Fortune Magazine "Americas AI Landlord"

Read this really interesting article in the paper version of Fortune magazine on the weekend.

Love that they are spending an estimated $600,000 in renovations each and every day......talk about economies of scale (and that their software can predict rehab costs to within 5% on average).

Interested in your thoughts and if you think something similar would fly in Australia.

- https://fortune.com/longform/single-family-home-ai-algorithms/Meet the A.I. Landlord That’s Building a Single-Family-Home Empire

Cheers,
Dean

 

Interesting . Couple of first thoughts

Australian credit scoring , and therefore credit worthiness , operates differently . I don’t think we have the same sheer volume of people ineligible for finance, forced to be renters for a lifetime.

Australia doesn’t have 50-100 mid tier cities with corporations providing large scale stable employment , and Australian investors tend to be biased against regionals anyway - even larger ones. Americans don’t pine to live on the coast . So culturally I'm not sure there is an appetite within investors (small or institutional) for the necessary diversification required for this sort of model to be replicated here

Australians attitude to property investment is almost exclusively speculative. ie it is skewed aggressively towards speculating for growth rather than towards investing for yield and then reinvesting profits for additional yield, as this guys model appears to be.
I know this because it's what I do

Australia doesn’t have a median house price in the low 200s , so the capital outlays required to get such a large portfolio up and running are far larger

Australia is heavily regulated. Starting up a Managed Investment Scheme or similar in order to build this sort of model would require unbelievable hoop jumping

Buy to rent is a concept they are trying to get going here...yet again . And it will fail - yet again. I know this because NRAS was a concept they tried to get institutional investment going here on a large scale, but got little to no buy in from institutional investors - and that came with generous tax incentives. Just like the section 8/ low income housing tax credit that underpins a lot of large scale institutional investment in the US, it was designed for large scale institutional investment here...but institiutional buy in was limited so it ended up becoming a mum and dad opportunity instead.

That turned out to be a great opportunity for Mum and Dad investors - but it shows the lack of appetite here among institutionals to be large scale landlords - even with massive tax credits attached as incentivse to do so.

So I just dont know whether you’d ever get something like this to fly, here ....

 

very suspicious on how accurate a software could be good to predict a good deal,

we have valuation software here in aus and they suck to a point, where its dangerous

I think if he paid a few people full time to find deals everyday, that would be far safer

 

30 accepted contracts a day.....you cant scale that high and cheaply enough to do it without software and if you think software cant calculate better than a human.....then a software routine is coming to replace you real soon.....

Great 60 minutes article last weekend that might interest you - Facial and emotional recognition; how one man is advancing artificial intelligence


I just ordered kai-Fu Lee’s book off Amazon - https://amzn.to/2YgryYl

I wonder how many Australian politicians are thinking about this and how we can use this to get Australia ahead globally eg how do you think Australian politicians/teachers would react to putting a camera into classrooms to monitor attention.

 

Dont you love US markets, we just cant do this in oz

 

I dont even think you could make this work here in New York based on ROI/property taxes.

 

There are so many strategies that are used in US by investors, should check out podcasts on biggerpockets mind blowing