Hot Take: AI Isn't That Revolutionary

Carol EnochI have less confidence in the data that I'm getting from most of my operations teams now than I did five years ago because there's so many systems, they don't all talk to each other, and there's often variation in the data. What those companies are selling is they're selling us back our own data. I still need data that I trust, and I don't have data that I trust.

Jonas BordoThat's Carol Enoch, asset manager at Bridge Partners, and I'm Jonas Bordo, CEO and co-founder of Dwellsy. This is Net Effective, the Rental AI show. So Carol and I have known each other for a really long time.

Carol EnochReally long time.

Jonas BordoI have to say, might actually be my very first real estate colleague that I met with all the way back. I was embarrassingly young in Chicago and buying my first properties and got the fantastic chance to work with Carol, who was on the team that was managing those properties for me. And we have been friends ever since. Carol, welcome to the show. I'm so happy to have you on here.

Carol EnochThank you. It makes me very happy that we've known each other for such a long time and that I might be your first real estate colleague and friend.

Jonas BordoYeah, me too. Well, why don't you tell our audience a little bit about yourself and a little bit about what you're doing right now?

Carol EnochI would love to, Jonas. Someone recently described me as a multifamily nerd, and I will take that and run with it. I've been in the industry about 24 years, done everything from leasing operations, consulting with prop tech and ownership groups on the asset management side, working for a private equity company based in Walnut Creek, California, in the Bay Area. So really have had phenomenal opportunities to learn and grow alongside some phenomenal people in the multifamily industry. Yeah, I just there's not much I don't love about it.

Jonas BordoThat's fantastic. you are truly one of the most knowledgeable people I've ever come across in this space. And I really appreciate that depth of expertise and your nerdness, if you will. Yes. So let's jump in on the AI front. How is AI coming in handy for you? Where are you seeing value from it today?

Carol EnochSo I think there's two places to look at when we talk about the value of AI from an asset management role. I think it's going to be important for us to address how am I using it as an asset manager in my daily life, in my responsibility to have a fiduciary duty to my investors, and how are our operations teams using it in ways that also benefit the asset and benefit our investors. So, my goal always every day is to maximize the highest and best use of our real estate, right? That it was my job as a leasing agent. That was my job when I was consulting with prop tech companies, and that is my job as an asset manager. And so for me personally, what I am looking to AI for right now is typically process workflow and data validation. We are using it very selectively here at Bridge because we work with private investors. Privacy is very important for us. And so I think we spend a lot of time evaluating the right way to do something. I'm very sensitive to information. So we're working on a closed model, which I think is very important for any companies that are looking at or wanting to start using AI for their daily workflow, is consider the risk of what you're doing. By example, the easiest thing I can think of is a rent roll, right? Let's say you're like, okay, I want to underwrite something really quick. This could be an operator, asset manager, vendor, anybody. I'm gonna grab a rent roll that the broker sent me. I'm gonna upload it. Well, if you are on an open large language model, if you're logged into your personal chat, GPT, Claude, Gemini, whatever you like, do you have likely just released people's names and addresses into the world, which isn't great for their privacy reasons. And so having a closed model, I think is really important and we thought it was really important. So what am I using it for? Contract review, automating tasks, financial review. I just built a skill to upload our chart of accounts and our property management, company financials, and scan for any potential reclasses that weren't caught. Does this sound boring? Yes. Do our owners appreciate the extra layer of attention on our tax treatment and depreciation? Also, yes. So I would say that I'm using it like a little baby intern right now, just trying to train it up. But really, the contract review part has been phenomenal because it's extremely easy to just dump data in there and have it. Check against previous terms. I built a skill and claude recently where we pulled all of the historical capital data because we're a long-term holds shop. So we have properties that we've owned over 30 years. And I had it pull everything in and I had it do a risk assessment on my systems and build a systems map for what we would need to look at for an upcoming refinance. that was super useful. Now, can the data be wrong? Of course. So we're still going back and verifying all of that. So I would say that's the non-sexy but really important ways that we're using it on the asset management side right now. Again, a lot of tasks, a lot of automating spreadsheets and outputs and things like that. any questions on that before I jump into our operators?

