All Forum Posts by: Bill R.

No, because I never claimed that every single aspect of property management could be delegated to software.  

But let's look at some of the things that could be done.

When a tenant tells you that they are moving out, it could set off a chain of events to fill the vacancy.  For instance, based on the applications your current tenants have submitted it could create a profile of the type of tenant you're looking for, figure out what places are best to advertise to that demographic, and automatically create advertising for you as well as schedule prospective tenants for viewings from those who respond to the ad. 

Of course, you or someone else will actually have to show the unit but finding those prospective tenants is a big part of managing your property, right?  

Also, you might even be able to get advanced notice when a tenant is thinking about leaving before they have said anything to you.  For instance it could monitor their social media accounts and alert you if they have a life changing event like getting married or divorced or a change in employment status.  Ideally you would love to be able to do a soft credit pull and see who else has been looking at the tenant's credit report to see if other property management names show up but . . . 

If it thinks a tenant may be moving it might monitor certain economic metrics to determine how tight the rental market is at the moment or it could even post a dummy vacancy listing to determine if it should send an offer to incentivize the tenant to stay based on how long it determines it would take to fill the unit with a new tenant.  

I could keep going . . . and this is all stuff that you could with existing technology.  If we ever got to the point where AI was so advanced like OP has said it was going to get, you could pretty much automate everything other than showings and inspections.  And in many cases, it could do the job better than any human because it works 24/7 and is constantly processing data about your units.  

 Yes, many employers are starting to use similar tools.  Hope people remember to delete those photos of themselves passed out at a college frat party because either in employment or housing it could come back to haunt people.  

Moore's Law is only applicable to certain types of technological problems.  If everything could just be boiled down to calculations per second, cancer would already be cured.  

At a certain level AI is a people problem.  As I stated previously AI is not easy.  Even when it becomes more advanced and perhaps even more mainstream, there will be somewhat of an upper limit on the number of people working on problems.  AI isn't a magic bullet that figures out how to do everything itself.  It is a method of computing that allows a system to learn based on either massive amounts of data or via trial and error.  

But ultimately, someone - a human writing the software - needs to understand what problem that they need the software to solve and to understand how to make the computer learn the best way to solve the problem.  

Moore's Law would only be applicable after the above criteria have been met, the developer wrote the code, and the computer had to process through many computations to arrive at a solution.  

Right now, the bottleneck is:

1.  Not understanding the problem correctly.

2.  Not understanding how to make the computer solve the problem autonomously.

3.  Not enough smart people to solve #1 and #2

 For instance, it took an entire team of AI students about 10 years to create a poker AI that could beat a world-class human poker player heads-up.  

In the commercial world this exercise would have been entirely unprofitable.  First off, the potential profit would be greatly eclipsed by the cost of hiring a team of some of the smartest AI people in the world for 10 years.  Second, it would be far more easy and cost effective to teach someone over the course of a year to beat a world-class poker player.  

And that was just to beat a poker player playing them one on one at a very specific game of poker.  Add a second, third, or ninth player to the mix and they have to go back and and use an entirely different method to solve the problem because certain strategies work well in one environment but will be entirely wrong in a different environment.  

Obviously, they will be better able to solve these new problems more quickly but not because of computational power, but because they know what path to take to solving the problem.  

So the chance for exponential growth in AI is less tied to computational power and more towards figuring out an efficient method of teaching computers to learn that could be applied across multiple problems.  

As @Charles Worth noted, this knowledge is likely to be at an incremental pace rather than an exponential one.  Which is why even though people have been talking about AI for 30+ years, and computing power is astronomically greater than it was 30+ years ago, we've only seen incremental AI advancements.  Only if there is a breakthrough in AI theory itself will growth become exponential.  

Yes, look how long it has take to get a burger bot.  And how many millions of dollars have been poured into that over the years?  It adds up to a lot of brain power and a lot of capital to achieve a rather modest goal.  

