🤖 How investors are really using AI

👋 Hello, Best Ever readers!

In this week’s newsletter, AI streamlines acquisitions, Trump calls out Powell (again), and investors fight taxes (and win).

Today’s edition is presented by Capital Gains Tax Solutions. Selling a property shouldn't mean losing 20-50% to taxes. Let Capital Gains Tax Solutions create your personalized exit plan and calculate your savings today.

🚨 Also … LAST CHANCE to join us and our special guest from Neutral at Noon EST today for a FREE live event — Multifamily's Next Frontier: Wellness-Oriented Sustainable Development. Register here to save your seat, and if you can’t attend live, register anyway and we’ll send you the replay.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

Rates Hold, Shots Fired: President Trump called Fed Chair Jerome Powell a “fool” this morning after the Fed held interest rates steady at 4.25%-4.5%. The Fed gave no indication that a June cut was imminent, citing that “uncertainty about the economic outlook has increased further.”

Let’s Eat: Restaurants lead U.S. retail expansion with nearly 3,000 of 7,770 new store openings in 2024-2025 coming from dining concepts, followed by grocery chains like Aldi and discount retailers. Fast food brands including McDonald's, Chipotle, Wingstop, and Dutch Bros Coffee are among the leaders in openings.

Trump Eyes HUD Cuts: Trump's new budget proposal seeks 44% cuts to HUD funding, reducing it from $77B to $43.5B. The plan would transform Section 8 vouchers into state-based grants, slashing rental assistance by nearly $27B despite housing advocates' concerns about impacts on low-income families.

Doubling Down: A recent survey shows 44% of global family offices plan to boost CRE investments within 18 months, seeking stability amid economic uncertainty while favoring tangible, income-generating assets like industrial and multifamily properties.

Moving Season: Washington, DC leads nationwide renter engagement in Q1 2025, with Las Vegas and Fort Lauderdale making dramatic jumps of 88 and 71 spots as the busy summer moving season begins. Southern cities dominate the top 30 while Midwest markets claim most top 10 positions.

🏆 TOP STORY
HOW CRE INVESTORS ARE REALLY USING AI

AI is everywhere. And like it or not, if you’re not using it, you’re getting left behind. Joe Fairless recently hosted a series of live panel discussions in the Best Ever Community with active CRE investors to find out how they’re using AI in their businesses. In the first of this three-part series, Joe was joined by four investors who are using AI to streamline their acquisition processes.

Here are the tools they’re using, how they’re using them, and how you can implement them into your strategies.

🎨 Bo Barron, co-founder of Hearthstone Capital, relies on Google's Notebook LM because it limits AI analysis to specific uploaded documents. "I don't want any creativity when I'm trying to learn a market," he says. "I want it to look at the data I've provided and do all that great AI stuff that saves us time, makes us more efficient, and helps us make good decisions."

• How He Uses It: Bo searches for market reports using AI search engine Perplexity to request market reports. For instance, he'll prompt, "Find me all the market reports on industrial for Seattle," and Perplexity will gather reports from CBRE, JLL, Moody's, CoStar, etc. He then uploads these reports to Notebook LM and asks targeted questions about metrics like job growth or vacancy rates.

• The Benefits: Like most AI, the benefit for Bo is speed. As a fund-to-fund investor looking at deals across the country, he needs to quickly understand unfamiliar markets before evaluating specific properties. Instead of spending hours studying market fundamentals, he can rapidly assess whether there's sufficient job growth and evaluate other key indicators to make an area investment-worthy.

• How You Can Do it: Sign up for Perplexity and use simple prompts to search for market reports in your target markets. Create a Google Notebook LM account and upload the documents. From there, identify the key metrics you use to evaluate a market and ask Notebook LM to isolate those metrics, creating a custom market snapshot to help you vet opportunities.

💪 Lance Pederson, co-founder of Passive Advantage, built a custom application that integrates with several AI platforms, with a particular focus on AI21's Jamba model. He chose this lesser-known tool specifically because of its low cost and high accuracy compared to other options like OpenAI.