Jonas BordoYeah, a bunch. I think the privacy one is very real. And, I know some people are very relaxed about that. other people are not. but I think the one you point to is a really big one, which is that John Smith lives here at this place, pays this in rent, and all of the other information that is potentially part of the record that the landlord has, because this is one of the rare circumstances in which you provide some pretty private information to somebody. You know, it's your employer and your landlord are the two people who get a lot of these information, these pieces of information, and nobody else. Right. And so, you know, that privacy factor is critically important here. We haven't talked about that before on the show, I think. So tell me about the private model. I want to hear a little bit more about that and what you're doing there. It sounds maybe fancy. I don't know. What do you guys think?

Carol EnochIt's not that fancy.

Jonas BordoNice, okay.

Carol EnochWe are utilizing Claude at Bridge, and so it's something that's accessible to anybody, and we set up an enterprise level account. We do have, we're a small firm. We're 14 people in the office on the investment management side, and then we hire out third-party operators. We have about 8,000 properties. So just to give everybody a sense of what we're dealing with, and I think we're a great example of what makes up a multitude of the multifamily sector, which is a mid-sized company, right? We've got enough scale to be efficient, and we're not so big that we can't really dig in and give our investors the best possible attention to every detail of their property. So we set up an enterprise level account. We do not have internal IT. So I think that's something else that's important as folks are looking to set up how they're working with AI. We have a third-party company that we partner with on our technology support. We've been working with them for years. They're a trusted partner. So they worked with us to set this up. We have a technology group. We meet informally, internally with Bridge every Friday afternoon at 1:30, and we just talk about very relaxed. What are we doing? What's working, what's not. Our acquisitions team is using it in a different way than the asset management team. We have a portfolio analyst. So that piece has been really great for us. It's just a quick half hour check-in. So these were all things we talked about before setting it up. And I'm especially sensitive to the privacy piece because I used to work on-site. I used to be an on-site manager, either living there or working on property with residents. And I have seen firsthand the true danger of private information getting out there. So I might be thinking about this a little bit differently because I have a specific set of experiences. I've noticed that brokers tend to be the most relaxed because they typically haven't had that experience. And so they're like, here's a rent roll with people things on it. I'm like, guys, redact, redact. But so, in order to get the enterprise caught, I don't know what the dollar amount is, but it's a pretty reasonable fee that we pay every month and it's a closed system. So our information is not going out into the world. So whatever I upload is not going out there. Now, with that, we do not have this attached to any of our internal files, anything that has anything to do with our investors. Like we have made the decision currently, you know, it's not connected to our server. I will select specific documents that I want to upload. I'm reviewing those to make sure I'm comfortable with the level of detail because even though it's a closed model, I still want to make sure that I am taking the best care of the data possible.

Jonas BordoThat makes sense and sounds quite approachable. So yeah, super approachable. It's not like you have to, try to figure out deep tech to create that. You're just making sure the settings are right in a cloud enterprise product, right?

Carol Enoch100%.

Jonas BordoOkay.

Carol EnochI have a theater degree. So like I'm not doing this. I am talking to people, I'm double checking. I'm using my critical thinking skills and I'm saying, okay, what do I think could be a challenge, a problem, something we need to think about? Then I sit down with my team, we hash it out, we might bring our AT people in. And it doesn't make it take that much longer. Like I said, we meet on a regular basis, which I think is really important, and just talk through kind of like what you and I are doing now, like what works, what doesn't, and share information.

Jonas BordoSo out of curiosity, who's around the table at those technology meetings?

Carol EnochIt varies, but it's typically somebody from asset management, somebody on the analyst side, somebody in acquisitions, and then somebody on the C suite level. Again, we're small companies, so C-suite is, they're just right there. It's all pretty intimate, which is nice. But I think something like this could work with any size company. and the more diverse your grouping is, the better. Because people are gonna think about things differently, and that's gonna leave you with more opportunity and more perspective.

