Building Scaler. AI OS for RE operators | Better decisions, higher NOI, less grind | Agents handle the work; people keep the irreversible calls
New York
Joined June 2010
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Zlatan retweeted
This sounds extreme and I wouldn’t have believed it even a year ago, but we’re starting to see plenty of examples of productivity gains that are an order of magnitude or two above output levels pre-AI.
With the right harness, a deep understanding of your domain of what you want to build, likely a relatively new codebase (with some exceptions), a fluency of how to work with multiple agents at once, and a setup that makes it so you can test and deploy with limited friction, outputs on this level feel realistic in coding.
What’s crazy is this gap doesn’t appear to be diminishing over time. You’d think that we’d see a convergence in the lines because of AI, but it turns out the more depth you had before -and willingness now to take a different approach- gives you crazy leverage. And that is only compounding as the models can take on larger work and harder problems.
Right now this is most pronounced in software engineering for the obvious reasons. But there’s no reason we don’t start to see this in a number of other computer-use-sensitive domains like other scientific fields, AEC, finance, cyber, and more. Going to get quite wild.
Growing up speaking multiple languages I have this test for when I’ve adapted to a new location and that is thinking and dreaming in that language.
Adapting to AI as a software engineer feels similar. You stop thinking and visualizing lines of code but only think in systems, entities and how they interact with each other.
Zlatan retweeted
narrative violation: preferences will swing back from DIY vibe-coded software to super secure industry-leading SaaS solutions.
while it's super easy to build anything, endlessly protecting and securing it is super hard...and teams want to sleep at night.
Zlatan retweeted
A moat never made a castle impregnable. It slowed attackers down. The wider and deeper it was, the more time it bought.
The industry made it sound like “moat” means high immunity from competition.
But I think moats will remain as long as people are involved.
But also means properly maintained software is safer than ever
Zlatan retweeted
3% of “critical” software security bugs, in all of recorded history, have been found in the last month.
This is on pace to find another ~100,000 bugs this year alone, adding ~26% more vulnerabilities to the all time total
Do you realize how fucking insane that is?
Even if rental vacancy rates jump to +9% not much will happen as long as you have a +10y outlook
Dinner with an exec/friend at a large national property management company tonight. This person oversees ~150k apartments; access to an insane amount of data.
Current multifamily market in most of the country is worse than S&L, .com bust, or the GFC. Worst they’ve seen.
Class A mostly fine, decent rent growth. However:
- credit scores at class A have gone down meaningfully over the past 3 years.
- more people are paying rent via credit card.
- average bank account balance noticeably lower than even 2 years ago
- class A tenants stretched thin, living beyond their means. 20k comes in, 20k goes out every month.
- starting to see these renters move down a tier
Class B:
- simply too many apartments, we built too much new stuff. Ripple effect is enormous.
- fewer renters tomorrow than today. Same store foot traffic noticeably down year over year. Some markets down 40-50%
- considering dropping rents below $700 a month on some 1beds in major southern markets.
Class C:
- looking at degrading NOI. Rents aren’t growing for a long time, but expenses keep creeping up
- more renters are one missed paycheck away from disaster than they can remember seeing in decades
- tenants aren’t paying rent because they simply don’t have it
- wage growth has not kept up
Lenders:
- some major investment funds, household names, haven’t paid their mortgages in 2-3 years. Banks won’t foreclose because “X is a big client.” Mexican standoff.
- a roof leak gets ignored, becomes water damage, then mold, then a down building. Buildings are rapidly deteriorating as some owners choose cash preservation over funding losses.
- number of pre-foreclosure and REO deals is the highest as a % of total units they can recall.
- data providers know it’s bad, but they’re paid to sell optimism to owners/lenders. So every forecast is “it will probably get a little better next year maybe” and that gets regurgitated at investment committees all over.
I asked “how do you think this ends?”
“Not sure. My gut says slowly then suddenly, and things will get really bad. Been doing this 40 years, you can feel it in the air. But, there’s a chance it’s just a decade of tolerable pain. I’m praying for that.”
Zlatan retweeted
This is a dire post for multifamily, but I do think it is largely submarket specific.
So here’s my frontline view as a small operator in the Midwest:
• We didn't have nearly the same new supply come online as the sunbelt, but that doesn't mean there aren't problems. Still pockets of softness, but contained. We're at 95% occupancy with no concessions active.
• Most of our new construction was squarely Class A in our markets. Class B is in high demand if the rents are a true discount to new product. If you're throwing in granite and trying to scrape towards Class A rents, you're sitting at 86% occupancy when you could be at 96% with Formica and $150/mo lower rents.
