We're using shortcut AI to underwrite a new deal in our existing Excel model, our Pro forma.
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Not another interface, not another tool.
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This is our Excel model and we are going to use shortcut in it.
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All right?
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So at the top, right, we're going to use our shortcut Excel plugin, very easy to upload.
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I'm already logged in here and you'll see it's a similar type of, interface that ChatGPT or Claude or any of these other large language models have.
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what I am going to do is I'm going to take this deal, this om that Taylor Avakian had sent to us.
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I'm going to attach it, okay?
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And then I'm going to go to my AI girlfriend.
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Claude and I already created a prompt, okay?
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And I'm going to throw it in there.
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It's pretty simple, but we want to perform a comprehensive underwriting analysis for the multi family property, etc.
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Here's the critical instructions.
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We want to use my existing Excel structure.
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We want to populate the model with verified market data, replacing broker assumptions where incorrect.
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And we do not want to create a new model.
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We want to work within my existing framework.
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So the use case here is that we're going to utilize the shortcut to, underwrite using our own model.
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And if you guys have been following along, you know that I really, really appreciate the tools that integrate pretty seamlessly with our existing workflows.
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If you're an institutional shop, if you're any type of shop and you have a model just as this one, you see here, you don't want to abandon it, you want to use it, right?
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You're comfortable with it.
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You know it inside and out.
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It's what you've done.
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We're stubborn in our ways, we don't like change.
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And so what shortcut's so brilliant at and index, you could see I both have that, at the top here.
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But they're so brilliant because they integrate seamlessly with our existing workflows.
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So now watch us underwrite this deal.
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We're going to hit send.
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Let's watch shortcut go to work here.
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And I haven't done this specific use case yet.
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so we're going to give it a go and see what it's all about.
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I have pretty high expectations, so I'm hopeful that it nails it.
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Okay?
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And what's great about shortcut too is you have a prompt library.
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Okay?
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So what I think these tools do is they level the playing field, okay?
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They level the playing field.
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And I just want to check something here.
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Where's my om?
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So it's analyzing it.
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Okay.
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So it levels the playing field.
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What I mean by that is, let's say, right?
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So on a deal like this, this is pretty comprehensive stuff.
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You know, underwriting a multifamily deal in la, it's no easy task, right?
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But, having shortcut or index or this Excel super agent at your disposal allows anybody to underwrite this type of deal.
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Okay, There's a prompt library here.
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So that exact prompt we could store in our library.
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And then you could have your assistant, your View VA or whoever it might be, someone from your team who's maybe not the best underwriter.
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They could take a stab at this.
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They just input that prompt with the new om and bang.
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Shortcut underwrites the deal for you.
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Now you need to be there for quality control.
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Okay.
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That'll never change.
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Right.
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Anytime you delegate tasks or things to another quality is, is, is something that needs to be thought of and considered.
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but it levels the playing field.
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The barriers to entry are less.
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Okay, I could do this type of work for self storage, for retail, for multi, for industrial, for land, whatever it might be.
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Okay.
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I don't need to be an expert in underwriting.
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Instead, I just need to know the prompts and then I need to know how to direct shortcut and index and these AI tools to do what they do best.
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So we'll report back shortly.
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It looks like it's just studying the offering memorandum.
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and, I'll report back with some thoughts shortly.
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So we're cranking.
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So now it's going to start searching the web to verify market rents, operating expenses and comparables.
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Watch this thing go.
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This is just nuts.
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so now it is updating a lot of our information.
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As you can see here.
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Bang.
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It's making lots and lots of changes.
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We are getting some error messages, but I would think that it's going to fix all those for us momentarily.
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It looks like it's updating the unit mix with 12 studios and 41 beds.
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Let's take a look.
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Bang.
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There it goes.
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Wonderful.
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can figure this out.
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It looks like it's trying to add gas, trash, and so it's reading this detailed utilities this detailed expenses sheet.
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But now it looks like it figured out that it could only update utilities and it Looks like it's updating all of our growth assumptions here, which is pretty cool.
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We are getting these error notifications quite a bit.
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I'm not sure what that is.
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Now it's updating our exit cap to 6.
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Yeah, there's that error.
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So Excel found a problem with one or more formula references in this worksheet.
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Check the cell references, neighbor links to other workbooks and your formulas are all correct.
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Yeah, I'm not sure what that is.
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if you hit okay.
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It just moves.