Jonas BordoYeah, absolutely. So you also mentioned skills, and I've talked to a bunch of people recently for whom that's a bit of a mystery.

Carol EnochOh.

Jonas BordoHow have skills been useful to you? You know, when do you use a skill? When don't you?

Carol EnochOkay. I love this question. Building skills or just being bossy to Claude and saying, Claude, I want you to do this. So here is when I use a skill and when I don't. Is it a repeatable task? Is it a task that you are gonna want or need to repeat? So, by example, my general ledger review, I review property financials every single month for 12 assets. And then I do a deep dive on an adjusted quarterly basis. So I am looking at these numbers a lot and it's on a very regular schedule. We have tight deadlines to our investors, we distribute quarterly to our investors, which means that I have to have my financial reviews done timely so we know how much money we get to write checks for. And so it is a repeatable task that happens, a cadence that I don't have control over, but I have knowledge of. So a repeatable task is a great opportunity to build a skill. So I know that I'm gonna be reviewing financials every single month. I know that I'm an asset manager that has a background in the arts rather than a background in finance or accounting, which means I sometimes need a little extra help. Right? So I'm gonna look at things differently, which is a value add, and also can drive my accounting team insane. we don't like that. We love our accounting team, they're amazing. Good do our jobs without them. So I'll build a skill that says, okay, I upload this document. I say this is my base document for the skill. I want to create a task by which every single month you take this source document and you compare whatever I upload. And I want the output to be a list of areas where this financial packet doesn't line up with our set chart of accounts, for example. So it gives me the skill name, it's backslash chart of account review for me. Upload my financial chart of account review and it spits it out. And I look at it and I go, You guys were kind of lazy. I need a little more detail. I give it feedback just like I would give to, I really do think about it. Like I have an intern, like I would give to an intern and I say, Hey, thanks for doing that. I'm very polite, which probably waste money and energy. But I try to be nice. I'm like, hey, thanks for doing that.

Jonas BordoI'm right there with you.

Carol EnochYou want to tell it what it did well. I like this format. I need more detail. Here's what you missed. So if I go back and do another review, so I'm training my skill as I go. Once my skill is ready and I'm still working on this one, I don't actually know how to do this yet, but I'm gonna see if Claude will help me figure it out. I'm gonna share it with my team so that they can start using it as well. So anybody could throw their financials in. But I want to kind of work the kinks out.

Jonas BordoI think they're fantastic. I've had tremendous luck with skills for all kinds of repetitive tasks, exactly what you're describing. Anything that I need to do regularly and I want to get a similar outcome each time. I think that's fantastic. especially, you know, when you have a recurring cadence of something, which in property operations investment, we always do, you know, every month.

Carol EnochIt's all b based on banking calendars and schedules.

Jonas BordoExactly. So we dove deep there on a couple of things. You were about to talk about operations.

Carol EnochYes.

Jonas BordoYeah. Yeah.

Carol EnochOh, Jonas, I have so many thoughts and feelings about this.

Jonas BordoWell, let's go. What do you have?

Carol EnochSo, oh, where do I want to start? I have a concern about AI with operations that a lot of our beautiful, wonderful, amazing, kind, smart, well-intentioned partners look at multifamily. They see a lot of opportunity, and they build AI-based or technology-based tools that are actually making our operators' jobs harder rather than easier. And somebody had posted this video on LinkedIn. I want to say it was the director of experience at Mission Rock who was talking about because she and I have a similar background. We both started as leasing agents. And it was Marcella. And so she said, okay, when I was a leasing agent, you could put my job description on an index card, right? It was like seven things you had to do. Now there's seven logins before you even start your day. And so we've taken a skill set that on the investment side, I really rely on my operators to be my boots on the ground. You know, if I'm managing my investors' funds well, I am paying salaries to staff that are doing things that they can only do on site, right? That exclusively has to have to happen there. And then I want my management companies to be handling the back-end work, whatever that may be. And I think accounting is a great example that a lot of operators have pulled off site. But then on the ownership side, if I have a question about something that's hard to get a direct answer, back in the olden days, the property manager would enter the invoice. He'd be like, Catherine, I have a question. And she'll be like, oh yeah, I paid the plumber this much. And I'm not saying that we should go back to the way that things were before, but we had a source of truth that used to be the property manager. And now my source of truth for data is really confusing and convoluted. And I have less confidence in the data that I'm getting from most of my operations teams now than I did five years ago because there's so many systems, they don't all talk to each other, and there's often variation in the data. So I think we did too much. I think we've done a lot, and it has convoluted and diluted our ability to find a single source of truth.