And in the end, consumers may refuse to buy burgers made by the burger bot so the whole prediction of displacing 3 million fast food workers - even if every fast food worker was currently only making burgers - is due some skepticism.  

And every robot, every piece of AI, is going to need to have similar amounts of capital and brain power invested into it.  

And to be blunt, there simply aren't that many smart people available to solve so many complex problems over such a short period of time.  Real AI, not just MadLib style parsing text intelligently, is hard stuff.  And many of those people are already allocated to stuff like predicting the stock market and creating other predictive modeling.  

That's one of the reasons I can't believe that eventually some of that brainpower wouldn't eventually be unleashed on the RE sector. Funding is going to go first to the things with the highest ROI.

Excellent point.  Everything is interconnected.  You can't just look at one facet of something and think it can change in isolation of everything else.  

That said, I do not fear the burger bot.  :-)

I know you don't agree.  You created a thread titled, "Your future as a worker looks bleak" and then promoted the fact that as a RE investor you never have to worry about being automated out of a job.  :-)  

But you linked to an article that I've read 100 times over the last 25 - 30 years written by different authors in different publications that have all claimed the same thing.  All I'm pointing out is that if AI and robots can do everything these article say they can do, you are not safe either.  

I'm not saying that it's going to happen.  I'm saying that if things are as dire for everyone else as the article makes out, you are far from safe yourself.  Remember, anything that you can turn into a process, in theory, can be automated by software or a robot.  

And so what if RE has an innate value?  Nobody was arguing that assets would become worthless.  You seem to be trying to convince yourself that you've picked the greatest job in the world by making up some really incongruent analogies.  

So let me boil this down:

1. If computers start taking over everything it removes the very inefficiencies in the market by which many RE investors make money. Would you agree or disagree that margins shrink when a bunch of investors all come into one particular market? If you set an army of AI bots loose on the MLS and combine that with databases of crime rates, job growth, construction permits, rental listings, etc, how difficult will it be fore institutional investors to buy up all the easy money making opportunities before you've even gotten out of bed in the morning?

I'm not saying that you won't be able to buy RE.  I'm saying that you'll only have a choice of what the big money decides isn't worth their time which ultimately means you have to work that much harder to keep up.  

2.  Most of the large property management companies are already pushing automation as hard as they can.  I lived in an apartment in Irvine for 2 years and only saw the manager when I signed the lease and when I turned in the keys.  Everything else was online.  You claim it's all about personal touch but that is not the direction the property management industry is heading.  The vast majority of property management can be automated.  And what can't be automated will be of somewhat limited value compared to what it is today, if for no other reason than AI has put everyone out of a job and labor costs will be extremely low.  

3.  None of the above two points mean that you can't carve out a niche or find a way of making money in RE.  When there's a will, there is a way.  But you absolutely cannot tell me that the entire world will change around you, and RE investing will go on completely unchanged because of the "personal touch" aspect.  Either things aren't as dire as the article makes out or RE investing will also undergo major changes.  RE doesn't exist in a vacuum nor is the personal touch factor so unique that it can withstand the forces going on around it.  

Bottom line?  The article is pie in the sky wishful thinking that is highly unlikely to manifest itself on the scale the article suggests in the next 30 - 50 years.  And if it does happen, RE investors will have to deal with a very different world that likely will not be as friendly to them as it is today.

You could paint the same dire outlook for any job/career.  You seem to be glossing over the physical toll many trade jobs can take on the body.  

That said, I do wish I was better with my hands.  Especially investing in RE, I regret not having done a lot more hands-on stuff so I understood how a house works a little better :-)

Tech jobs can be anything you want them to be though.  I never moved to any of the places you mentioned, was with one company that went from 32 employees to 1200 in two years, did an IPO, and then, unfortunately, watched the stock go to $0 in the dotcom crash.  Loved living in SoCal.  Other companies came out of SoCal too, Geocities (sold to Yahoo! for $5 billion) - played pool with the founders a few times when they were still struggling.  Had a few friends who started up companies and cashed out for 8-figure paydays.  