• How He Uses It: Lance's system assigns different AI models to different tasks based on their unique strengths, creating what he describes as "a whole team of workers going to work with their own specialization.” He uses custom prompts for each tool to extract key market data like median household income. His team feeds in property zip codes, and the system automatically retrieves and analyzes relevant market metrics.

• The Benefits: The primary benefit is more accurate market intelligence at a lower cost. By matching specialized AI tools to specific tasks rather than using a one-size-fits-all approach, Lance says his system delivers higher quality analysis that helps both his team and investors quickly determine whether a potential investment merits deeper investigation.

• How to Get Started: The real key here is testing different AI models like OpenAI, Claude, AI21, etc., to identify which ones perform best for your specific investment criteria. Then, build custom prompts to optimize each tool. It’s a more labor-intensive approach, but the benefits of having your own customized AI army will be tenfold.

📊 Perry Zheng, founder of Cashflow Portal, also uses different AI tools based on their specific capabilities, with Claude being his preferred tool for PDF-to-Excel conversions and ChatGPT serving as his all-purpose solution.

• How He Uses It: Perry uses Claude to convert messy financial PDFs (particularly mom-and-pop spreadsheets) into structured Excel data. His underwriting software then creates "semantic labeling" for each data point, making it possible to ask complex questions about the deal and unstructured financial data into meaningful insights.

• The Benefits: This approach helps Perry spot potential issues early in the underwriting process, compare metrics against standards, and generate questions to ask the seller that might otherwise be missed. It also helps him draft investor-friendly newsletters and presentation decks, streamlining both analysis and communication.

• How to Get Started: Start by identifying how to properly structure your financial data. Perry recommends using specialized underwriting software (like his Cashflow Portal) that converts spreadsheet cells into labeled data points AI can understand. The critical step is creating what Perry calls "nomenclature" for your data — explicitly defining what each number represents (rent, expenses, unit types) so AI can make meaningful connections between them. This structured approach is what enables asking sophisticated questions about deals that raw spreadsheets can't support.

🔎 Paul Hopkins, director of acquisition at CPI Capital, relies heavily on ChatGPT Plus as his daily AI, leveraging the custom GPT creation functionality that doesn't require any coding skills.

• How He Uses It: Paul's star application is his custom "OM analyzer" GPT that he's trained to process offering memorandums from brokers. When he uploads an OM, the tool extracts property information, business plan summaries, value-add opportunities, cost estimates, unit breakdowns, in-place rents, and pro forma projections in a consistent format. He's also set parameters for it to calculate property valuations based on specific cap rates he inputs, giving him instant deal analyses.

• The Benefits: This approach saves hours on every deal evaluation, providing a standardized "back of the napkin" analysis that allows Paul to quickly compare broker asking prices against calculated valuations, helping him determine if a property is worth the whisper price.

• How to Get Started: Start with ChatGPT Plus and create your own custom GPT, which ChatGPT itself can show you how to do. You can specify exactly what information you want extracted from documents and how you want it formatted to create custom reports.

WHAT IT ALL MEANS

You don’t have to be an expert to implement AI into your business. Even a basic understanding of different tools’ capabilities and how to prompt can be a competitive advantage. Like anything, it just takes a little education and creativity.

🎙️ For more on how investors are using AI in their CRE businesses, listen to the full podcast episode on AI in Acquisitions, as well as the episode on AI in Capital Raising, and tune in to the Best Ever CRE Show on Monday for the final episode on AI in Operations.

💰 CAPITAL GAINS TAX SOLUTIONS
A BETTER WAY TO SAVE ON CAPITAL GAINS TAXES

Selling a property shouldn't mean losing 20-50% to capital gains taxes. And while most investors think their only option is the outdated, restrictive 1031 exchange, there is a better way.

