All Forum Posts by: Henry Clark

Quote from @Steven S.:

Quote from @Henry Clark:

Quote from @Steven S.:

 https://chatgpt.com/share/67e35b44-352c-800b-b9d8-79e44e703c...

@Henry Clark So do you see how ChatGPT can utilize BP posts to answer your Q's? It's really simple and takes <30 seconds!

But you might be getting confused... Carlos said "But it's good if BP started to have its own AI LLM feature" and that is what I am responding to. It's actually stupid for BP to make their own chatbot, as Carlos was requesting, because it's a waste of time & resources. The large AI companies already provide this.

That example is great.   Now forget what both of you said.   How does BP set up and automate a response on their forum posts.  Move the conversation past you two and to BP.   People are lazy.  How do you automate it as part of their BP post?

@Henry Clark Sure, after thinking about it:

1. When composing a post (in the editor), have an automation to take the currently written content every 15 seconds, and send it to an AI with a system prompt like:

"Analyze the content below into summarized search terms and then check only bigger pockets forum posts from biggerpockets.com that you see on search results, and return me the top 5 most similar most recent posts. If there's nothing similar, you should only output "NO_MATCHES".   {USER_POST}".

If NO_MATCHES is returned, then loop again and try in 15s.

When matches are found, you can display these similar posts with the citation tags for sources (just like in the ChatGPT example), hover over sentences to see different posts & provide links to posts at the bottom of the editor.

This will allow those basic posts to be answered immediately, before they even get done writing their post.


2. Create a 'BP Expert' bot that identifies those surface-level posts or things that have a straightforward answer, and comments "This post has been identified as basic so I'll try to answer it for you. XYZ explanation. 123 sources." This will answer those basic posts or questions, and point them towards the other posts/sources.

This bot would also apply "Beginner", "Intermediate", and "Expert" tags (with their own colors) to each post below the title of each post so people could easily know what level each post is at. Some people like only expert level discussions, some only beginner, etc.


These two solutions avoid excessive API cost since it's not like a general chatbot anyone can just type things into, whilst still providing a lot of value to the community from beginners to experts. BP Pro members (subscription fee accounts) could get access to a chatbot or something that has custom system prompting/memory trained on BP posts (obviously with usage limits, I would make it like 50% profitable, i.e. charging 1.5x the cost of the API tokens they use).

I could think of more but I don't get paid to do this for BP lol

 Thank you.  Steven S.

@Moderators.  Please pass on to BP development team.  

BP realize you’re worried about accuracy and liability.

  Accuracy- you’re not guaranteed any of us posters are accurate.  So put a waiver on the AI response.   Also other posters will follow up with additional or corrective comments which already happens.  

Liability-  as mentioned put a waiver.  If needed add a Topic section called AI search.  Tied to a waiver process.

Monetization.  Pick a track that suits BPs model.  At the end of the response direct them to podcasts, BP books, vendors who also pay you for advertising, require them to get a ???? Membership after 5 AI responses, etc etc. 

Quote from @Steven S.:

 https://chatgpt.com/share/67e35b44-352c-800b-b9d8-79e44e703c...

@Henry Clark So do you see how ChatGPT can utilize BP posts to answer your Q's? It's really simple and takes <30 seconds!

But you might be getting confused... Carlos said "But it's good if BP started to have its own AI LLM feature" and that is what I am responding to. It's actually stupid for BP to make their own chatbot, as Carlos was requesting, because it's a waste of time & resources. The large AI companies already provide this.

That example is great.   Now forget what both of you said.   How does BP set up and automate a response on their forum posts.  Move the conversation past you two and to BP.   People are lazy.  How do you automate it as part of their BP post?

Quote from @Steven S.:

@Carlos Ptriawan And Carlos, your question indicates a huge gap of understanding. You want BP to rent or run their own servers to host a chatbot like OpenAI? LOL

There is no need for them to train a custom model... BP posts are indexed on Google/search engines, and AI models are trained on these things by default. Even if they weren't, just enable a web-search and say check BP, and it will gather all relevant posts and provide a summary based on them. Don't you remember our conversations surrounding AI and how much of a fail they are and will be for REI analysis and decisions?