But I consider those days, the period when I was paying my dues.  I had to work my butt off but after that, I worked for companies and lived in Europe for a few years, took some time off and worked remotely from Asia for a few years, and pretty much know I have a skill set I can go anywhere with.  

That is not always true for the trades though.  Try muscling in on the local carpentry scene in a country where you don't look like the locals.  

I would disagree that these are the only places.  That's where a lot of the tech jobs are and where a lot of the money to finance startups is, but you can startup your own company in Iowa if you want to.  If you want to work for a company that will go from startup to $10 billion in valuation in 2 years, yes, you probably need to be in one of these places.  If you want to create an app that nets you $1 million a year, you can be anywhere in the world.  

That's what everyone who has had their jobs outsourced overseas has said too.  :-)

Why can't you automate property management?  Maybe not 100% of it but enough where being a property manager would become relatively mindless work not worth much in terms of wages.  List every aspect of property management and I can come up with a way to automate it given enough data and some minor advancements in AI.  

Automating placing ads for new tenants?  Yep.  In fact, you can probably write an app today that would effectively test the response rate and quality of applicant from every type of source.  

Give tenants an app and let them report their own maint requests.  

Screen tenants?  You can write something that crawls into every aspect of a tenants life and scores them for you.  Isn't that what a credit score is anyway, except only on limited level.  What if a bot would tell you about what they post on FB or Twitter about?  Gathered up data on who they were friends with and gave you an idea of what kind of social circles they associated with?  

The mechanisms for cutting off your water or power are automated by the utilities that provide them so why couldn't you have a system that could handle a good portion of automating dunning letters, filing notices, etc?  Not that you would cut off the tenants water or power, just that when you don't pay, they fire off a letter, and then the system waits X days, and then it fires off another letter, and then you might get an automated phone call saying that they'll cut off your power or water.  When it gets to the point where they do cut off your water or power, that might be the only time a human being is involved.  Same with tenants.  The only time you have to get involved is when you file the legal paperwork (and even much of that can be automated).  

I understand that it's a people business but if AI has taken over the world and can write applications and have taken all of our jobs, AI has also made it possible for institutions, funds, etc to buy up 80% of all rental properties and they don't have time to give the personal touch so this type of renting becomes the norm.  

Even in the investing process you're looking at Zillow today and assuming that Zillow will be similarly capable in 20 years. If AI can write software, believe me, AI can price real estate by that point. The MLS will simply be like the stock market where people buy and trade RE for micro-margins because the second it hits the MLS 10,000 bots have seen the deal, evaluated it, and decided whether or not to add it to their portfolio, flip the deal like a wholesaler, or pass on it.

Like I said, you can't make the argument that tons of jobs like software engineering are easily replaced but what RE investors do is so special that no computer can ever crush your margins so badly that it's impossible to make money without access to massive amounts of capital.  

They used to say the same thing about trading stocks and commodities.  But grudgingly, more and more trading is done by computers rather than traders in a pit.  

I would never go back to doing startups in the tech field again either but that whole scene is a young person's game and always has been.  I have friends who work in law firms and are over-worked, never leave the office, no life outside of work, etc too.  I have friends in finance who are over-worked, nver leave the office, no life outside of work, etc too.  I have friends in the entertainment industry who . . . . you get the idea.  

Almost all high paying career fields have a similar sort of weeding out process.  Those who make it past the first few years end up having a lot more choices.  

Unfortunately there has never been a career field where you start directly at the two martini lunch stage.  

Even in RE, you either start off with a lot of money (usually made by making huge sacrifices like the ones you mentioned) or you put in the hustle which means you're over-worked, always on the look for deals, etc, etc.  

You seem to be confusing the fact that you either had access to capital or hustled your way to earning enough income to be where you are today with where people can start off in RE.