Jonas BordoThat's fascinating. How do you think we, went so far wrong on that? Because I know so many people who are trying to work on solving that exact problem. And in your view, we're going backwards.

Carol EnochWe're going backwards. I think we didn't consider ownership of data. You think a couple of things. I think owners and operators are not the people that are developing these solutions. Venture capital funds, and their job is to fund something that they think is going to make money. And the people that are developing, their job is to develop something that's going to make money. So they're trying to make money. We're all in business. I get it. That's super fair. But they're not, the incentive structure isn't aligned. Like what we were talking about earlier with owner, operator. This was offline friends. I'm sure Jonas and I'll have another podcast about it. Don't you worry. So we've got a scenario by which we've got our partners that are creating things that they think that we need. And a lot of times, if you ever go to like a Y combinator or any of these great resources that we have here in the Bay Area to be an entrepreneur, it's typically okay, identify a problem in a market and solve it. So somebody from the outside might look and say, okay, well, I tried to go visit these apartments. I tried to lease, schedule an appointment for leasing, and nobody answered the phone. So I need somebody to answer the phone. So I'm going to create an automated phone answering service and I'm going to sell that. Okay. So now we've got your Elise AIs, your Knox, your CRM software that's out there. Actually, it's not even just CRM. You've got your kind of CRM. You've got your communications portal. Okay. Then you've got your CRM software, which might be different. And those might be owned by different people. And then you've got your property management software, and you might have an accounting software that's different. So you might have four different softwares operating what used to be a single process, a lot of times owned by four different companies that don't talk to each other, none of which are owned by the owner or the operator. And so what those companies are selling is they're selling us back our own data, formatted in a way that they think we want it. But because they're not talking to each other, if I am trying to understand as an asset manager how many apartments did I lease last week at a particular property, Knock might tell me something different than on-site might tell me something different than Yardy might tell me something than like we use Canopy as our BI tool. It's amazing. Because all those feeds are coming in from different places. And so I think that something I've really been considering a ton is the ownership of data. Like in my mind, we're the owners of the property. We should own that data, but I have to pay to get access to it. And I have to pay not just Yarty, I have to pay on-site. And then I'm still not getting data that makes sense. So where did we go wrong? I think we failed to consider the ownership of data when we started building these partnerships and building our businesses on SaaS products that are really difficult to unwind. Changing your technology is a huge deal, right? People aren't just like, I'm gonna switch from Yarty to entrata. It's very expensive. It has tremendous results that are not necessarily positive in the short term on the on-site team, on financial performance. It's a really big deal. And so we hung our hats and we really invested in essential infrastructure for our business without fully understanding what we were doing. And I don't think that was a bad thing. I think we didn't know.

Jonas BordoYeah. You don't really recognize it until everything stacks up. Of course. That you have a problem, right? Each individual choice seems rational. Seems great. But when you get everything together, it's no longer great. So this situation that you're describing is really challenging for all of us. And I'm curious, I had a couple of conversations most recently last week with a guy named Brooks Baskin and his colleague Michael at To Be Living in San Carlos here in the Bay Area, fantastic folks. And they have an internal dev team that is building their own software. They manage about 6,000 units in the Bay Area. I've talked to several other people who are doing the same thing, and I think that's fascinating. And is that the solution? Is now that AI makes it possible for us all to build, that property managers just need to build their own stuff. Is that reasonable or is that crazy?