Forget detail analysis.  BP forum first need is to cover basic, repetitive questions.  Carlos has already proven a base search and response can be performed on the BP data base.  Whether it is the best, cheapest, etc approach can be analyzed.
 But the tool exists today.
 What is????  1031, best market, plumber in Dallas, hey I’m 15 years old best REI approach, etc. etc etc.  What is your approach and solution?  Can you show a result in 15 minutes like Carlos did?  

Quote from @Ronald Rohde:

Thanks for sharing as always.

I'd consider a larger percentage of outdoor storage if you put a building on the A site. You can get low risk returns with boat and RV storage. I do truck parking, but get calls all the time from retail users.

I sold an industrial property, sitting on a 3x EM, no real reason to sell, but it reduced my PG debt and booked a tidy profit. Making nearly the same on just 4.4% accounts...

The good thing is you can writeoff if your family has REP status if they out back in 100% year one.   Also you avoid the high Texas property taxes.  Insurance should be lower as personal property.  You can always resale if they don’t rent versus a building.  Plus if we get into an economic dispute these will double or triple in price since most of these are made in China.   

OP on your 3 legs of retirement you feel threatened.  Not a financial advisor.

Stock market-  we will be taking a major clip to the stock market over this year.  I think 50%.  It takes a 100% gain to recover.  Talk with your advisor to do ETFs with recession based industries or companies.  Or take the losses. If your near retirement you should have at least 5 years in cash equivalent as part of your portfolio.       

Rental income- if you're in the Boston metro market you have a guaranteed rental base. Since you are already STR and MTR. You could look at LTR or moving more to STR. Instead if rental income I would be looking at pruning any poor investments.

Social security- off the top of my head.  You can look up actual info.  Used to be 4 workers to each SS benefactor.  Now it is 3 benefactors to every 2 workers.  We haven’t saved SS funding.  We have spent it.  So the earlier 4 to 1 ratio didn’t help.  The $3x T debt is “Nothing”.  The $13xT in undocumented benefits such as SS and Medicare are what will bankrupt us.  There are only two ways out of our debt crises.  1. Go bankrupt.  2.  Print money which causes inflation.  Every low income and retiree on a fixed income will get devastated.      If you’re a retiree you should be cheering for all government Cost savings.  But even that won’t be enough.     Plus Boston is not a town to retire in.  Due to high cost of living and Sanctuary city costs. 

There are lots of things to be concerned about. I would not only look at returns but also Risk. Stock market, crypto, New REI, gold even, etc. We analyzed our Risk 2 years ago and started making adjustments to our portfolio.

OP.  Read your linked article.  It says expect a 5% reduction in international travel.  Any business plan should handle that.   Minimal impact to your investment.

But lets say your market is higher for international.  If Boston this isn’t a zero sum game.  You should be able to fill that shortfall.  Good for your investment.

The dollar has been strong versus the euro since 2021.  Which reduces travel to the U.S.  Since March 1st the dollar has dropped versus the euro creating a greater potential for travel to the U.S. or investment in the U.S.  Good for your investment.

US stock market and REI has been super strong Foreign investors flocking to US investments. Especially Canadians. Good for your investment.

S&P ratio 25.  Say a 4% return before taxes.  Say a 3% return net.  Majority of this is in the magnificent 7 which is industry concentrated.  My projection market will take a 50% cut by the 4th quarter if this year.  Bad for your investment.  Less travel over all.  

The stock market has nothing to do with anyone other than all of those investors.  I would be more worried about that than any other threat. 

OP.  You need to talk with your tax preparer or do more specific reading.  But as mentioned already it is specific to your situation.

You have been living in the unit???  How long???  As a primary residence??  If you can live there 2 out of 5 years as a primary residence, then $250,000 capital gain is not taxable per spouse.

