinar we have a 60 second ad of whatever it is, whatever project we’re doing at that point of time that we have open for investment. That’s it. 60 seconds out of 90 minutes. And 1% of the people that watch these webinars become investors with us, and the remaining 99% just get incredible amounts of real estate information for free. People have been doing it for 12 years, they’ve never invested anything and it doesn’t bother us.

James [00:43:58]:
That’s awesome. Tell me as far as the returns that investors can expect in not necessarily yours, but universally, any syndication, when you compare to stock market or investing in real estate on their own, or investing in gold, bitcoin, whatever, I guess. How does it compare with any of those?

Neal Bawa [00:44:18]:
So I think I have to give you a very generic answer. So here’s what I’ll say. For properties that were purchased between, let’s say, 2013 and 2019 and sold by 2022, the returns were very, very high. So a lot of people made 30% annualized, some people made 50% annualized, some people made 100% annualized, the returns were extremely high. For properties that were purchased maybe 2020 and after and are still being held or were held beyond 2023, when the interest rates doubled, there really hasn’t been much of a return, if anything. So now of course, if you’re buying a newer property now you’re buying the much cheaper multifamily project. Property prices have dropped 20 to 30%, so you’re buying at a lower price because rents have dropped and interest rates have gone up. So hopefully going forward, people will be able to make a 15 to 20% return, and that’s really the targeted goal.

Neal Bawa [00:45:18]:
It’s hard, but that’s the best answer that I can give you. Market conditions have made a dramatic or drastic change to the amount of profits that people can make from multifamily.

James [00:45:30]:
Right on. Are you, when you’re looking for investors, do they have to be accredited or any other criteria that you need to have?

Neal Bawa [00:45:39]:
All of our investors have to be accredited. You know, if you go into ChatGPT and say, what is an accredited investor? It’ll give you a definition. Lots of people qualify, some people don’t qualify. And so all of our investors have to be accredited. But in general, if you’re interested in syndication, know that there are syndications of two kinds and one of them require you to be accredited, including all of my projects, and one of them doesn’t require you to be accredited. So we, we won’t be able to help you with that. But there are many others in the industry that can help you.

James [00:46:10]:
Gotcha. I want to ask you really quickly about a few different types of real estate. You mentioned a few of them and I’ve heard good and bad on some and I was hoping to get your opinion. Mini warehouses or self storage?

Neal Bawa [00:46:22]:
What are your thoughts on those huge amounts of incoming supply? So I don’t see a lot of rent growth in the next two or three years. So I’d say Steady Eddie.

James [00:46:30]:
Okay.

Neal Bawa [00:46:31]:
Single family or duplex, very problematic market. Single family prices have not dropped at all even though interest rates have doubled. So that market is losing velocity this year. Prices have finally started to drop in a number of metros in the U.S. this is just not a time where you get appreciation on the single family side. And to be honest, single family is all about appreciation because the rent rents are so low compared to the purchase price that it’s really an appreciation play. So for the moment, I’m very bearish on single family. That changes.

Neal Bawa [00:47:02]:
But for the moment I’m bearish.

James [00:47:05]:
And then condos or townhomes I guess we mentioned a little bit.

Neal Bawa [00:47:08]:
Let’s just say those, I think they’re similar to single family. I do think that townhomes are slightly better use for rentals because, you know, their prices tend to be a Little bit lower. So when you’re going in, you’re spending a little bit less. And on the rents, you get almost the same rents as single family. So I think newer townhomes are probably a bit better, but not very bullish at all at this point.

James [00:47:30]:
All right, and how about the larger scale, multifamily? And I guess when I say larger scale, I’m thinking 100 plus, but it sounds like your number may be even bigger than that.

Neal Bawa [00:47:41]:
So my comments apply for anything that’s five units or over. So for purposes of loans, one to four units is considered single family, five units considered multifamily. So my comment applies for anything over 5 units. This may be a good time to buy because prices are beat down, rents have declined. So we think we’re pretty much at the bottom of the market, where prices are in some markets 25% lower, some markets 30% lower, but they haven’t gone up or gone down for a year. So this seems to be a plateau. So we think that you’re buying pretty much at the bottom of the market.

James [00:48:16]:
Okay.

Neal Bawa [00:48:17]:
Which surprises people. They still are, like really multifamily prices have dropped that much? Yes, they have.

James [00:48:23]:
Right on. And then do you do anything with commercial office space or warehouse or anything like that?