Carol EnochI mean everything is crazy that's fun, Jonas. I don't know what the right answer is. I think that's an interesting answer, and I think it's an interesting response. I think that when I zoom out and I consider why multifamily and prop tech specifically is still behind general tech. It's largely because rather than utilizing off-the-shelf products like Salesforce and Oracle, we decided to create our own product for our own needs. And then it often became not as robust. I think it could either be the right answer or the wrong answer or both to get more and more industry specific. I think that a solution could be collectively coming together as a whole and making some demands of our technology providers that are already out there, the big shops that have the property management software that most of us are handcuffed to. Could we, and I know people have formed committees and groups and things like that, but could we approach them as an industry and say, look, you need to open your APIs for less money? Right? Like, could we informally unionize in a way? I think that could be an option because not everybody is going to do what you're saying. I think that's a really cool option. And I think that's a smart way to think about it because technology is so much a part of all of our lives, we need to have that considered in any business. So yeah, I think that's super interesting. It just depends on what people's risk tolerance is and their desire to get into that. Because I both think it's a great idea. And I think about like a company like Bridge, where we have decided as a firm that we are going to be the investors and that we are going to hire third parties to operate. So we don't actually sign the contracts with those SaaS providers. So we're already a step removed from our data, right? It's the property operators that have that. And so would a Gray Star or a Willow Bridge or an RPM, now, if those groups were to take their scale and start to create internal tools, that could be really interesting. But then you're still leaving yourself exposed to they have a hold of your data. So I think there's two things. I would love to talk to an attorney about this and understand from a legal perspective, an intellectual property perspective, this idea of owning data. In my mind, of course, I think the owner should own it because I'm an owner's rep. And I always have been in some capacity? Now Mr. Yarty may go, well, I own it because I created this tool that processes all of it. The resident could go, well, I own it because it's my information, right? So I think there's larger philosophical, legal, moral, ethical questions that are part of a conversation. But the business implications are we are paying so much money to get access to our own data right now on the ownership side and not getting it in a format that we can work with. I'm still taking Excel reports and transmuting.

Jonas BordoSo is AI the solution to that then? because I know I take in an enormous amount of information and I've gotten so much help from AI in processing all of that information.

Carol EnochIt's a huge help with processing. Huge. And I think it's in some way taking place of our entry-level analysts, which then brings me to the question, which I'm always thinking about is succession planning for our people and how we as an industry are going to continue to attract and retain high-level talent if our all of our entry-level stuff is getting swapped out. You know, what does that mean for the future? Which I mean, every industry is struggling with that. I think that AI is definitely useful, but it also hallucinates data and makes errors just like anything else. I don't think it's perfect. And in order for me to utilize AI to analyze or organize data, I still need data that I trust. And I don't have data that I trust. And we have BI tools that we use. I mentioned Canopy earlier, and so it pulls in all the data from all our management companies so we can look at it in a dashboard. And it does a great job getting that data in clean. But sometimes there'll be errors because it's pulling from one source, and there's often multiple sources feeding that one source. And so to me, every step there is dilutes the data further.

Jonas BordoYou know, if you're abstracting away from the original data source and putting a layer on top of it, that's always risky.

Carol EnochThat's right. And Donald Davidoff talks about this a lot, the single source of truth. And that was his dream behind building Reba, which is a super powerful piece of technology. But it does require you to have a technologist to run it, is kind of what it feels like. So it may or may not be appropriate for every scale and every size of business. But yeah, this is a question I'm still trying to figure out and still trying to answer because we can utilize all these tools, but unless I have data that I trust, none of the tools matter.

Jonas BordoHow do you think we get there? And I asked that specifically, you know, you mentioned at the beginning, and I think this is a really important thing for everyone to remember is that most companies that are on the ownership side look like Bridge. Yes. They don't have 2,000 employees and a 40-person tech team. They have maybe just an external tech team, maybe somebody, one person in-house who handles that stuff. And often that person's job is to keep the computers working on people's desks. And that's a very important job, but a very different job than trying to figure out the enterprise technology and develop things. So, how do we tackle this kind of stuff in your environment, in the in the bridge environment?

