Data Signals Of A $1B Portfolio With Neal Bawa

I managed just to rewrite history 'cause I'm in the mood to label us the leaders of the leaders of the new school. This ain't for the radio, can't find this on YouTube. This the type of killing that these critics ain't used to. Victorious, victorious, victorious, victorious, victorious. In this day and age, I got time for innovation, time to be creative, time too big to waste on my time on critics hating. Flattered by your opinions, destroy you while just embracing. Now watch a worldly sunrise up, your daylight savers go nuts when I have to. Glazed up my sound and there's beats on the house that we dreaming. Watch me wake back up in their castle, my thoughts are distorted. 'Cause I recall guys were hating on Commonly all of them, but can't common denominators. Hold up. Tried to overlook a rival. All eyes on me 'cause I got no competition. Now looking at an idol. Your dough ain't long enough to pay for my attention. Man, it's the gospel for the black sheep. I guess it got a banging ring to it. Quiet, we're triumphing on the rap league. So all of you mother could sing Now I be burning these critics 'cause they ain't know they was walking their course while burning they bridges. Hold up, hold up. Man, whoever thought I'd be rapping? Rapping? The family ain't never think that can happen. Matter of fact, only person that ever pushed me to get out was my mother, and the only reason was 'cause I can track. Heard that Carmen's that chick that you put a ring on. And by the looks at your life, guess she's a cling-on. It's on me. Dudes had they lead on the board, but game change over time, so I even the score. Youngins, bet it up. Learn how to step it up. Without a doubt, the number one value of Black Card has been the caliber of people.

If you have the drive and ambition to launch a fund, then there's no excuses once you join BlackTie. Well, otherwise you're going to be figuring it out. Even with Bridger's YouTube content, it's not gonna, you know, get every little piece, um, you know, put together. And the ability to just learn, like the knowledge, and nobody is— it's an abundance mindset versus scarcity mindset. And I think that is such a huge thing For anybody start—

looking to start a business.

The best thing is the quality of the people that are in the group, right? And that God loves you, and I wish nothing but success and happiness for all you guys. And they have coaches in place to help you with that too, and to change your perspective around things. It's just—

it's very—

the incentives to be in it far outweigh what you pay out. So the caliber of the people here has been amazing. The biggest value for the Wolfpack is my bond. The quality of the coaches, my gosh. The ability that being around the people here, it gives you a push and a drive to step up more.

Welcome home. If missing you made me stronger, then I'd be Superman. If I fly around the world, it wouldn't take me longer than it would to be your man. I'd fight a thousand guys, live to die a thousand lives.

Oh, oh, I'd All right, what's up everybody? Welcome on, welcome on. My name is Lincoln Archibald. I'm subbing for Bridger Pennington today. Uh, for those, for those of you that don't know, Bridger just had a second child. Um, so exciting stuff there. Wish him congratulations if you, when you see him next. But, um, look, we'll be getting started at the top of the hour today talking about Alt Street will be interviewing Neil Bawa. Look, I've known Neil for years. Incredible multifamily investor he is. One of his special skill sets or edge edges, I believe, is his ability to track and make data-driven decisions as it pertains to investing. So it should be a fun conversation today. Look, we're going to kick things off here. Next time you see me, we'll kick things off officially. At the top of the hour, so look forward to seeing you all then. Drop in the chat where you're coming from today. Would love to see that. And if there's any areas you want me to focus on today, feel free to drop that in the chat as well. We'll see you here back in ten.

Thanks. Marker.

The ability to raise money is tied to you presenting a vision of the future, whether it's real estate or Bitcoin or anything else. You have to present a vision of the future.

Their minimum check size is $300 million, and they won't ever take more than about a third of a—

Cut the strings off my guitar, stomp your heels into my toes, steal the keys right out my car, and I'll find a way to forgive you. I'd fight a thousand guys, live to die a thousand lives. Oh, oh, oh, I'd find another way to make me smile. Just so I could understand. Just so I could understand what it takes to be so good. What it takes to be so good.

Yeah, big time, know my name.

Diamonds in my teeth, I got a lot of shine. Running up the number, that's a lot of grind. Try to take it from me, must be out your mind. Big time, lot of sun.

Smoky in the air, that's a lot of pine.

Pockets running over with the dollar sign. Try to take it from me, yeah. Oh, big time, big time, big time.

Uh.

Uh. I managed just to rewrite history, 'cause I'm in the mood to. Label us the leaders of the leaders of the new school. This ain't for the radio, can't find this on YouTube. This the type of killing that these critics ain't used to.

Victorious. All right.

All right.