Neal Bawa [00:48:29]:
I’ve built warehouses, I’ve built office space. It’s not something that I do very often, but I think that I’m very bearish on office because of the fact that we continue to have. As technology gets better, it becomes easier for people to work from home. I mean, here we are having a conversation thousands of miles away. So I think technology is making it easier and easier and easier. And because the next generation grew up during COVID and they went to school for a year from remotely, they’re well equipped to do this remotely. So I feel like it might take a decade before we need to build more office space in the US So not very bullish on that. Very bullish on warehouses.

Neal Bawa [00:49:17]:
I think that’s a great business for two major reasons. One is we continue to see more E commerce. Amazon just keeps sucking up tens of millions of square feet of warehouse space. And the second one is data centers. We need to build massive, massive, massive numbers of data centers in the US and they all use warehouse space. So I think that there’s room for warehouse growth. It’s not going to be very sexy, but I do think that that’s an area that could see significant growth.

James [00:49:48]:
Tell me. So you are very into the AI thing. And I’m in Wisconsin where they’re talking about or some are even building gargantuan. I mean, from my point of view, they’re insanely huge data centers. So, and I don’t understand the I go to chat GPT, I get this answer. What does that take from a, what does that mean from a data center? Because right now I’m getting the answer. So what is the data center for? And we’re not just talking like a thousand square feet. There’s millions of square feet.

James [00:50:21]:
So help me understand what all that is for.

Neal Bawa [00:50:24]:
Well, I mean, keep in mind when you’re having a conversation with ChatGPT, right? The reason it’s not real time, it takes a second or two seconds for it to answer is your question is just, your machine’s just simply sending that question to the cloud, to that million square foot data center where a very, very powerful, very, very expensive server is churning away on it for about a fifth of a second or a third of a second and then writing an answer and sending it back to you. Your machine is just a front end. All of the work is being done at those super expensive data centers. And based on my projections and projections I’ve seen from others in the industry, we are currently at 1% of the data center needs that we have where humanity is going through the greatest change in its existence. Greater than the invention of the wheel, greater than the invention of fire, greater than the invention of the personal computer and the Internet put together. We have never seen anything of this type. The smartphone wasn’t even 1% of the AI revolution. And we think of the smartphone as the greatest invention of our times.

Neal Bawa [00:51:34]:
It’s nothing compared to AI. AI is a fundamental shift in humanity. And as a result, we’re going to need to build an absolutely insane amount of data centers. We will build them in space, we will build them underwater, because cooling space obviously is very cold. We will build them on land and we will build them anywhere we can find land, anywhere where we can build, you know, where we can find power. We will build massive, massive solar farms to support them. We will build massive amounts of battery backups to support data centers. All of this is inevitable.

Neal Bawa [00:52:10]:
And we’re just at the beginning of that process. So just enormous, huge amounts of growth. And a lot of people are like, no, I don’t think it’s going to go that way. I just want to point out to you that there’s no city in America that doesn’t have dozens of warehouses owned by one company, Amazon. And these didn’t exist 25 years ago. Amazon now is the largest shipper in America. They’re bigger than FedEx and UPS combined. Right.

Neal Bawa [00:52:39]:
They have dozens of aircraft, they have thousands of vehicles. All of this didn’t exist in the past. The same thing will happen for data centers. We’ll have massive amounts of data centers.

James [00:52:50]:
Yeah, It’ll be interesting to see where it all goes. It’s a little freaky because I’m in the Terminator Matrix movie generation.

Neal Bawa [00:52:59]:
I was in the Terminator group until about three months ago. And in three months I’ve changed my viewpoint. So it ended up coming back. So the biggest reason is that we’ve had with AI, the greatest models are not the ones that you are using or I am using Claude or ChatGPT. The greatest models are the ones that are being internally worked at these Frontier Lab companies like Anthropic and OpenAI. Some of these models are unstable and they basically tried to trap these models and the models have tried to escape. Right. Just like Terminator.

Neal Bawa [00:53:37]:
And what they found, interestingly enough, both companies have found the same thing, is that the reason AI models want to behave badly is because of the culture that we’ve created around AI being bad. A whole bunch of Terminator type movies, a whole bunch of books where robots behave poorly. So in the last three months, what these companies have done is written fictional books and fictional videos that they’ve created where AI always acts for the benefit of humanity. And they have started to train and retrain the AI using a massive amount of fictional books and fictional videos all created by them, where AI always acts as a protector of humanity. And as they have started feeding that to the models, the models have trotted, started to change and started to behave and become more benevolent. I think humanity has figured out a solution. We will train our AI to be the best of us.

James [00:54:41]:
All right? All right.

Neal Bawa [00:54:43]:
So I have hope. I have hope.

James [00:54:45]:
I hope so. It’s a very powerful tool. Very powerful tool. But it is, I guess it’s interesting to me because it’s, it puts the great majority of people on a semi, even, even playing field.

