Real Investor Radio Podcast

Craig Fuhr (00:00)
Hey, it's Real Investor Radio with Craig Fuhr and Jack Bevere. We're doing some hot takes today on just a bunch of topics, mainly really sort of giving some predictions on 2025 as well as sort of a year in review for 2024. Jack, you mentioned on the last episode, we were talking about technology as it pertains to real estate investors and obviously what we do here at Dominion Financial with real estate lending. And

You know, we've I feel like we've kind of dipped our foot in the pool a little bit over 2024 Jack with AI and it was mainly from a, you know, chat GPT. We'd set up a couple chat bots and, you know, try to figure out loans and, you know, use it that way. Maybe punch up some emails and stuff like that. But with a gentic AI that's that I think will be emerging in 2025 as well as.

know, one thing that I haven't really had a chance to take a whole lot look at Jack, what is co-pilot with with Microsoft and sort of how cope, how AI will then go across all the Microsoft software that we all use on a daily basis to help us be more productive. Man, I wanted to get a hot take from you on some of the things that that you'd like to talk about that Dominion has been working on, as well as how you see

AI in the coming year really affecting white collar workers as well as what we do as real estate investors.

Jack BeVier (01:30)
Yeah. Yeah. So like you just said, we've been paying attention to ChatGPT because it was a new technology and people are trying to figure out like, is this going to impact the world? If so, how, and try to stay on the front edge of that curve. And we've been paying attention to that very closely. When I think we really hit, we got really excited though, here internally at Dominion when the chat GPT 4.0 model came out because the level of intelligence and analysis that, that,

You know, the, came with that version of the model really felt like an inflection point where you could, and, know, we different UK use cases, you could feed it a large amount of data, ask it questions and get like really solid answers. and then with some, with some human reinforcement learning, with some training, you could actually really teach it to be an expert in something. And so we are, and, and as you mentioned, you know, and now we're going to be entering this next phase of agentic AI where, where.

the AI will actually be able to do repetitive tasks along with still having that intelligence aspect that's already built into it. And you can really start to see now how this digital labor is going to be entering the workforce, the American workforce in the global workforce in 2025. And I think that there's going to be really profound impacts on white collar labor specifically.

I think there's an interesting labor dynamic that's about to happen. White collar labor is going to be disrupted in terms of significant productivity gains for those who adopt it. you'll be left behind if you ignore it on the white collar labor side of things. It probably affects the blue collar labor aspect of the economy less, which is interesting. That's usually. Yeah. Yeah. Yeah.

Craig Fuhr (03:13)
It's hard to get AI to swing a hammer.

Jack BeVier (03:17)
But that's been the story of the past 50 years, right? Is like white blue collar jobs being exported, shipped overseas and those folks, the blue collar folks getting disrupted. Well, now technology is coming for the white collar labor and that'll be an interest.

Craig Fuhr (03:32)
and

everyone wants to go buy the next plumbing company. Yeah.

Jack BeVier (03:36)
Yeah, yeah, exactly. So it's gonna

be a really interesting, I don't know, I think frankly, like social unrest and political implications of that are pretty widespread. And we haven't seen this before.

Craig Fuhr (03:47)
Well, let me ask you,

let me ask you, man, because one of the things that I know about you is that you care about the people that work here. And you just you just said on the last episode that Dominion Financial now employs about hundred and ninety six people, I think you said. And and how those people are in a living to support their families. And but but I know you care about that and I know Fred does as well. Your take is that.

Jack BeVier (04:02)
Mm-hmm, yeah.

Craig Fuhr (04:12)
AI will make us way more productive. And I guess the sort of the flip side of that, Jack, is that when you have five employees that are now 10 times more productive, do you need the additional 15? And I think that's a real fear for most folks who are contemplating the ramifications of AI and its

fast, I mean, lightning adoption over the coming next year to two. So what's your take on not only how it will disrupt what we do on a daily basis, but how it might disrupt what, you know, what a person's career is?

Jack BeVier (04:55)
Yeah, I think that it depends on who they're employed by, right? Like if you are, if you are a worker who is employed by a company that doesn't want to adopt, that doesn't want to change, then I think that that company is going to, and doesn't change its cost structure and just does the same amount of business with the same amount of people. Well, they're going to be, you're going be doing it much more expensively than the new company or the company that, that, adapts to this. Right. And they're going to be able to under price you.

and they're going to steal your market share because your products are more expensive than their products for the same quality. And that'll be a tremendous mistake, right? It'll be a tremendous mistake to ignore this idea. Instead, I want to be that early adopter. I want to be the, I want to be the, company that figures out how to get significant productivity gains out of its people and starts eating everybody else's lunch and growing the pie.

Craig Fuhr (05:28)
Mm-hmm.

Jack BeVier (05:46)
Right? Like it's not a, this, you know, economics are not a zero sum game. It's not necessary. There will be losers, but I think in this situation, you have the opportunity to control your destiny and adopt that technology, figure out how to incorporate it into your workflow to make your, to make yourself much more productive and do a lot more business than you ever thought was possible. There are certain things that the technology cannot do and

Craig Fuhr (06:05)
Mm-hmm.

