🤖 How AI could cut the renter pool by 10%

👋 Happy Sunday, Best Ever readers!

In today’s newsletter, AI takes renters’ jobs, the FTC cracks down, a Ponzi scheme (allegedly) emerges, newer apartments dominate, and much more.

🎟️ Five years ago, two strangers met at the Best Ever Conference. Today, they're GP partners running a multifamily investment group. Read their story below, and claim your spot at BEC X today. Your next deal or partner is waiting.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

⚠️ FTC Crackdown: The FTC sent warning letters to 13 property management software providers, cautioning that they may violate federal law if their platforms inhibit rental managers from displaying total pricing. The action followed the agency's $24 million settlement with Greystar for allegedly excluding mandatory fees.

🏦 Servicing Surge: CMBS special servicing climbed to 10.86% in November, reaching its highest level since 2013 despite falling loan balances. Office properties drove 43% of the $2.3 billion in new transfers, with the office sector's rate hitting 17.16%.

🏛️ Housing Axed: House Republicans stripped the bipartisan ROAD to Housing Act from the National Defense Authorization Act, blocking what advocates called the most significant federal housing legislation in over a decade. The Senate Banking Committee had passed the 40-provision package unanimously in July.

📊 Occupancy Dips: National apartment occupancy fell to 95.4% in Q3 as resident retention climbed toward all-time highs, with lease renewals reaching 55%, according to RealPage. Home values have risen at twice the pace of market-rate rental units since 2020, keeping households in rentals longer.

🔴 Ponzi Allegations: UK-based Godwin Capital entered administration in June owing investors £162 million after administrators discovered funds weren't secured on properties as promised and new investor money was used to repay earlier investors. Fraud experts reportedly say the pattern appears to be a Ponzi scheme.

🏆 TOP STORY
HOW AI COULD CUT THE RENTER POOL BY 10%

Elon Musk recently predicted that most computer jobs will disappear in three years, and jobs "moving matter" (physical labor like delivery, warehouse, construction) will be gone in 10 years. For multifamily investors holding assets through 2030, that's not a tech prediction. It's an occupancy question. With 183,000 tech workers already laid off in 2025 (following 239,000 layoffs in 2024) and administrative roles facing similar pressure, the question isn't whether AI will reshape the tenant base — it's whether operators have stress-tested for it.

And it’s not just Musk. MIT's Iceberg Index warns that AI is already capable of replacing 11.7% of the U.S. workforce. Goldman Sachs identifies the highest-risk occupations as computer programmers, accountants, administrative assistants, customer service reps, and credit analysts — the white-collar workers generally filling Class B and C apartments.

So, what could this really look like?

• The 10% scenario: If AI displaces even 10% of the workforce (conservative vs. Musk's prediction), that's 15-16 million people who could either need government assistance to pay rent or double up with family.

• What it means for underwriting: Most GPs are modeling 3-5% rent growth and 94-95% occupancy through 2030. But if your property has 30% of tenants in administrative/IT/customer service roles, you're modeling for 2019, not for current structural employment risk.

• The government wildcard: Universal basic income could stabilize rent payments (people still need housing). But if it doesn't materialize, Class B/C assets in white-collar markets could face compression.

The geographic risk is uneven. Tech hubs like San Francisco, San Jose, New York, and D.C. face immediate pressure. But administrative-heavy cities aren't safe either. Kansas City has 40,000 workers in the 10 most AI-susceptible occupations, with 23,750 customer service jobs where 44% of tasks could be automated. 

Elsewhere, five states—South Dakota, Kansas, Delaware, Florida, and New York — have more than 10% of workers vulnerable to displacement, while markets like Las Vegas, Orlando, Phoenix, Nashville, and Salt Lake City also show significant exposure, mostly in customer service and office roles that fill workforce housing.

THE BOTTOM LINE

Whether you’re an LP or a GP, this trend is worth monitoring. LPs should ask GPs what percentage of tenants work in AI-vulnerable sectors and how that affects 2028 exit assumptions. GPs should track tenant employment by industry now — not when renewals drop — and focus on recession-resistant sectors like healthcare, education, and skilled trades where AI complements rather than replaces workers and tenant bases could remain unaffected, or at least are less vulnerable.