Welcome on everybody. Good to see you today. Good to have you on here. My name is Lincoln Archibald. So some, for those of you that don't know me, I'm a partner here at Fund Launch. I run Fund Launch Partners as well on the backend. I am subbing for Bridger today. Bridger Pennington is the guy that usually runs these things. Uh, he just recently had his second child though, so He's not with us today, but if you know him, shoot him a text, you know, tell him congrats. Everything's good there. So, but yeah, happy to, happy to be here today. Look, we've got a fun conversation with an awesome guest today. Neil Bawa will be coming on here shortly. I've had the pleasure of knowing Neil for a number of years. And look, I mean, there's a lot of good investors out in the world, but some of the best investors I've ever met are always Extremely data-driven individuals, and I feel like that is Neil's superpower, right? Not only in investing and investment selection and market selection of you know deploying into the real estate markets, but it's also you know his his ability in raising money from investors and tracking numbers on investors. So before we bring Neil on, just a couple quick. Quick updates. So Bridger asked me to give you guys a quick update on me and what I'm working on. So I've been a partner at FundLaunch really since inception, kind of the nerd in the background running finance. I'm the CFO of the company still, but primarily I run FundLaunch Partners right now where I partner and invest in the favorite and our favorite emerging managers that come through FundLaunch. So last year we raised $20 million to invest in our favorite funds, and all 6 of the funds we invested in last year came out of this program, and we look to invest in another 10 this year. So yeah, it's a ton of fun. I love looking at emerging managers. I love supporting emerging managers and ultimately helping them build institutional-grade asset management Firms. So that's a little bit about me. We, before we bring on Neil, I just want to give you guys a quick update on Alt Street. So if for if you guys have been following Fund Launch at all, you've probably heard of Alt Street. If you haven't, if you're new here, shame on you for not being on it earlier. But Alt Street is a a program that we excuse me we launched last year. Let's see. I think they're pulling it up right here on the screen now. Look, our our mission here. here is to democratize Wall Street. And we said, well, look, if we're really gonna democratize Wall Street, we should be giving away all of these, you know, secrets of different trades and as much knowledge as we can. And we should be giving it away for free. You know, we used to, we started this company actually charging for education, right? That's how we built this company. But we said, look, if our mission is to democratize Wall Street, we should really be giving this education away for free. So, as you can see on the screen here, we've got a bunch of videos on there of different firms walking through their investment strategies, how they built their firms. I did one, Bridger did one, Neal's just dropped today. So, Neal does a full deep dive on how he built his billion-dollar multifamily business right there. Look at that in front of the fire. That's a great setting.

Yeah.

Um, but look, today we have Neil on live. Uh, so in addition to today's conversation, if you want to hear more from Neil, uh, you can go to AltStreet and watch his class there. So if you guys are sick of listening to me, uh, let's bring on Neil. Uh, let's get him on here, uh, and welcome him to the stage. Uh, as I said, I've, I've known Neil for a number of years now, and it's been so fun, uh, you know, watching his growth and learning from him in all reality. There he is. Uh, Neil, thanks so much for being here today. I really appreciate it. How are we doing today?

Fantastic, Bridger. It's— I'm thrilled to be here and, uh, thrilled to see that the episode's going live. I, you know, it's, it's been, it's been a while that we've been waiting, but I've, I've heard it's worth the wait.

Yep, yep, no problem. Well, yeah, so I, I— my name says Bridger. Uh, Bridger's out, uh, with his baby today. Uh, I'm Lincoln. Uh, so yeah, happy to, uh, have you here today. No problem. So, Neil, look, we've got you here. I don't know if a lot of people know your background and your story. If you have— to the audience, by the way, if you have questions, feel free to drop those in the chat and I'll be sure to tee those up. But Neil, why don't you start off by just telling us, like, catch us up to speed on GroCapitas. Who are you? What are you doing? What's your specialty? And we'll go from there.