Carol EnochI think that education is the most important thing. So having conversations like this, having conversations like we have in my group and just learning what other people are doing is really the answer. I think AI is really powerful. I think everybody's very excited about it. I think making measured, thoughtful decisions is important when things are moving really, really quickly. And I like to move fast. So it's interesting that I'm saying that mildly out of character. But I mean, I don't know what the answer is. I have some ideas. I have some things that I think are worth trying and exploring and experimenting with. I definitely think we just have to start using it and testing it and seeing what works.

Jonas BordoWell, Carol, this has been fantastic. I have a couple of quick questions for you to wrap things up. So, first, what was your aha moment with AI? What was the moment where you were like, wow, this is exciting?

Carol EnochI don't know that I had an AI aha moment. Now I feel left out. Okay, here's the thing, Jonas. Like I look at this as just a natural evolution to a tool.

Jonas BordoOkay. That's interesting. Tell me more.

Carol EnochTo me, this isn't some magical, mystical thing that's going to solve all of our problems. We are humans, we like to evolve. This is a natural evolution. So I don't think it's something special or unique. I think it's the natural progression of technology and that we should treat it as like we would treat any tool or thing that's here to help us.

Jonas BordoMakes sense. So, as somebody who's using it regularly, what would you tell someone who's been apprehensive who maybe hasn't gotten started yet? Where should they get started?

Carol EnochI would say don't be afraid. Call me out. I'll hold your hand. We can jump on a Zoom and eat some snacks and get in there. Think about it like Google. Like, remember when Google search came out and you could just say, hey, Google, tell me this. I mean, I would start there asking questions using a co-pilot or Gemini, ChatGPT, Claude, whatever one of those you like. There's a ton of free options out there. I would say just start asking it questions. Say, hey, tell me how many apartments are available in a square mile radius? Tell me how many are too bad. just really use it in your daily life and you'll start to figure out ways that it'll apply in your business.

Jonas BordoSounds good. Last one. How are you using AI in your personal life? How's it coming in handy there? I don't. Oh, really? That's interesting. Not at all.

Carol EnochI try to not use my phone or electronics when I'm not working.

Jonas BordoYou are very different than me in that regard.

Carol EnochI am a person. So I will use I'll text my friends and be like, come over at this time. I don't use it that much in my personal life.

Jonas BordoI have to say, Carol, you're a role model for us all. I think we all should be using a little less technology in our personal lives. That's fantastic. So I'm not sure.

Carol EnochI'll tell you my best story about how I use technology in my personal life. I was kayaking. and I do like to use my phone to take pictures. And so I had it tucked in my PFD in Richardson Bay in Sal Salito. It's beautiful North Bay. So I have my phone tucked in and I like pretty pictures. I didn't have it in a waterproof case. And I rounded a corner and about a 40 mile an hour wind came through. So I went and tumped myself over and took a swim in the bay with my phone and my PFD. And they are kind of waterproof, but I don't know if 55 degrees salt water when you're in there for about five minutes is really what's supposed to happen. so that's how I use technology in my personal life.

Jonas BordoFair enough. Did the phone survive? We all want to know.

Carol EnochOkay. Well, kind of. then I forgot about it. I made a phone call to a friend and it died. And then I took it to Verizon and I told my new best friend Elliot, I was like, look, I took a swim in the bay this morning and broke my phone, fully prepared to pay whatever you're supposed to pay for a new phone. And my friend Elliot said, Oh, he goes, Your phone still works. The screen is broken. I was like, Well, it's an iPhone. The screen is kind of the whole thing. He's like, You're eligible for a free upgrade. So I got a free phone that I did not deserve. So thank you, Elliot.

Jonas BordoWell, that works out nicely. Thank you, Elliot. Carol, this has been fantastic. Thank you so much for coming on the podcast. As always, it's a pleasure to talk to you.

Carol EnochThanks, Jonas. Ditto.

Jonas BordoThat's NetEffective. New episodes weekly. If you're running rentals and figuring out AI, hit like, subscribe, follow, or whatever your app makes you do to get more of the show. And if you'd like to come on as a guest or subscribe to the weekly updates, go to neteffective.show. I'm Jonas Bordo. Thanks for listening.