Jack BeVier (06:13)
there are things that are still fundamentally human. And the economy is still, you know, the to human interaction and judgment and creativity are things that no one is talking about the AI being able to do right now. And so I think that what we're going to need to do is to figure out which things are fundamentally human and which things are just prefrontal cortex, you know, just knowledge-based prefrontal cortex.

Craig Fuhr (06:37)
What are your initial

thoughts on that? mean, what thoughts have you given to that? What things are fundamentally human?

Jack BeVier (06:42)
in terms of like what is and what is it?

Yeah. Service, right? Like serving, serving other people, the, the, cannot make, you know, get the same dopamine rush from, interacting with the chat bot than I can from a, from a personal conversation or hanging out at the bar or having a great, you know, having a great conversation with somebody about their business. Like that's not something that that is, you know,

we fundamentally have, you know, believe that that is a valuable thing and that's not going to go anywhere, but scrolling through a PDF and pulling out data and then typing it into another database. There's nothing high value about that, right? Like that's a frankly, a low value use of a prefrontal cortex. And so that stuff's going to get disrupted. I frankly, I frankly think that the,

condition of workers is going to be much is going to improve significantly, right? Because all that stuff that doesn't that when you feel like you're dying, right? Like, like office space, right? Like the movie office space, all of that, that entire office is going to be replaced, right? But that's a awful place to spend your life as a human anyway. So this is a good thing, right? Like we're going to figure out where we you know, we're going to get outside, we're going to interact with other people, we're not going to be scrolling through PDFs and typing into

Craig Fuhr (07:43)
Yes, yes.

Jack BeVier (08:01)
typing on keyboards all day, you for eight hours a day. And I think this is like, I'm fundamentally like very optimistic that this is going to make life better. But don't, but you have, but, you have to be the one adopting it for it to accrue those benefits. And so we're, it's a big, it's going to be a big challenge to navigate how to do that. There's going to be a lot of disruption. There will be some short-term pain for some folks, but I think that the

Craig Fuhr (08:18)
Two things.

Jack BeVier (08:28)
The faster you get obsessed with this idea, the better off the company will be, the better off the people will be.

Craig Fuhr (08:35)
From a lending standpoint, one of the things I love that Fred, your partner in the business, always says is that this is a relationship business. It was a relationship business when you walked into your local bank. It's a relationship business now. I always believe, Jack, with all my heart, that this will always be a relationship business. What are your thoughts on how AI would impact that if that's even a thing?

where that human to human interaction, I mean, could you ever foresee a time where a borrower was speaking to some sort of AI agent for his loan?

Jack BeVier (09:13)
Yeah, you could. But I don't know. I think that we can tell, you know, like, I haven't heard any demos that, you know, I'm like, Oh, it's pretty good. It sounds like a, it sounds like a mindless, you know, it sounds like the person that I call who's who's working in some cubicle, but like, but that I never develop a relationship with that person, right? Like, you know, it is, it is English. It extract extracts data.

Craig Fuhr (09:28)
Yes.

It gets the job done, but there's no relationship base there.

Jack BeVier (09:39)
but it doesn't develop a relationship. And I think that that's gonna end up being the fundamentally human component is, you know, things exactly what you're talking about.

Craig Fuhr (09:46)
Yeah. the other, the other,

the other thing I wanted to touch on was how AI could impact marketing. and, and from a lending standpoint, as well as from right from the investor level standpoint, so much of what you do with Dominion properties is acquisition. Jack, you, you mentioned that you guys are still buying a hundred properties a year.

And that's just a big data mining operation. Find the best lists, you know, make sure that you're, that you're really marketing to sellers who are probably most prime to sell at a discount. I really feel like the better list providers, guys who we know, the guys who are like running prop stream, for instance, or any of those companies, if they're not early adopters of AI and how to make real estate marketing

better and more efficient for the average investor. I think they're really missing out on something really big in terms, not only in terms, Jack of just getting a better list, but how could AI be used to do all of the follow-up that you have to do on every lead, you know, in terms of email marketing, direct mail, all of that stuff could be automated. And I think that's all coming very, very quickly.

Jack BeVier (11:00)
Yeah, I agree with that. mean, certainly I think the analysis of large data sets is something that is already happened, is just going to get better. I think we're going to see some disruption in terms of the data analytics side of the business. I'm aware of a couple of companies that are new companies right now that are taking aim at a lot of incumbents. And so I think that that'll be happening this year. I completely agree with that. I think that a lot of the, one of the things that, you know, it's

The idea, particularly with agentic AI, when we have agents, that idea of this digital labor force being added to the market that makes scaling much easier than it used to be, much, much easier than it used to be. You can buy digital labor via tokens as opposed to hiring people. so anything that is, any baseline administrative work or

Craig Fuhr (11:32)
Mm-hmm.