Sounds good. I'm a technologist, computer science degree, you know, data science is my background. And I got into real estate in reverse, right? Most people start with, you know, flip, fix and flip, or a single-family rental. I started in real estate in 2003, so 22 years ago, with a built-from-scratch 27,000-square-foot technology campus. So, we were running a tech company, hundreds of employees. And we decided we didn't want to be renters anymore. We wanted to basically rent, buy our own campuses and build our own campuses. And when I did that, my big fat tech salary, you can imagine I live in Taxifornia. I have a big, massive tech salary. So, I was paying 50% of my income in taxes. And every time I built a campus, my income went up, but my take-home also went up at the same time. Right. So, my taxes went down, my take-home went up. And it took me a while to realize that the depreciation benefits of real estate are absolutely shocking. I like to call real estate the best authorized tax scam of all time. Right. Because, you know, if you look at the richest people in America, what do they have the most of? It's real estate. Right. So, you look at 90% of all real billionaires that have been billionaires before the tech boom. Basically, their net worth was mostly real estate. And the biggest reason why they keep investing more and more money in real estate is this incredible benefit of depreciation where, you know, you can have tens of millions of dollars in income and be paying no tax whatsoever, especially as a general partner. So, once I realized that, I really started getting interested in real estate. And it took me 10 years from the point of building my first campus to actually doing real estate as a full-time business. And during those 10 years, I bought dozens and dozens of properties for myself, for my family. I sort of became the family office manager from a real estate perspective. you know, buying it for family members and doing those kinds of things. And also, I became a data science expert on real estate. So, I became so passionate on real estate that for years, for 5 years before I ever asked an investor for money, I was publishing data science, going to conferences, presenting toolkits, presenting, you know, different kinds of software that really help you make money in real estate. So, it's been a journey of intense passion. And since 2013, 2014, I've been a real, full-time real estate professional. So, I sold my technology company to a private equity firm and I've been in tech ever since. Currently, I have a $660 million portfolio. I have about 1,200 investors and I've invested about $325 million of their money into projects throughout the United States. 2 different companies. One buys and builds apartments and the other one only builds townhomes. That's the second one down there, Mission10k.com. So, I, that's what I do. It's, you know, I'm super, super passionate about it. There's, there's, we need 10,000 Neal Bawas to resolve America's housing problem. It is so bad and it's so rarely discussed. And so, I'm, I'm glad to be a little piece of that, that big puzzle.

Love it. Hey, look, you cut out for just a smidge on our end. I don't know if that was everyone else, but You said 1,200 unique investors. And what's your cumulative AUM these days?

So, it's about $660 million. As you can imagine, over the last 2 years, 3 years, we've sold a lot. And so, it hit a billion and now it's at $660 million. And about $320 million of their money is invested into our projects.

Oh, phenomenal. Great. Wait, so is that about a 1-to-1 debt and equity ratio?

So, the answer is yes and no. You know, certain projects, we don't actually mark up the value of the projects until they're built. So, if it's a new construction project, it's 1-to-1. But if it's built, it's 3-to-1, right?

Yeah.

So, if the project is in the middle, we're still counting it as 1-to-1, and hence, you see that odd ratio.

Yeah. What percent of your portfolio is value-add versus development?

I'd say about 60% development, about 40% value-add. And the reason for that is simple. We've sold a lot of value-adds because the values in 2020 spiked. They went up for some of my properties, they went up 50% in a single year. So I sold 9 large properties in, in the last year and a half, 2 years, because, you know, the window was there. We knew that we couldn't possibly get better returns than that for our investors. So we sold a significant portion of the value-add portfolio.

Love it. Well, look, Neal, as I followed you, I think as I was saying in your introduction here, like, I just feel like one of your special abilities is data and the ability to track data and watch it And I know it drives your investment decisions as well as your fundraising decisions. So first, like, I'd love to focus our conversation today on some of that and possibly how maybe if AI has affected that at all, if you're integrating that into your processes here. But let's start on the investment side of the business. I mean, what are your like key KPIs that you're watching? How are you tracking that data and how are you using data in your investment selection decisions?

Sure. Happy to discuss that. I actually love discussing this. So I'd start with a quote. And I, you know, I've only ever invented one quote in my life, but I think it's a good one. Link, Bible— the Bible got it wrong by one letter. I believe that it's not the meek that shall inherit the earth. It's the geek. It's the geek. Richest man in the world, Lincoln, geek. Second richest, geek. Third richest, geek. Do you see a pattern? Do you see a pattern there?

Yeah.