You said you had a partner in another of your posts. What does that mean? Ownership? Primary residence?  Etc.

What types of expenses have you recorded related to this investment other than brick/mortar, or other physical attributes of the house itself?

The fine print is your personal situation.  Versus on a post.  Take your tax return, the asset itself and sit down with a tax professional and discuss how to maximize your returns.

Also, don't do things just for a Tax advantage. Do you have a website and a child? Did you use your vehicle, phone, computer, internet service? How much would your normal rent be, if you rented or bought somewhere? Are you a medical professional? Do you have a 401k, Solo, IRA, etc? Do you have two vehicles? etc etc.

OP.  Your responses raise a lot of questions to me.   You need to engage with an experienced commercial investor or a commercial agent or broker.  

Ask them to go through your entire operations.  

Based on your info your at a 9,7 cap rate.  You did not answer on your capex.  

You need someone local to deep dive on your operation.  Otherwise there are a lot of questions, which a post is not a good medium. 

You can look back at our 2023 Year-end Wrap-up Post for further perspective.

Economy- my perspective right or wrong throughout 2024. This is the basis for some of our business decisions. Basically, put our money where our perspective was. Costs on Self Storage buildings and Flex buildings are double what they were about 5 years ago. No reduction in sight. We have been past our "Wealth Number" for several years, so expanding into this Economic market we weighed more towards Risk Avoidance and Wealth Preservation; versus bigger numbers and increased exposure. Again, this is our perspective, forget whether we are right or wrong. But this is the basis for our decisions. We have diversified wealth. Even if an economic downturn we are fine. Your perspective along with your W2 job will be different.

Self-Storage:

We are primarily at 100 % at all of our B/C locations. Our A location is at 80%, thus in 2025 we will need to think about expanding.

Debt level. Pulled back to around a 40% LTV across all properties, by selling 3 our our C locations in 2024. Two years ago, we refinanced to a 7-year balloon. Plus, part of our portfolio is an SBA loan on a 20-year fixed interest rate term, except for the local participating bank with 10 years fixed. Thus, increased interest rates don't really impact our decision on our existing Storage investments.

Decided to sell these C locations, since the rent was not high enough to warrant investing in more new buildings. Paid down on existing debt on those and other locations, took portion of funds to investment in better return properties, set aside some cash for a potential New A location development in 2025.

Future-

A. Sitting on 5 acres purchased to do an "A" location. Not ready to pull the trigger to start building. The interstate system construction around this location has been completed and will slowly start to increase the value in this area.

B. Black Swan- there are a lot of potential economic hits right now. China collapse, China/Taiwan, China production moving to other countries, Ukraine/Russia war, Ukraine/Russia fertilizer and wheat, Panama Canal water levels, US debt versus GDP, US illegal immigration, US Baby Boomer social costs coming online, Stock market P/E ratio. Even if interest rates dropped 2% points, I am very leery of the economic outlook. We are sitting in a good spot, but there are a lot of things I am looking over my shoulder.

C. Rerunning numbers on a New “A” Self-Storage location. About 500 storage units and parking spots. 3 phases, but in total $3mm development. Market analysis is best ever. Banker is on board. No money down, would use cross collateralization with one of our other properties.

Flex buildings:

We have the land, the contractor, the plans, the zoning and the financing in place. This is a new market even though similar to Self-Storage. A little uncomfortable. Holding off, have a better potential deal above.

Subdivisions: We do Country subdivisions. 2 acres up to 6 acre lots. We just subdivide the lots and sell them. Bought a new location with 75 acres that we are developing. Lookup Silver Springs post. Ended up with 18 lots. Bought at auction for $675k; will invest around $200k into roads/electric/fiber, 1 pond, and development costs. Plan to sell lots for $80k up to $150k per lot. I tell people doing a Subdivision development right now is a bad idea. Where we are ahead, is this is a pure cash play with no debt, thus no holding costs (yes opportunity cost is missed but let's say 5%). Our area we are very low on housing inventory, so people are willing to build. The target market with the lot price point and the building Covenants are people who have the money and are not as impacted as other home builders. Are we right? As I always tell people, it's your money, your always right, even if you're wrong.