Jack BeVier (11:53)
or frankly, even like intelligence based work, you knowledge based work is going to be completely automatable. And as a result, you'll be able to, and if you just throw more tokens at it, scale, scale those ideas much faster than we've ever been able to do before. You know, the idea of right now we talk about, you know, want to scale my, my, my cold calling, my cold calling department. You

outsource that to India or the Philippines or Columbia or something like that. Now it's going to be no, we're going to, I'm going to teach my AI how to have these conversations. They're going to do it much better with a much better consistency. I'm going to be able to tailor the fricking accent, you know, to, I'm calling a, I'm calling a three one seven. I want it to have an Indiana accent, you know, like, and you know, we could, you know, you could never do that with humans, right?

but to like, like teeing up leads and then, then be like, well, how many, know, how many leads do you want today? I want, you know, I want 153 leads today. It will just, you press a button and it will call you until 153 leads are in your inbox. Right. And then, but then someone's not, but I don't think the selling is going to happen there. I think like the team, the teeing up might happen there, like the, you know, gauging interest pulling in the, you know, the, top end of the funnel is going to be very scalable. But I still think that

Craig Fuhr (12:57)
No.

Jack BeVier (13:07)
I still think the AI is going to lose to a sales guy sitting across the table, you know, looking in the whites of your eyes, asking you about, your life, they'll lose to that guy, you know, the AI is going to still lose to that guy. There's still a fun, there's still a portion of the business that is still fundamentally human. but it, think, but I do, I do think it'll allow the scaling aspect and the low level, the administrative aspect of it to be, to be done much more simply, and much more scalably than we've

Craig Fuhr (13:11)
across the table.

Jack BeVier (13:36)
than we've thought about before.

Craig Fuhr (13:37)
On the call the other day, you, uh, you implored us all to take, start doing it rather than doing death scrolling on our phones to start doing some, uh, YouTube videos at night on AI. And I've actually been doing it for months. So I thought that was a great, great advice from you, man. saw a demo on a data center call center that Google already has just kind of ready to go, or it could have been Amazon. I apologize. But the, the, uh, it was a, uh, a human calling in.

And they were talking to AI. There was zero latency. It felt extremely personable. The AI, you know, so I call up Amazon for like a widget and the AI is then like, well, you looked at this widget, but are you interested in maybe this widget and this widget as an alternative? It was brilliant. I, I really, I was completely sold on it. So for that kind of stuff, I get it. But yeah, sitting across the dining room table from someone who's in distress,

and really needs to sell their house. We're not there yet. We're not there yet. But it's not infathomable to think that we might be that good within a few years. So any last thoughts on AI before we jump on to another episode?

Jack BeVier (14:49)
Yeah. yeah, real quick. I've mentioned this in previous episodes, but for folks who aren't listening to every single one, I'll, I'll mention it again. So you're missing out. I think that, I think that this round of technology is always deflationary, right? That's something fundamental about technology. New technology comes out, productivity increases cost to cost to produce the same goods goes down cost to produce the same labor goes down.

Craig Fuhr (14:54)
Shame on them.

Jack BeVier (15:13)
And that an AI we know different, right? We're going to have a, it will have a deflationary effect on white collar labor. So this one's interesting though, cause it's going to have a deflationary effect on white collar labor for the first time. And you'll see massive productivity gains in white collar labor. It's not going to make swinging a hammer much cheaper, much cheaper at all. It's not going to make the cost of lumber any cheaper, materially cheaper. And so.

I really interested in the idea of investing in real estate as a hedge against inflation, is, know, it's historically been, I think it's even better now, right? Because inflation is going to be the combination of, of, you know, labor, productive or labor prices, right? So you might have downward pressure on white collar labor. but I don't think you're going to have much downward pressure on blue collar labor and

most of the or a very large percentage of the inputs into producing real estate are blue collar labor. And so if we're aiming for a 2 % inflation rate across all increase in labor, that's not going to be equally proportioned, right? Like that'll be a weighted average of, you know, zero or 0.5 % white collar labor increase. And, and that'll be blended with blue collar labor, which, you know,

which probably goes up at maybe goes up at three and a half or 4 % and the weighted average of those two is 2%. So if I'm buying an asset that is indexed to blue collar labor, I feel like that's going to outperform versus other assets that are indexed to white collar labor, like perhaps the stock market, for example. And so I could see a place where now you also have significant productivity gains. So I'm not saying that the stock market's going down. Like the pie is going to get a lot bigger here.

any but but but in terms of the and the concept of real estate as an inflation hedge, I really like the idea that is more attractive of an investment to me with AI coming than without AI coming. And so I'm kind of like, you know, encourage the double down on on continuing to buy real estate, even as know, prices continue to go up, I still think that that's going to be an outperforming segment of

an outperforming asset class.

Craig Fuhr (17:31)
Speaking of labor, another great tease, Jack, for our next episode where we're going to talk about a fascinating study that was recently done by Zelman and Associates regarding labor and potential tariffs that might be coming from the incoming Trump administration. So that was a quickie on AI. I hope you all enjoyed that. As always, we encourage your comments and suggestions on any other content that you might be interested in.

Craig Fuhr and Jack BeVier, Real Investor Radio. We'll see you on the next one.