The geeks, we're taking over the world because we are so aligned with data. We use data basically to make money. We use data to create wealth, and we use it to create wealth for a large number of investors. So, you asked me this question about what metrics do I use, and I'll answer the question about AI last. I think it's an interesting question that you asked me. But the metrics that I use depend on whether I'm buying an existing asset or I'm building an existing asset. When I'm building an existing asset, the sort of metrics that I really care about are supply. I would not build an asset in a market that was the best market in the United States if there was too much supply. Austin, in my mind, is potentially the best market in the United States for the next 10 years. Dallas is a close second, but I'm not building at this point in Austin and Dallas. I actually have some projects in Austin. I paused them. Why? Because there's too much supply. So, when I'm building, I care a lot about supply as a metric. Now, when I'm buying, I care about 5 key metrics, and I also care about them when I'm building, right? So, supply plus these 5 key metrics. And I actually have a course. It's very popular. I have 13,500 students taking the course. It's free. There's no subscription. There's no upsell. There's no second tier. It's just a give to the community that's given me so much. So, usually in January, I have more students. So, I probably have 14,000 people taking the course right now. And what this course teaches you to do is it teaches you these metrics and then it basically explains how to gather each metric for whatever city you like, right? Let's say you went to a party last week and around the water cooler, people are talking about, well, I've heard Northwest Arkansas is absolutely incredible. And somebody else says, no, no, that's bullshit. It's really Reno that's amazing. Or somebody else is saying it's Raleigh. Somebody else is saying it's Austin, right? The question is, you're like, hmm, what if I was willing to invest? Some people only invest in a 30-mile radius and I don't think I can help them in any But if you're looking to invest outside of a 30-mile radius away from your home, then the question is, where in the United States should you invest? And does that change? So, I'll give you a preview. Number one, the best cities in the United States to invest in change every year. They change. And often, the cities that are at the top today will be at the bottom 3 years from now. So, there's this concept of, well, if it's a great city, it has a lot of population growth, it's great for investment. That is nonsense. But it's a very popular theory that people say, well, I'm investing in Dallas and Dallas has been good to us for the last 10 years, so it'll be good for the next 10 years. I'm not saying Dallas is not good for the next 10 years. I'm saying that when people make those kinds of statements, they're not being data-driven. They're using legacy data to make future decisions. In other words, your fund, Lincoln, has this statement that says, past performance is not an indicator of future performance. You say that, right, in your documents?

Yeah.

Well, why do you say that? Because using the past to predict the future never works, but it's the most common thing that people do in real estate. So, as a data scientist, the number one thing that I do is I basically say my past performance doesn't matter, and my past success in certain metros, certain areas doesn't matter. And even the metrics that I used in the past may not be good for the future because even metrics change. For example, we now have a new metric, which is about a 10% weightage in our decision-making. We didn't have it until about 3 years ago. And that is climate risk. And you might say, well, I don't believe in climate change. Yes, but the institutional investors investing tens of billions of dollars into real estate are all implementing climate risk in their underwriting. So, the fact that you don't believe in it is not relevant. What's important is the people who invest $100 billion or $500 billion are using climate risk as a metric. So we have to add climate risk in because that's what everybody else is doing.

Yeah. No, well, I think that's such an important point because a lot of people don't think about that in real estate investing. I have several real estate funds in my portfolio, but look, why does it matter what the institutional guys are buying, Neal? It's because they're buying your assets that you're selling, right?

They're setting the price, right? So The, you know, $660 million portfolio sounds like a lot, but I can tell you in real estate, you know, I'm a little guy, right? The people with the big portfolios are $10 billion, $100 billion, and $500 billion. Those are sort of 3 categories of the superstars. They set the pricing of the entire market. They're even affecting single-family pricing because they're buying, you know, 100,000 single-family homes every year. You've heard about that. There's a lot of political issues with that, but they're buying 100,000 single-family homes every year. So, they're setting the prices for the single-family market, but they're They're always setting the price for apartments, for offices, for retail, because they're the ones that pay the most. So the person paying the most actually sets the price for the entire market. So if that person is saying 10% of my decision-making is based on climate risk, and I don't include that in my numbers, I'm not aligned with the guy that's going to give me the most amount of money. So like, for example, I love Florida. I think Florida has a— is a great future. But it's an X factor. Why? Because their insurance keeps going up 20% a year. And I can't keep putting 20% into my pro forma because if I do that, I will never buy anything. So, I have to put 5% or 10% increase in insurance into my pro forma. And I'm not comfortable doing that because in the last 5 years, insurance has more than doubled in Florida, way more than doubled, right? Last year alone, it went up 30%.

Yeah.

There's been years when it went up 50%. So, if it's an X factor where data science doesn't give me the ability to actually see into the future, then I step away. So, the entire state of Florida, I've just stepped away. I've had to do that for a big part of Texas, not necessarily all of Texas, but Houston is a great market. It has some of the best fundamentals over the next 5 or 10 years, but I cannot invest in Houston because their insurance has become an X factor. So, that's how climate risk is looked at. You don't necessarily look at it from the perspective of whether you believe that burning oil causes causes climate change. That's a political discussion. And I'm not in politics and never will be. What I'm looking at is how does it affect my investors? Well, the answer is if insurance goes up 30% a year, I can't write a pro forma.

Yeah.

