Latest / Results Driven / Episode 176: AI Almost Cost Me an $80,000 Real Estate Deal

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Episode 176: AI Almost Cost Me an $80,000 Real Estate Deal · Results Driven

• 0:00
  SPEAKER_00: Guys, AI is an awesome tool.
• 0:02
  SPEAKER_00: We use it in several areas of our business.
• 0:04
  SPEAKER_00: But, you know, someone, an executive at some of the really big company, you would know the company, I'm not going to share it, but uh a friend of mine, his dad, is an executive at a very, very, very big organization.
• 0:14
  SPEAKER_00: And he's actually part of the tech department.
• 0:16
  SPEAKER_00: And he has been saying for the last few years that garbage in is garbage out.
• 0:21
  SPEAKER_00: If you assume the data going in is good and the data coming out is good, then you're going to make poor decisions.
• 0:33
  SPEAKER_01: Are you a driven real estate investor tired of inconsistent deal flow and ready to scale your business?
• 0:39
  SPEAKER_01: I'm Tiffany High.
• 0:40
  SPEAKER_00: And I'm Josh High.
• 0:41
  SPEAKER_01: And this is the Results Driven Podcast, where we share proven strategies to build systems, master sales, grow your team, and create a self-sustaining business with predictable income.
• 0:52
  SPEAKER_01: Whether you're a one-person operation or building a team, our mission is to give you the tools, support, and mindset shifts you need to succeed.
• 1:01
  SPEAKER_01: Let's dive in.
• 1:06
  SPEAKER_00: You're spending hundreds of thousands of dollars on buying houses and you're trusting a tool.
• 1:10
  SPEAKER_00: You're trusting AI to make the most important decision for you.
• 1:13
  SPEAKER_00: If ChatGPT or Cloud are is the one that's running all the comps, pinning your ARV, estimating your repair estimates, you better watch this before you make another decision.
• 1:23
  SPEAKER_00: Let's dive in.
• 1:24
  SPEAKER_00: All right, I'm going to share a case study with you guys.
• 1:26
  SPEAKER_00: I had a property here in Columbus, Ohio that uh was in an area that's being gentrified.
• 1:31
  SPEAKER_00: Okay, so to put this into perspective, there's Children's Hospital.
• 1:34
  SPEAKER_00: And when you look on the map, if you go south of the hospital or if you go, if you go west of the hospital, then you're in a great spot.
• 1:43
  SPEAKER_00: Okay, there's one million dollar homes, one and a half million dollar homes, some even that are$2 million.
• 1:48
  SPEAKER_00: It's a higher price point.
• 1:50
  SPEAKER_00: It's a historic district, very, very, very old buildings.
• 1:53
  SPEAKER_00: Then you cross one street, cross one street and you go east.
• 1:58
  SPEAKER_00: Okay.
• 1:59
  SPEAKER_00: Once you cross that main road, it's a completely different part of town.
• 2:03
  SPEAKER_00: That part of town has been under like gentrification over the last 10 to 12 years.
• 2:07
  SPEAKER_00: And so the values have significantly increased, meaning they used to be worth like 20, 30, 40 grand.
• 2:13
  SPEAKER_00: And then now they're worth, you know, mid 200s, low 300s.
• 2:17
  SPEAKER_00: And so, you know, part of our process is we'll always go through and we'll pin what we think an ARV is, but then we'll reach out to our real estate agent who has an automated system that helps them pinpoint ARVs.
• 2:28
  SPEAKER_00: Now they'll come through it with some of their knowledge of the area as well.
• 2:31
  SPEAKER_00: So we sent this over to our real estate agent, and our real estate agent shoots it back at uh with an ARV of about 270,000.
• 2:37
  SPEAKER_00: Now, this house is in pretty rough shape.
• 2:40
  SPEAKER_00: It's gonna need every bit of$120,000 to$140,000 worth of work.
• 2:44
  SPEAKER_00: Now, seller was wanting to get about$130,000 for this.
• 2:48
  SPEAKER_00: AI pinned the ARV of this, not knowing the separation of this street.