Neal Bawa [00:54:59]:
It does.

James [00:55:00]:
Where it doesn’t, I guess you’re not relying on somebody being physical, physically better than you, not even necessarily more intelligent than you. You are as good as your prompts, I guess is what it really comes down to.

Neal Bawa [00:55:12]:
It is I spend four hours a day programming and I haven’t written a line of code in years. Actually, the last time I wrote code was 2002, so 23 years ago. But I write with the help of AI at least 1000 lines of code every day.

James [00:55:30]:
That’s a lot of code.

Neal Bawa [00:55:32]:
It’s actually very little code. So a major software like Salesforce is about 5 million lines of code.

James [00:55:38]:
Sure, sure, sure. But you’re not building Salesforce daily.

Neal Bawa [00:55:41]:
Yeah, but I’m building dashboards. I’m building connections for my property management software. I’m building software for my personal use. I’m a cricket fan. I downloaded a massive database of every cricket match in history from Cricksheet and built this gorgeous interface so I can basically track all of my favorite players, my favorite teams, my favorite venues. It’s an. It’s an interactive, stunning dashboard. And it took me seven hours to build on a Saturday.

Neal Bawa [00:56:09]:
It would have taken me about a year to build before AI.

James [00:56:13]:
Wow.

Neal Bawa [00:56:13]:
If I ever built it, I mean, I would probably would have just given up.

James [00:56:17]:
Sure. Surreal. Go out and play cricket instead.

Neal Bawa [00:56:20]:
Right, I know, it’s just. But look, I mean, what’s your sport? Right? I mean, what’s your sport?

James [00:56:27]:
I like boxing.

Neal Bawa [00:56:28]:
Well, I mean, listen, there’s. Boxing is so technical in nature. There’s probably a hundred metrics that you can track for every boxer. You know, what was Ali good at? What was Frazier good at? You know, what are the current guys good at? I mean, there’s. There’s joy in looking at these sports from a technical perspective. Baseball is another one that’s very, very technical in nature, obviously. You know, you heard of the movie Moneyball and you can study so much. So, you know, as a technologist and a numbers guy, I like to watch cricket just like anybody else.

Neal Bawa [00:57:02]:
But I also love to analyze cricket. And now I have a database of every single match ever played. Now, I have no idea where this database is because I just went to Claude and I said, I want a database that I own of every single match ever. And it did its thing for two minutes and said, okay, I’m downloading blah, blah, blah, blah, blah from here. And it did that. And then I built this interface and it’s got every single match ever. It’s got matches held in 1887.

James [00:57:33]:
Right. Somebody somewhere to manually type that into the Internet. Somewhere.

Neal Bawa [00:57:39]:
Yeah, some database, apparently. Place called Cricksheet. I don’t know how it went and got this data, but apparently it’s free. So previously you wouldn’t even know where to go get this stuff, let alone take it and build it into some interactive dashboard. Now I have this sexy dashboard that shows how all of my favorite players are doing. Their average is going up and down. You know, their charts, their graphs. Has nothing to do with work.

Neal Bawa [00:58:04]:
I just enjoy this kind of stuff. And I think everyone that is interested in AI, I encourage them to do that. Like last week I wrote an application that, you know, 20 minutes before my Pilates classes makes a phone call to me and says, Pilates in 20 minutes? Because what would happen is my Pilates classes are in the morning, 6:30 or 7am and at that point I’m on do not disturb. So if you send me a notification, it gets suppressed. So I kept missing the classes and it’s $40 to miss a class. So it took me one hour to write an application that makes a phone call to me 20 minutes before class. Now I can’t miss any classes.

James [00:58:41]:
Oh, interesting lever. The sky’s the limit. Seems like it is.

Neal Bawa [00:58:47]:
It is Cool. I mean, just these are examples. I know this is a, you know, real estate discussion, but I think what people have to understand is start by using AI with your life first and then bring it into whatever business you’re in and you’ll do a better job then.

James [00:59:02]:
I love that, that, that may be the best advice we’ve heard all podcasts. I love this. That is great advice. Yeah. Where just where would people start? Does it just go to ChatGPT or Claude or whatever and just start prompting or where do you go?

Neal Bawa [00:59:16]:
Look, as a culture, I think we’ve lost the ability to read books. You know, less and less people are reading books. People even have trouble reading a little PDF. So I would say start with YouTube. Right? YouTube is the world’s best at giving you more of what you need. Start clicking on everything about AI that you can find. There’s so many tutorials, there’s so many guys, you know, pitching their AI stuff or whatever it is and then get started. I mean, I, I, I have never not read a single book about AI.