Lessons learned on these subdivision projects. People love trees, ponds and boulders. We plant trees as needed. Build ponds. Trucked in about 100 tons of boulders and strategically placed.

Waiting on Subdivision approval this next month. Will start to market this summer/fall 2025. If interest rates continue downward, then interest will rise. We are planning on a 5-year sale cycle for this project.

Teak Plantation in Belize:

Teak trees are going great. Continue trimming and thinning trees. Have almost all new seedlings planted. Bought a skylift and transported there. Starting to trim up to 35 feet. So, we can get 3 clean logs. In middle of a deal for an additional 89 acres next to one of our existing properties. Will clean off and plant more seedlings.

Building our third house down in Belize for one of our worker's who will be cutting back fulltime.  He will check all of our tree locations every day and take care of the animals and plants.  Plus do a little trimming and spraying.  This will be 900 square feet with a concrete ceiling which is also the floor for a roof top covered patio.  300 sqft covered porch on two sides of the house.  Trying to build this for $25,000 USD unfinished.  Finish will be about $5,000.  If we come close, may start building these as Expat rental units for $800 per month.  Almost zero property taxes, almost zero income tax, zero insurance, no capital gains if we sale them.  People as they are looking to move to Belize would like to live there while looking for properties or waiting on their construction.

Funnest Idea Last year:

Taught our guys how to raise Hogs and Ducks/Geese. Then showed them how to butcher and process hogs. Bought a freezer. They take home free pork every week. They can only afford chicken once a week, so this is a big deal. Ducks/Geese are setting on eggs, and we are incubating. Shooting for about 300 Ducks/Geese by this fall. The workers will eat Ducks and duck eggs for free. Geese they will sell for $150 each in the fall. Why??? We pay them good, and they just have to work Steady. One of the easiest ways to make money in Belize is to steal trees. My guys know they need to protect our trees, or they lose their jobs, plus the free food. 300 chickens are our next project when I go down next month.

Dumbest Idea Last year:

Not investing. Selling 3 very low debt, high monthly cash returning properties. There were our reasons, but still.

Outlook for 2025:

Still playing it conservatively. Will let the new Subdivision get completed and go to market this summer. We need 10 of the 18 lots to be sold to break even, thus not a lot of pressure. But the market will decide. Still have both Cash and a lot of Equity on the sidelines. Have three properties shovel ready. Will wait and see how the subdivision does, then look at costs again on new projects. Not really looking to buy existing Self Storage. Premiums are too high. Making more money developing than buying existing locations. Finance terms were solidified to 7-year balloons and SBA 20 years, so have no downsides if interest rates increase for the Self-Storage business. At about 40% LTV across the board on Self Storage and Flex buildings; thus, no Banker "call" issues. Only downside on higher interest rates will be sales of the Subdivision lots, which since this is a cash investment, we can sit on and hold.

Good luck on your 2025 investments.

It's your money, you are always right, even if you're wrong.

Start small and Make Your Big Mistakes Early.

OP.  You are not going to find a Market cap rate that is comparable to the property you own.  

2 residential, 4 commercial, These types of contracts, these type of contract durations, these types of lessors, this type of building, that type of location, that type of road access, that type of parking, etc etc. Not going to happen in your market.

The true value of your property is its Cashflow after taxes to you. Amortized at your market interest rate. Less CAPEX needs. A. To start with take what you paid, less Capex in the next 5 years. That is one value figure., B. Take your cash flow at your market interest rate, less Capex in the next 5 years.

Why do you want the value????  You just bought it. 

You want the value based on what you will get the rents up to.  Just put the projected rates into your NOI or cashflow projections.  Take the Cap rate you paid originally.  Divide your New projected NOI by your prior Cap rate.  Again, I would reduce it by any Capex needed in the next 5 years.