Those are metrics that I include. But here are the 5 big metrics that I care about the most. And this is part of my course. So, population growth, job growth, income growth, home price growth, and crime reduction, right? So, I'll say that again. Population growth, job growth, income growth, home price growth, and crime reduction. Now, most people think these are common sense. And so, they're like, this is not a big deal. No, because the metrics are not important. What's important is how much, what's the range for each metrics that matters? Because too much of a good thing can be bad. Why? Because a massive number of money, amount of money will flow into that marketplace. And drop the cap rates, which means increase the prices, and your margins will basically be shrunk. So, you're not always looking for the markets that are the best in the United States. You're actually looking for the markets that are climbing the fastest. So, a market at number 10 this year that was at number 20 last year and has climbed 10 spots is better than the market at number 1, number 2, and number 3. You see what I mean?

Yeah.

And that's what I'm teaching people. that you need to catch a market when it starts its upward 5-year momentum run from a statistics basis and not necessarily go for the top market in the U.S. And I'm not saying I don't invest in the top markets. Currently, the report that I like the best in terms of data is called the Milken Report. This is free. It's available on the web. There's no subscription. M-I-L-K-E-N. And it comes out in January each year. So, the 2025 report shows that Raleigh, or Raleigh-Durham metro is the number one MSA in the United States for a 5-year, 10-year investor, probably a 10-year investor rather than a 5-year. So, they're ranking it that way and they're very transparent. They show you how their ranking works, what weightages they provide, and they rank 50 metros. They also rank some smaller metros. And in the smaller metros, Ogden, Utah, this is a market that I've been talking about for 8 or 9 years, is currently ranked very high. There's a few other markets that are very interesting that are in that scenario, in that list. Northwest Arkansas, for example, Bentonville, Will Rogers where the Walmart headquarters is, is ranked very highly. So, what you have to understand is that data leads you in the right direction, but please don't make— go to the place that everybody else thinks is best. That's what I'm trying to teach people. Everybody else is too late. Everyone knows, the institutionals know the prices are high, the cap rates are low, and there's just very little margin. So, if you want to be successful in real estate, you have to pick secondary metros, And if you're brave enough, tertiary metros. And then you go into these metros when they're on the rise. And now you benefit from the rent growth. You also benefit from the price growth. And how do you find these metros? These 5 metrics. Now, internally, we use about 35 metrics because we're professionals. We have staff, full-time employees. All they do is basically crunch numbers. So, we use about 35 metrics. But here's the cool thing. 85% of the time, When we use 30 different metrics, which take us all year to gather and churn through, 85% of the time, our list is the same as the 5 metrics. So, for the perspective of investors that are trying to do this on their own, or maybe our small syndicators, small general partners, just the 5 metrics work most of the time.

Right.

Now, very important to understand, it only works for multifamily and single-family. Please do not apply these for self-storage, senior housing or student housing or any other kind of housing. In fact, for some of them, they lead you in the wrong direction. So single-family, multifamily, that's what my, my, you know, my, my metrics work. And those are the courses that I, that I put on the web. We update it once in a year. So every January.

So yeah, in terms of asset selection and market selection, so as you're determining which areas to invest in, are you setting the year's objective like just once, right? And saying, hey, these are the markets we're going to go after. Are you updating that monthly? Are you like, if a deal pencils in a less favorable market, like, are you going to be more deal-driven and sway away from your, your market focus, or how are you making those types of decisions?

We usually pick a market. Once we pick a market, we've basically picked it for a year because I think looking at it from a monthly basis, markets go up, markets go down. If a major manufacturer in the market closes, the market could lose 1,000 jobs in a single month. But if those jobs get adjusted over the next 6 months and those people basically go back into the workplace, we will be fine. So, do we look at data every month? Yes, we look at all 323 metros in the United States. It takes us 2 hours a month. So, it's 2 hours. It's a structured process. We go through all 323 metros. They're ranked using these 35 different metrics that I mentioned. They're ranked. So, we're looking at the ranking and we're looking at the ones at the top. And sometimes, we'll look at the ones on the bottom to figure out why is it that they're at the bottom. So, I think looking at it on an annual basis is important. I like to tell people real estate doesn't change on a day-to-day basis. There's a lot of people that come from the stock market and they look at real estate on a day-to-day basis. And every time there's an article that's negative about their market, they panic. That's not how real estate works. Significant changes in cap rates only occur in 2 scenarios. One, the biggest employer in that market all of a sudden dies. Like, for example, the Northwest Arkansas, that would be Walmart. If Walmart just all of a sudden dies, that's a change that happens in that market. Then the second change is if the Federal Reserve suddenly raises interest rates by 200 or 300 basis points, that'll affect everything. But other than that, I think a year is a terrific time to look at a market, Lincoln.