• 2:52
  SPEAKER_00: AI pinned the ARV on this one at$270.
• 2:56
  SPEAKER_00: So$130 plus$120 already puts you at$250.
• 2:59
  SPEAKER_00: So all of a sudden that deal is not a deal.
• 3:00
  SPEAKER_00: But here's what I knew: I knew the area pretty well, and I knew that this street was a clear borderline depending upon values.
• 3:07
  SPEAKER_00: And I had reason to believe that this thing could be worth in the 500s.
• 3:11
  SPEAKER_00: And so I challenged our real estate agent.
• 3:13
  SPEAKER_00: I said, hey, send me the comps that your system's pulling.
• 3:16
  SPEAKER_00: And of course, it pulled comps from the other side of the road, which is the bad area.
• 3:20
  SPEAKER_00: And so I challenged him.
• 3:21
  SPEAKER_00: I said, hey, Parsons is a cutoff here.
• 3:23
  SPEAKER_00: Let's look at everything that is west of Parsons and only pull those in.
• 3:26
  SPEAKER_00: And sure enough, value came back in the low 500s.
• 3:30
  SPEAKER_00: I believe it was like 535.
• 3:32
  SPEAKER_00: That one thing could have ruined this opportunity for us.
• 3:35
  SPEAKER_00: Guys, this is looking to be about a$70,000,$80,000 assignment.
• 3:39
  SPEAKER_00: Okay.
• 3:40
  SPEAKER_00: Now that's not our typical deal size, and I sure can't guarantee that that's going to be a typical deal size for you, but it just goes to show you our generally our average profit per c uh per deal is around$20,000.
• 3:51
  SPEAKER_00: So the fact that this is a$70,000,$80,000 spread is just showing you right there that if I trusted AI to make this decision, I would have walked away from this deal and someone else would have closed this opportunity.
• 4:01
  SPEAKER_00: So just be careful.
• 4:02
  SPEAKER_00: Another thing, guys, we've been uh really focusing on, you know, one of our goals was always become a private lender.
• 4:07
  SPEAKER_00: We wanted to build the real estate business, build the team, magnify our results, build this nesting that we could then go be the bank, right?
• 4:14
  SPEAKER_00: Live with passive income, allow our passive income to exceed our lifestyle expenses.
• 4:20
  SPEAKER_00: And luckily, Tiffany and myself, over the last uh few years, few years ago, we were able to hit that target.
• 4:25
  SPEAKER_00: And now we get to do things, right?
• 4:27
  SPEAKER_00: We get to jump on and share these types of things with you.
• 4:29
  SPEAKER_00: We don't have to.
• 4:29
  SPEAKER_00: And um I think that's something that's really important.
• 4:31
  SPEAKER_00: Anyway, because of that, we've become private lenders and we have people submitting deal reviews to us, their deal analysis.
• 4:39
  SPEAKER_00: It's very clear to see the people that are leveraging AI and the ones that are actually doing the work still themselves.
• 4:44
  SPEAKER_00: You know, I in fact I had someone send me a deal review, and it just so happened to be that one of the deals was a deal that we were dispositioning.
• 4:52
  SPEAKER_00: Their ARV, I think they had like 340 R penned ARV on the specific property going through our process, the thing that we've done for the last 10 years that has helped us build what we've built was around 230,$110,000 difference.
• 5:06
  SPEAKER_00: That individual could have lost it.
• 5:08
  SPEAKER_00: Like they could have lost their shirt and more in that scenario, because that house would have never sold for$340,000.
• 5:15
  SPEAKER_00: You know, I guess if you're a wholesaler, maybe you will appreciate that other people are underwriting deals that way, because then they're gonna buy deals at insane prices for you, I guess, right?
• 5:24
  SPEAKER_00: But if you're a rehabber, you don't want to be that person.
• 5:26
  SPEAKER_00: And if you're a wholesaler, you don't want to be marketing a deal that you think because your AI bot or whatever told you that this thing's worth$340,000 and you're pricing it at$230 when it really needs to sell for$130.