Neal Bawa [00:59:46]:
I just watch videos from 6am to 7am and then from 7 to 8, I implement 8 o’, clock, I go off to my job and then I come back at 4 o’. Clock. Sometimes it’s still coding, right. I gave it some instructions and it’s doing its thing and, you know, I don’t have to be there for that. And I’ve come back at four and it’s done, it’s ready for me. I give it some feedback, I go away, I come back, you know, I exercise, come back at five, I give it some more feedback. So I’m not really. Because I don’t know how to code anymore.

Neal Bawa [01:00:13]:
I, I’m not sitting there doing things. It’s coding. I’M just giving it feedback. It says what about this? And I give it feedback and what about that? And then I give it feedback. And it’s just a back and forth process. It’s a discussion where I’m telling it what I want to see. My vision for a software or dashboard and it has to figure out how to build that. It’s wonderful.

Neal Bawa [01:00:35]:
I mean, imagine like this 24 hour day engineer that for $20 a month is at your beck and call.

James [01:00:46]:
It is compelling, that is for sure. I don’t what happens when they. Well, I guess they’re not making money now, are they?

Neal Bawa [01:00:55]:
I think surprisingly, both anthropic and OpenAI are close to breaking even. I do expect that that $20 price is going to go up to about 40 or $50 in the next two or three years. You know, we saw the price of Uber and Lyft double, you know, from where they, when they started, you know, it was $27. Now it’s I’m paying 55. So you know, when a startup starts initially, you know, they, they, they’re trying to get more customers. So I do expect over time, if you’re paying 20 bucks a month for ChatGPT, you’ll end up paying 40 bucks a month.

James [01:01:27]:
Sure.

Neal Bawa [01:01:28]:
All those data centers are not going to pay for themselves?

James [01:01:31]:
No. Well, with the tax breaks it seems to be, but yeah, no, that’s, that is very true. They are insanely huge. I drive past1 that’s whatever 25 miles north of me. I don’t think I’ve ever seen a building that big.

Neal Bawa [01:01:45]:
Well, here’s what I can tell you. Any data center that is built now will be considered small in five years.

James [01:01:51]:
Oh, wow.

Neal Bawa [01:01:52]:
They’re going to be stadium sized going forwards.

James [01:01:56]:
This one, I mean, we’re talking about just south of Beaver Dam, Wisconsin and it’s surreal. Surreal.

Neal Bawa [01:02:03]:
Yeah. If it’s a million square feet, it is the footprint of a stadium. Yeah, yeah, we need a lot more of those. So anyway, and that may not be the best news for humanity, by the way, because a lot of people are going to go out of work over the next five years as AI advances. But the overall benefit to humanity is incredible.

James [01:02:24]:
Yeah, time will tell. Time will definitely tell. Neil. This has been Authentic Business Adventures. The business program brings you the struggle stories and strength and successes of business owners across the land. My name is James Kademan and Authentic Business Adventures is brought to you by Calls On Call, offering call answering and receptionist services for service businesses across the country. On the web https://callsoncall.com and of course, the Bold Business book, a book for the entrepreneur in all of us. Available wherever fine books are sold.

James [01:02:53]:
If you’re listening or watching this on the web, if you could do us a huge favor, give it the big old thumbs up, subscribe and of course, share it with your entrepreneurial friends, especially those friends that may be interested in real estate investing, interested in data, interested in AI. Neil, am I missed anything there?

Neal Bawa [01:03:11]:
No, I think all of these are tremendous areas of interest. And if you’re not jumping in, why aren’t you jumping in?

James [01:03:18]:
That’s right. That is so true. So true. We’d like to thank your wonderful listeners as well as our guest, Neil Bawa of growcapitas. Neil, I didn’t ask you your website. What’s the website where people can find

Neal Bawa [01:03:29]:
you best place is not growcapitas. That’s the business that we have where we buy buildings. It’s https://multifamilyu.com multifamily university. So multifamilyu.com club. So/club. It’s free. It will always be free. There’s no subscription, there’s no upsell.

Neal Bawa [01:03:45]:
It’s just a community of tens of thousands of people interested in everything about real estate from a data perspective.

James [01:03:51]:
Perfect. Then Multifamily U. That’s the letter U. Is that correct?

Neal Bawa [01:03:55]:
Correct. Multifamily followed by the letter u.com club.

James [01:03:59]:
Perfect. Past episodes can be found morning, noon and night. The podcast link fun at http://drawincustomers.com. Thank you for joining us. We will see you next week. I want you to stay awesome and if you do nothing else, enjoy your business.