Yeah.

Okay. No, that's helpful. Let's circle back to that initial question. So obviously, you know, AI makes decisions based off good data, right? And so, and you're great at keeping data. So I'm curious if you're starting to implement, you know, artificial intelligence into any of your practices, you know, either on the investment side of the business or the fundraising or whatever, but would love to hear how you're thinking about that.

Sure. So, we've started 2 different projects, and I'll tell you the one that's working, and I'll tell you the one that we are working towards. So, the one that's working is simple, straightforward. We have one person in our company. He's in the Philippines. His name's Toby. And we've given Toby about 40 different sources of data. So, Burkadia, Markus and Millichap, CBRE, Milken Report. And the guy basically gathers this data together, And he uses ChatGPT Pro's feature, and there's a feature called Projects. So, this is a recent feature. It came out about 6 months ago in ChatGPT. We're part of their beta, so we actually had it longer than that. What's so different about Projects that you don't get in ChatGPT? When you define a project, you can give ChatGPT a very detailed set of instructions, and then everything that you put into the project, all of the different chats, all of the different conversations, all of the different documents, it remembers those instructions when looking at those docs. So, we have a project, it's called Multifamily Research, and it actually works well for single-family as well. I just don't buy single-family anymore. So, that project, I've given it specific instructions saying, you, ChatGPT, are the best data science-driven researcher in the world. We will be giving you documents, and you will produce from these documents weekly summaries. You will read every single document that's put in, and you will not just refer to the new documents that you you put in, you will every time go back and look at the older documents. You will tell us which documents are aligned where people are saying the same thing. You will tell us which documents people are saying the different things, meaning they don't agree with each other. You will do this for cities, for parts of the United States. You'll do this for rents. You'll do this for cap rates. And so, that— it's very detailed instructions, right? I'm giving you a very short version of it. But essentially, what I'm saying is everything that I care about in these reports, It's your job to bring it out every single week. And now I have this guy Toby dumping dozens of articles and dozens of reports into this project. And so every Monday at 9 AM, a new report comes out from ChatGPT through a feature called Tasks. This is also a new feature in ChatGPT. If you've had the beta, you've had access to it for about 6 months. But the Tasks is what triggers every Monday because otherwise, You have to go and ask ChatGPT to do something, correct? That's what everybody does. You go and ask him. But if you use a task and you tie the task to the project, then every Monday ChatGPT gives you a very, very detailed report. And we give it instructions like we need a 15-page report, a 20-page report. So, it generates a 20-page report. And because we're asking it these specific things, it says things like 5 different providers agree that from the perspective of rent growth, this one metro, Reno, is going to have extremely high rent growth. That's what I'm looking for, Lincoln. I'm looking for everyone's consensus. There are 323 markets in the U.S. How could I, even with my resources, my people in the U.S., my people in the Philippines, how could I basically figure it out for 323 metros? I'm not going to be an expert in all of them. But ChatGPT can be an expert in all of them because it has an infinite memory. So, what it's essentially doing is it's churning through all of the reports and it's highlighting all of the things where everyone agrees. If everyone's agreeing that rent growth in a certain metro is going to be double the national average for the next 3 years, that's a very powerful insight, isn't it? And it's real-time because it changes all the time, right? So, you know, they may think today, they might think Reno is the best one. 6 months from now, they might think Raleigh is the best one. And so, I get access to real-time information without paying for a subscription. These are all free reports that they're churning out. And what I'm doing is I'm using ChatGPT as the the uber researcher, the mega researcher, the PhD researcher to basically give me insights from 50 different sources and match it all up and say, here's opportunity, right? That's what we have built today. What we are building tomorrow is our own tool. So, what we are doing is we're using programming. So, we're, you know, writing a Python app that basically does all of these things because there's a limit to what you can ask ChatGPT. But if you write your own app and you pay for the tokens, You probably won't pay more than $100 a month on these tokens. Then you can get into incredible amounts of detail. Then you can have 2-year, 3-year, 5-year, 10 years' worth of data, and you can constantly be churning through that and look at trends. So, I think that's where we are going with AI. Maybe one day we'll sell that app. But just today, with just the $20 version of ChatGPT, what we can do with projects plus tasks, is mind-blowing. I could never achieve this by myself. It's mind-blowing.

Yeah.

No, I love it. We use the same thing and it's remarkable. I guess let me ask you a question here, Neal. You said something in there about delivering consensus. And I feel like from a broader perspective, so much of investing is being right about the the non-consensus items, right?