• 5:37
  SPEAKER_00: You're just wasting your team's time.
• 5:39
  SPEAKER_00: You're wasting resources.
• 5:40
  SPEAKER_00: If you're paying for inspections on those, you're wasting hundreds of dollars every single deal.
• 5:45
  SPEAKER_00: So make sure that if you're using AI, that you're going back and you're just validating.
• 5:49
  SPEAKER_00: Just sweep through it real fast.
• 5:51
  SPEAKER_00: Leverage your knowledge, leverage other experts, find a real estate agent, double check this for you.
• 5:56
  SPEAKER_00: The last thing you want to do is trust a tool like this, where it's not valid.
• 5:59
  SPEAKER_00: Guys, AI is an awesome tool.
• 6:01
  SPEAKER_00: We use it in several areas of our business.
• 6:04
  SPEAKER_00: But, you know, someone, an executive at some of the really big company, you would know the company, I'm not gonna share it, but uh a friend of mine, his dad, is an executive at a very, very, very big organization.
• 6:14
  SPEAKER_00: And he's actually part of the tech department.
• 6:16
  SPEAKER_00: And he has been saying for the last few years that garbage in is garbage out.
• 6:21
  SPEAKER_00: If you assume the data going in is good and the data coming out is good, then you're gonna make poor decisions.
• 6:27
  SPEAKER_00: He said you should trust, yes, trust the tool, but always verify.
• 6:32
  SPEAKER_00: It's a saying we have in our office: trust, but verify.
• 6:35
  SPEAKER_00: Verify the data going in, verify the data going out.
• 6:38
  SPEAKER_00: It takes not as much time to do a full analysis, right?
• 6:41
  SPEAKER_00: Because a lot of legwork is being handled by the AI agent, right?
• 6:44
  SPEAKER_00: Or the AI tool, but make sure that you're verifying that it is accurate.
• 6:48
  SPEAKER_00: Guys, these are the kinds of conversations that Tiff and I are having every single week inside of our free community.
• 6:53
  SPEAKER_00: Real deals, real numbers, and what we're actually seeing in today's real estate market.
• 6:58
  SPEAKER_00: And we go live every single week to answer your questions.
• 7:01
  SPEAKER_00: If you're an investor and you want to be part of these conversations, I'll put the link in the description here.
• 7:05
  SPEAKER_00: I'll see you there.
• 7:06
  SPEAKER_01: If this hits home and you know you need to go deeper, I want you to download the free resource that I recently just built.
• 7:13
  SPEAKER_01: It's at www.rdebook.com.
• 7:16
  SPEAKER_01: Again, that's www.rdebook.com.
• 7:20
  SPEAKER_01: It's called 26 Mistakes I Made as a Real Estate Investor.
• 7:24
  SPEAKER_01: You'll get the playbooks, the stories, and the breakdowns so that you can shortcut all the mistakes I made while building this multiple seven-figure real estate business and start doing deals way smarter than I ever did sooner and faster.
• 7:36
  SPEAKER_01: And hey, if you got value today, it would mean a lot to me.
• 7:39
  SPEAKER_01: It actually would mean the world to me.
• 7:41
  SPEAKER_01: If you left a five-star review on Apple or Spotify and left me a review and share with a friend who you think is stuck doing it all themselves right now.
• 7:51
  SPEAKER_01: Because one shift in strategy could be six figures or more.
• 7:55
  SPEAKER_01: Talk soon and see you on the next episode.
• 7:59
  SPEAKER_01: This episode has come to an end, but your journey continues.
• 8:03
  SPEAKER_01: Subscribe to the podcast so you never miss an episode.
• 8:06
  SPEAKER_01: If you want direct help from us, join our free community by visiting the results driven podcast.com.
• 8:12
  SPEAKER_01: That's the results driven podcast.com.
• 8:16
  SPEAKER_01: We'll see you next time on the results driven podcast.
• 8:18
  SPEAKER_00: We'll see you next time on the results driven podcast.