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So yeah, it's interesting.
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So it's showing that our, our IRR has a value error.
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So now it's going to look to see what the issue.
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I see the issue.
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The equity Multiple is showing 0.61.
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Whoops.
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Which indicates negative returns at the asking price.
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This confirms that we need to analyze the property.
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So now it's running scenarios at different purchase prices.
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It's created this analysis summary for us here, which I guess it's intending to Show U.S.
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broker versus the verified assumptions in a comparison table.
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Interesting.
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Here we go.
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So it's building all that out for us.
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So we got this pretty beefy analysis it's doing on a separate tab here.
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And so it's showing us broker versus verified.
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Look at all these strengths and weaknesses it's identified.
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Wow, this is awesome.
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Strong Silver Lake location, major Systems renovated in 2020.
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Multiple units with huge upside to market.
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And then we have lots of weaknesses and risks.
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Rent control, 1916 building insurance costs likely understated and rising rapidly.
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No parking limits.
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Tenant pool renovation cost estimated at 15 to 20k per unit.
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Value add strategy.
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That's awesome.
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So it's conclusion.
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So its conclusion is do not proceed at asking price of 3.1 million.
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It recommends submitting an offer at 2.75 million with thorough due diligence contingencies.
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Wow, look at this formatting and everything I put together here looks pretty good.
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It's got some sales comparables here, market rent comparables.
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Now it's testing different scenarios at different purchase prices.
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But we're still getting this value error here and I want to see if it picks up on that again.
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Now it's trying 2.2 million.
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You know, it's interesting because they may have changed our formulas up here.
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They may have changed our formulas.
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so that's not great.
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Yeah, I think did something to our formulas.
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We should get a positive IRR and equity multiple.
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Especially I mean, if our average cash on cash is 8% what purchase price?
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That's 3.
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Yeah, I think it did something to our.
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Our returns.
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I mean, it.
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Look, it did a great job with all this.
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Let's scooch that over.
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And you can see, like, now it's giving us an executive summary.
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I mean, the way this all gets formatted and done is like, insane.
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Look how ridiculous this is.
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Look at this property represents a value trap, not a value add opportunity.
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This is such a detailed analysis on top of our actual model.
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So now it looks like it's building a.
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Building something.
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Where is that?
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It's building a detailed rent roll analysis.
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There it is.
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So it just built this detailed rent analysis for us, which is pretty cool.
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And it looks like it's making this analysis summary the main sheet.
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So it's showing current and then market rents and then monthly upside priority of turning units.
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Pretty remarkable, actually.
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so it's definitely not perfect with our actual underwriting model with that use case.
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I mean, that was a pretty complicated thing to do, right?
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Take an om.
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go verify all the assumptions, figure out how to use our model, input all of those assumptions into the right locations.
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I mean, look, this model is like, really, really robust and comprehensive.
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So the fact that it got this far, I think is impressive.
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Now I just want to see why.
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I think there's an error.
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And that error keeps popping up, too.
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That's kind of annoying.
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I think there's an error with the IRR and equity multiple return calculations.
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Can you please try and figure this out?
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I.
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I think we should have a positive IRR and equity multiple.
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And it appears the formula or calculation is now incorrect.
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Let's see what happens with that.
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And here's our fully kind of comprehensive summary, final recommendations.
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I mean, it says, do not proceed at any price.
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This property represents a value trap.
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Maybe I am wrong.
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And let's just see what it kind of does here.
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I hate that error thing that keeps popping up.
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That's really annoying.
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So now it's going to investigate this calculation here.
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Let's see what we can find out.
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So it looks like it may have found the error here.
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Oh, my God.
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Look, it fixed it.
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That's unreal.
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Okay, so that's what I thought.
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So now all of our returns makes sense.
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Okay.
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All right.
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So yeah, we need.
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There needs to be a little babysitting in this scenario.
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And that.
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That's fine.
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Okay.
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But, now it needs to update, everything and look again.
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That's okay.
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I wonder Why?
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I wonder if it changed our formulas for that.
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or what exactly happened.
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But like now, now we got something here.
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So I'm glad it was able to figure that out.
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average cash on cash, five and a half percent.
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I mean that, that makes sense.
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spread between your untrended yield on cost and exit cap, less than 100bps.
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Not great.
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18 gross levered IRR feeling, is maybe that's low.
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and let's just see what else our rents.
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I mean it, look, it says it verified all of that.