Sure.

Um, and so, you know, how do you decipher when, uh, you know, or how do you justify, or, or, you know, how do you move forward with an unconsensus, non-consensus decision?

I'm going to be very blunt with you. I don't. There's, there's 2 schools of thought. One school of thought is everyone is saying go left, I will go right. This is a contrarian school of thought. Okay? I do not subscribe to the contrarian school of thought. I subscribe to the second-tier school of thought, which says, everyone's saying Raleigh is great. There's no opportunity there because everyone is saying Raleigh is great. I'm going to go down the list. And out of my 10 providers, if 8 are saying that some smaller market, let's call it Huntsville, Alabama, or Reno, Nevada, or Northwest Arkansas, right? Or my current favorite, Fishers, Indiana, is great. Then only 8 out of 10— 8 out of 10 is still a very powerful consensus because these people are putting tens of millions of dollars of full-time researchers into writing their reports, right? And I'm getting the benefit of that for exactly free thanks to ChatGPT. I'm going for that second tier, right? So, I'm still going into the places that have strong consensus, but they're above the noise and all of the— everyone's saying, I have this great thing. It's called Raleigh or Austin or Dallas. And for some reason, they think that— and nobody else knows that these are great markets. I stay away from those. But I'm still staying within the consensus. In my belief, the contrarian approach is great for somebody that bought Bitcoin in 2009. They're the richest people in the world. From my perspective, though, I can't afford to do that for my investors. So, my goal is to find places that where the data is absolutely in consensus, but not enough people are talking about them. And all I need to do is to get to the metro 6 months before everybody else. Just 6 months.

Yep.

Just 6 months.

Yeah. No, that puts it in perspective for sure. Let's shift gears on the data side of raising money, right? So many people here as well are trying to raise money for their prospective opportunities, their projects. How do you use data when raising money?

Lots and lots of different ways. I think that the— I'll give you an example, right? So almost everybody that's trying to raise money has— and oh, my friend Mark Harris is here. Hey, Mark. And so, you know, When you're trying to raise money, everyone says, go get a CRM. Fine. People go out, they get a CRM, right? And they're like, okay, well now send drip campaigns, send emails out to people. So, everybody does it because, you know, you get taught to do that in lots of good ways. But what I find is that then people miss the next step. And I've seen very few people do it. And anybody in the chat that actually does this, what I'm about to describe, tell me about it because I I don't come across a lot of people doing this. We are obsessive about ranking our database. Every database has much more money than you think there is. But here's the thing that I never hear anybody say. Your database money changes every day. For example, today, Lincoln got a $100,000 check from one of his projects. Okay? And he's like, okay, I'm gonna invest this money into a different project because, you know, I don't want this money to sit in the bank and make nothing. Today, Lincoln is interested. Today, Lincoln is a prospect. But let's say tomorrow he invests this money. It's gone, right? All of a sudden, if you send him an email day after tomorrow about investment, the same guy who was a perfect prospect 24 hours ago isn't a prospect today. You understand that? So, people in your database, you can't— everyone says this person is accredited. They've invested in projects. I don't care. What I'm interested in knowing is, Are today they interested, right? And that percentage of my database, believe it or not, is only about 3%. We have 84,000 records in our CRM, ActiveCampaign, and 3% of them at any given point of time, their ass is on fire to make investments because they have too much money sitting in the bank. And what I find is that identifying those people is a process. Now, how do you identify those people? Well, you do what is called recent lead scoring. Some people understand the concept of lead scoring, but there's this concept of recent lead scoring. What that means is when people are interested, when people are interested, they spend more time on your emails or text messages, whatever you like to send. They read more. They click more. So, their actions need to be cataloged. So, I'm sending an email to 84,000 people, hey, I've got a project. I'm raising $10 million, right? And everybody's like, yeah, you know, what we are trying to figure out is who are the people that are, you know, clicking on these emails and then they're going to a website and then they're filling out a form and then we call those people and try to close them. Yes, but you miss out the biggest bunch of people. Out of 84,000 people, we might have 50 people that do that. Fine. Go after them. Close them. But where's the biggest value in your database? The biggest value in your database are the people that didn't just open your email. Obviously, you want them to open their email. But you want the people that took 2, 3, 4, 5 minutes to read those emails and then they clicked, but they didn't fill out the form. These are the people that are actually highly qualified. They spent 5 minutes reading whatever you had to say. Then they clicked and then they didn't fill out the form. A massive percentage of your money comes from those people and what you need to learn, and this is easy to learn, it shouldn't take you more than $10 or $20. Go to udemy.com. That's my favorite website, but there's a whole bunch of websites like that, udemy.com, and look for courses on lead scoring. Lead scoring. Look for courses. These courses work for any CRM that you've got. So it doesn't matter if you have Salesforce or ActiveCampaign or GoHighLevel. They work for all of them. And what you need to do is to score your leads. So they get a certain score for opening the email. They get a certain score for reading more than 1 minute, 2 minutes. 2 minutes is good. And then they get a certain score for clicking. And then everyone with that lead score, those people you need to— in my case, I have full-time people doing this, but in your case, you probably are the person that's going to make the call. Those people are actually 90% convinced that they should be buying. And that by itself is so powerful, right? You're not using your database correctly because I think that maybe 5%, maybe 2% of the people here are actually doing active lead scoring. And on top of that, you need to use something known as automations to pipe up those lead scores to you constantly. So who has a weekly report that says the most active people in your database in the last 5 days were these people, right? Who are the people that were the most active in your database? That's an automation combined with lead scoring. Combine these 2 things together. For $200, you can find people on Upwork that will set this up for you. in with whatever software you have. That's, that's the value. And we can talk again about how to get people into your database, but I find that people basically have these wonderful databases and they don't know how to use them.