• The demand from tenants for cheap Class C apartments is through the roof (ominous). Even in terrible submarkets. Completely agree that there is no room whatsover in the rents for C class to move upwards for the foreseeable future.
• We know this because application declines for our few Class C apartments is the highest we've seen. The demand to take more and more Section 8 from prospective residents has never been higher.
• With that, the buyer pool for C class apartments is non-existant below a stabilized 10-cap out here. We've looked at dozens of deals and our bid is routinely 30-50% less than sellers want. The capex time bomb on Class C stuff cannot be shielded by rent growth and compressing cap rates any longer.
• Well located, affordable B class apartments will continue to do well in our markets. If you're buying, they need to be acquired with massive discipline and at a much lower basis than you think, on a longer timeline than you think.
• At least in our market, new supply has slowed enough and in-migration has grown enough that I lean more towards the "10 years of tolerable pain" forecast than a sharp correction to doom. I do not believe many lenders are sitting on bad deals in Cincinnati (though in Columbus and Indy I am sure it is higher).
It's back to the basics.
Buy to hold long term. 10 year deals.
Buy with operations as priority one.
Buy with a clear line of sight to 12%+ cash flow
Assume the market does nothing for you, and have contingency in place in case it gets measurably worse for a period of time.
Dinner with an exec/friend at a large national property management company tonight. This person oversees ~150k apartments; access to an insane amount of data.
Current multifamily market in most of the country is worse than S&L, .com bust, or the GFC. Worst they’ve seen.
Class A mostly fine, decent rent growth. However:
- credit scores at class A have gone down meaningfully over the past 3 years.
- more people are paying rent via credit card.
- average bank account balance noticeably lower than even 2 years ago
- class A tenants stretched thin, living beyond their means. 20k comes in, 20k goes out every month.
- starting to see these renters move down a tier
Class B:
- simply too many apartments, we built too much new stuff. Ripple effect is enormous.
- fewer renters tomorrow than today. Same store foot traffic noticeably down year over year. Some markets down 40-50%
- considering dropping rents below $700 a month on some 1beds in major southern markets.
Class C:
- looking at degrading NOI. Rents aren’t growing for a long time, but expenses keep creeping up
- more renters are one missed paycheck away from disaster than they can remember seeing in decades
- tenants aren’t paying rent because they simply don’t have it
- wage growth has not kept up
Lenders:
- some major investment funds, household names, haven’t paid their mortgages in 2-3 years. Banks won’t foreclose because “X is a big client.” Mexican standoff.
- a roof leak gets ignored, becomes water damage, then mold, then a down building. Buildings are rapidly deteriorating as some owners choose cash preservation over funding losses.
- number of pre-foreclosure and REO deals is the highest as a % of total units they can recall.
- data providers know it’s bad, but they’re paid to sell optimism to owners/lenders. So every forecast is “it will probably get a little better next year maybe” and that gets regurgitated at investment committees all over.
I asked “how do you think this ends?”
“Not sure. My gut says slowly then suddenly, and things will get really bad. Been doing this 40 years, you can feel it in the air. But, there’s a chance it’s just a decade of tolerable pain. I’m praying for that.”
Zlatan retweeted
Anyone else remember when Mac icons used to look this good?
I miss those times so much!
Real estate asset teams are often small, so seat counts say little about what they get out of AI. What a fund wants is a finished result, like an LP report that ties out or a DDQ answered from current numbers. I expect pricing to move toward that.
Once AI starts doing things, like updating the budget or filling in the report for the bank, checking the final number isn't enough. You need to replay why it did it, down to the lease or invoice it used. In real estate that trail has to hold up for LPs, lenders and auditors.
A lot of what a fund knows about a building sits with one asset manager or an outside property manager. When either one changes, the reason a tenant got free rent or a roof project slipped leaves with them. I'd want that history kept in a system the fund owns.
In real estate, value gets made at the building, through leasing, CAPEX and time with tenants. If AI cuts the hours that go into the quarterly report, I'd point that time there on purpose. If nobody decides, it just turns into more email.
Real estate still runs on PDFs, and that's a big reason private assets are slow to price and hard to compare. Two buildings with similar leases look nothing alike on paper until someone pulls the same fields out of both. That's why we start with parsing before any analysis.
In real estate one number has to land in a lot of places, like portfolio monitoring, the LP report, the lender pack and the asset manager's own Excel model. If AI answers in a chat window, someone copies it into each one by hand. Chat is not the workflow.