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Our expenses were at 36%.
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Yeah.
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So that, that's probably the issue or the expenses.
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It's This is honestly so amazing like how it does this.
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I mean having a co pilot like this is just so insane.
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I mean these expenses need to be a lot higher.
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So I, I, what I would say is that it kind of missed on that research.
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This is a 1916 building.
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We need to be closer to like 45.
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And then I think like repairs and maintenance for 1916 building should not be 500 per unit per year.
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Like I mean I think a thousands, like a lot closer to that.
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And you'll see that the returns kind of reflect that we're still only at 39.
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Let's just see payroll.
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Like that's fine.
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It's a 16 unit building.
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General admin.
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Fine utilities.
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That seems really low.
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So I don't know what's going on with that insurance.
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I mean probably even like 1500.
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honestly, 1500 per unit minimum LA, like 1916 building.
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Come on, seriously.
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So now we're starting to get into And that's why like this, this, you know, is it going to replace the analyst?
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No, like, you know, the analyst is there for exactly what I'm doing right now.
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Okay.
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And that's quality control.
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but actually building this out, taking a first stab at it, we didn't have to sit here and watch this.
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You know, we could have been doing other stuff.
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So I think that's what's so brilliant about this.
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Right?
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Like maybe the 10 to 15 minutes I spend doing quality control, you know, that allows me to underwrite a lot more deals versus having to do data entry and all this garbage and initial, initial research.
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Right.
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A lot of that could be done with the AI, which I think is so cool.
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But it definitely missed on some assumptions here.
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that's fine.
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I mean, look, even 41, I'm, this should be a 5% management fee on a small building like that.
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utilities.
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I just can't see how it's only 650, but maybe we're getting real numbers.
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Make ready contract services, all that's fine.
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Property taxes appear to be right.
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Capital reserves, come on.
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350 a unit minimum.
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Like let's be honest.
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And then is our exit cap really a six on a 1916 building here?
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No, probably make that six and a quarter.
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So now our returns are kind of more in line.
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So that's at the, the listing price, right?
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So like, where does this deal get done?
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Maybe there, maybe not.
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But so anyways, it's updated everything here.
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It's updated its full analysis summary.
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Proceed.
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with due diligence, property shows strong returns.
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Boom.
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Boom.
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Wow.
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Look at like this level of detail is so insane.
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So human judgment, quality control.
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More of the story here, guys.
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We're not quite there yet.
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With fully underwriting.
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We're close.
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Not quite there yet.
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I'm going to do probably the same exact demo using Index and I will compare the results and see which one is doing a better job.
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so excited to do that.
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This was a fun one.
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I certainly learned a lot.
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And I learned that this Excel agent is absolutely brilliant and can be utilized in such efficient and strategic ways.
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You cannot, rely on it to underwrite deals utilizing your model without oversight, direction and quality control.
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That's sort of the moral of the story here.
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But the way that it's created these formulas and does its homework and research, and then builds a separate tab to do comparison and a full analysis summary and formats it and just, it's so brilliant and just wicked, wicked intelligent.
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there is no analyst who could perform, at the abilities of these Excel agents.
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There is none whatsoever.
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So super, super excited to be, you know, working with Shortcut, to be working with NDEX as it relates to real estate, to making them better.
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giving real time feedback, getting you guys all access to this stuff, it's just so awesome.
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So I'll be doing a demo, sort of demo with NDEX just shortly.
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and I hope you guys enjoyed this.
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Let me know if you have questions.
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I'm going to keep doing different use cases with shortcut index just to see like where it performs better.
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but using your own model template, which in this case mine is crazy robust.
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If mine was a lot simpler, it'd probably do a lot better job, I think shortcut.
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But because this is so robust and complicated, which again, I mean, like, look at.
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Let me just show you guys, like look how insane this model is, I mean, like, all these different cash flows and stuff.
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It is so complicated.
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So, I mean.
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And it goes forever to look at all this.
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This is insane.
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So the fact that Shortcut was able to work within that model, as it just did, I think is so impressive.
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So we're close.
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We, are close, guys.
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We're very close.
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But we're still needed for quality control and judgment.
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I don't think that'll ever go away.
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And so the best analysts, in my opinion, are going to be the ones who could effectively use these tools and multiply how many deals they could underwrite.
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So we're going to figure out how promise.
Underwrite Deals in Your Own Model w/ Shortcut AI — Tella