I love it. I love it. I think you touched on so many keen things, um, uh, in there. So I, so I appreciate that. Um, Neil, look, as we're, as we're running short on time here, uh, any advice you would have to you know, the prospective emerging manager out there or somebody that's getting into investing or that is just trying to, you know, make something happen in their prospective investment practice?

Yeah, I, you know, I love giving this one. I used to teach, you know, real estate about 8, 10 years ago. I think this is the most important advice that I can ever give to anybody. There is absolutely no benefit to trying to time the market or saying I'm getting in at a time when there's less money, should have gotten it 2 years ago, should have gotten it 5 years ago, should have gotten it 10 years ago. This is the one thing that holds, you know, my— that held my student back the most. The students that were successful are the ones that never asked themselves this question. Whenever you start is the right time. Did you know that Apple and Microsoft, the number 1 and number 2 companies on the planet, both started in severe recessions in 1976? The recession at that time was so severe That, I mean, there weren't enough food stamps to go around. And the 2 most successful companies on the planet started at that point in time. So, there's a lot of people saying, well, real estate, well, interest rates have gone up. Real estate, well, cap rates have gone up. The juice isn't there. Such a nonsensical idea. You're investing into a category that is a need. You're investing into a category where you're fully aware that because of prices of homes going up much faster than incomes. Everybody knows that, right? Is there somebody here that doesn't know that the prices of homes in the U.S. have gone up 3 times as fast as incomes in the last 10 years? Everybody knows that. So, you know that that gap gets wider every year. You know that it's a need. You know that people love buying homes, even emotionally. And still, you second-guess yourself as to whether this is a great time. It's always a great time to invest or to get into an area that is a need-based area. And it's always getting better because that gap is continuously growing.

Love it. Well, look, Neal, thank you so much for hopping on today and sharing some of the insights about how you run your business. If you could actually share AltStreet on the back end here. So we had the pleasure of sitting down with Neal a few months back and filmed a full on masterclass with him, you know, talking. Let's see, can everyone see that right now?

Yeah.

Filmed a full-on class. It's broken into several different sections, jumping into some of the things we talked about. It's completely free, so feel free to head over there if you want to learn more about Neal and how he built his business and how he built his fund and how he uses data to scale his investments practice. And then I guess I'll say lastly, You know, if any of you are interested in launching a fund yourself and becoming the next Neal Bawa, you know, it's hard to do. That'd be an incredible feat. But, you know, feel free to book a call with our team and we help people launch funds. So, Neal, thank you so much for your time today. Really appreciate you coming on and hope you the best this new year.

Thanks, Lincoln.

Yep. Take care. Oh yeah, sorry, my team's telling me here that we got a trailer for Neal's class. I know some of you probably split, but, uh, if you want to watch that, you can watch that here.

I wish I knew that data is not an end-all solution. When you are a data guy, you tend to think data is the end-all of everything. You tend to think that other factors don't exist. Data simply points you in the right direction. What really matters is demographics, job growth, population growth, income growth. All of these affect your profits because I want to buy rough Roughly 24 months before everyone in the world knows that this is an incredible city to invest in. You can only manage what you can measure. Data beats gut feel by a million miles. Remember, your gut feel is your enemy.

All right, thank you everybody. Have a wonderful day. Talk to you guys soon. Take care.