Capital Gains Tax Solutions has helped countless investors preserve wealth through deferred sales trusts. With over half a billion dollars in closed trusts across real estate, businesses, and even Bitcoin, their results speak for themselves:

• A San Diego business owner selling for $13M kept an extra 40% by deferring taxes

• A dental practice owner selling for $16M saved 30% on taxes

• Multiple clients rescued failing 1031 exchanges with Capital Gains Tax Solutions’ specialized exit plans

Don't settle for outdated strategies. The Deferred Sales Trust advantage gives you flexibility, time, and control while allowing your wealth to compound as you slowly pay taxes over time.

But don’t wait! You must act before closing escrow. So, if you have an upcoming sale with at least $1M in proceeds or gains, let Capital Gains Tax Solutions create your personalized exit plan and calculate your savings today.

✍️ BEST EVER BLOG
HOW INVESTORS ARE FIGHTING PROPERTY TAXES

In CRE, increasing NOI means tracking every expense. Yet many investors overlook the most significant opportunity for savings: Property tax appeals.

Recent data from Ownwell reveals interesting patterns about which property owners are most likely to protest their assessments and which counties offer the most favorable outcomes.

• The Problem, and the Opportunity: Commercial property owners in high-growth markets face assessments exceeding actual market value. Ownwell's analysis shows Texas commercial values increased 7.44% in one year, with successful protesters reducing assessments by $357 million while non-protestors lost $25.38 million in potential savings. For investors, lower tax assessments directly increase NOI by reducing operating expenses.

• Millions Won, Millions Left on the Table: Ownwell’s report found that protest participation varies dramatically by property size, as 98.35% of properties valued over $50 million file protests versus only 40.88% of properties under $500,000. Larger investors recognize the value, while smaller owners often lack awareness of potential benefits.

• Where Protesters Are Winning: The math is clear: Dallas County protestors saved $84.7 million in 2024, with non-protestors missing out on $6.37 million. In Harris County, protestors saved $64.63 million. Even in smaller markets like Williamson County, properties worth over $50 million saved an average of $30,600 each.

As property values continue to increase and local governments seek additional revenue, the gap between assessed values and true market values is likely to grow. CRE investors who proactively manage their property tax expenses will maintain a significant competitive advantage in maximizing NOI and overall investment returns.

For those who haven't yet incorporated property tax protests into their investment strategy, the question isn't whether you can afford to protest, it's whether you can afford not to.

👉 Read more.

🏘️ DEAL OF THE WEEK
$1.2 MILLION IN ADDED VALUE WITH AN 8% PREF

Nico Salgado of Small Axe Communities completed a multifamily renovation project in Lakeland, Florida, navigating market challenges while making substantial property improvements and preparing for a profitable exit after just over two years.

Here's how he did it 👇

🏢 Property Details: This C Class multifamily property consists of 44 units built in the 1970s with concrete block construction. It is located in Lakeland, Florida, and was purchased in December 2022.

💸 Finances: The property was purchased for $5.85 million (less $200k in seller credits) with $2.55 million in capital/equity raised. Debt consists of two separate loans:

• Loan 1: A $1.35 million loan from Fairwinds Federal Credit Union at 4.98% fixed for five years with six months interest-only, followed by a 25-year amortization

• Loan 2: A $2.7 million loan from U.S. Century Bank at 5.85% fixed for five years with 12 months interest-only, followed by a 30-year amortization.

💼 Business Plan: The strategy included complete renovations to the property and fixing deferred maintenance in year 1. In year 2, they upgraded the community by replacing windows, adding fences, and a dog park. Unit upgrades were paused after initial renovations — the team plans to test the market by upgrading 10% of the units in 2027.

🍾 Results: The team has distributed $88,000 so far, though distributions were paused during the Summer to maintain stability, manage occupancy, and cover rising turn costs when tenants leave. The property is being listed for sale at $7 million to secure the 8% preferred return for investors and facilitate an exit.

💪 Biggest Challenge: "The biggest challenge was dealing with market challenges such as an oversupply in 2024, as well as rising expenses," Nico says. The team also faced a setback when they lost $50,000 to a negligent contractor who had successfully completed over $100,000 in work previously. However, they were able to dispute the charges with their AMEX cards and were reimbursed the full amount.

👉 If you have a deal you'd like us to feature, share it with us!