🎉 BEST EVER CONFERENCE
ONE CONNECTION, A MULTI-MILLION-DOLLAR PARTNERSHIP

Five years ago, Arn Cenedella and Dan Rowley were strangers on a video call at the 2021 Virtual Best Ever Conference. Today, they're GP partners running Spark Multifamily Investment Group together — a thriving business born from a single session.

Dan started as an LP investor with Arn’s company, saying, "I could see that he was finding good deals and they were operating their deals in a very superb fashion." What began as a capital relationship evolved into something bigger when they realized their strengths complemented each other perfectly.

🚀 This conference connection didn't just lead to one deal — it sparked an entire business partnership.

This is what happens when hundreds of serious investors gather in one place. The Best Ever Conference isn't just about the sessions or the speakers—it's about the person sitting next to you who could become your next partner, investor, or mentor.

💰 CRE BY THE NUMBERS
NEWER VINTAGES DOMINATE APARTMENT SALES

Apartments built since 2010 represent just 22% of the market, yet they're driving 52% of all U.S. apartment sales, according to data from Newmark Research. It's a lopsided trend that says everything about where investor dollars are flowing, and what they're avoiding. Expand the lens to include properties built since 2000, and the imbalance gets even starker, as they represent 67% of all sales over the past 12 months, despite making up only 29% of total supply.

🤔 So, why the flight to new? According to rental housing economist Jay Parsons, it starts with renters, who've skewed heavily toward higher-quality buildings. Investors are chasing that demand, especially since tenants in newer Class A properties spend a smaller share of income on rent — leaving more runway for normalized rent growth without hitting affordability walls.

💸 Then there's the capex problem. Those 1970s and 1980s buildings? They're only getting older, and buying them means underwriting serious maintenance spend and value-add upgrades. That math worked when vacancy was low and debt was cheap. Today, it requires steep discounts to make sense.

The short-term value-add crowd that dominated older-vintage deals has also largely disappeared—either stuck managing distressed portfolios or finding today's rate environment hostile to quick-turn renovations. And because newer properties attract more buyers, they're simply more liquid. The trend feeds itself.

👉 For more on this trend, join the conversation on LinkedIn.

🎙️ THE BEST EVER CRE SHOW
WHY THE WAVE OF DISTRESSED DEALS IS JUST BEGINNING

Rod Khleif owns a 200-unit lakefront asset in San Antonio. Right next door sits a similar 300-unit property that sold for $43 million in 2021. Today, the bank owns it at $28 million, and according to Khleif, who has been keeping tabs on the property, it still doesn't pencil until $24 million.

That's a 45% haircut from peak pricing, and it's exactly the kind of distressed opportunity he expects to flood the multifamily market.

"I'm on the opportunity camp," Khleif told Pascal Wagner on the Best Ever CRE Show this week. "I think there's incredible opportunity here. In fact, it's already here." He went on to discuss why he believes 2026 could be the best buying environment in a decade.

• Extend and pretend is ending: Lenders have been doing deferrals and loan modifications like crazy, but a trillion-dollar debt wall is coming due. "The proverbial shit's going to hit the fan," Rod says. When operators face maturity, they either have to sell or refinance — and sales are down 80-90% while refinancing is brutal due to debt service coverage requirements.

• The debt squeeze is crushing everyone: Rod knows operators doing capital calls right now. He's seen reserve payments jump from $8,000 to $80,000 monthly on adjustable-rate debt. "Very respected, wealthy operators are struggling," he notes. If you locked in debt at 3% in 2021 and you're refinancing at 8-9% today, there's no way to make up that gap operationally.

• Lenders don't want to foreclose — yet: Banks are avoiding foreclosures because putting distressed assets on their balance sheets tanks their stock price. But the math only works for so long. Rod expects the wave of actual foreclosures and forced sales to hit hard in 2026.

Rod's advice for investors? Start positioning now. The deals are surfacing, and operators with dry powder and conservative underwriting will have their pick. "With crisis comes opportunity," he says. "And there's definitely a meltdown in our space right now."

🎙️ Listen to Rod's full episode here.