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2024 Macro Trends and Their Impact on Real Estate Investing | Ep 25

James and Jessi with their hands up in a big position
In this episode, we delve into the key 2024 macro trends impacting the real estate market today. From economic factors like inflation and housing supply to social-political influences and cutting-edge technological advances, they analyze how these trends shape the real estate landscape. They also share insights on the rising electricity demand and the increasing importance of integrating AI and big data in property management.

Listen to the Podcast

Show Notes

  • 00:00 Introduction
  • 02:00 Understanding 2024 Macro Trends in Real Estate
  • 03:29 Economic Trends: Inflation and Housing Supply
  • 14:54 Social and Political Trends Impacting Real Estate
  • 23:56 Technological Trends in Real Estate

Key Lessons

  1. Explore secondary markets: Smaller cities and towns could be valuable investment opportunities due to the growing housing demand.
  2. Adapt to remote work needs: Renters now prefer units with flex rooms and reliable internet, making even small two-bedroom units highly desirable.
  3. Recognize the perception vs. reality gap: Public perception of the economy often doesn’t match the actual data, influenced by factors like inflation and media reports.
  4. Invest in energy solutions: The demand for electricity is growing rapidly, so investing in energy generation or efficiency technologies could be beneficial.
  5. Evaluate ADU investments carefully: Understand that in some areas, the return on investment for building an ADU might be only 50% of the construction costs.

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Read the Transcript

James: Welcome to the Furlo Capital Real Estate Podcast, where we dive into the intricacies of real estate investing. And our goal is to equip people to invest both wisely in property and people so that together we can build our wealth while improving housing. I'm James and this is my wife, Jessi.

Jessi: I'm here.

And guess who else is here? My praying mantises.

James: You're praying mantises? Yeah, it was a

Jessi: good day because my, I'm hatching praying mantises.

James: Okay.

Jessi: Actually, it's mantids. Mantids? I learned, yeah, praying mantids.

James: That's the plural of mantids? The plural. So it's not praying manti, it's mantids? Right, mantids.

Interesting. I think. And why are we raising mantis? I love bugs. You're so weird. All right.

Jessi: Okay. Well, I release them in our garden and they eat the aphids. Oh, okay. Off of things. All right. So it's not just Not that I planted any We're not raising pets. vegetables, but

James: But

Jessi: Well, I do keep a couple. I mean, we are.

Yeah. So they can be my pets. That's great. But I release the others. So.

James: That's fair. All right. Well, anyways,

Jessi: happy birthday,

James: Prangmanteds. Oh, that's so weird. How do you, you just buy them online or what's the?

Jessi: Yeah, these ones I just, I bought the little egg cases online.

James: Oh, interesting. Okay.

Jessi: Make a little habitat for them.

James: Yeah.

Jessi: They have to be warm for four to six weeks.

James: Wow. So, all right. So, so this will be a four to six weeks from now. We'll get an update. No,

Jessi: the egg cases have to be warm, so I've had them for four to six

James: weeks already. And then

Jessi: they start to hatch. So

James: we have hit that four to six week time period. Okay, I'm following you.

Because it's like,

Jessi: typically the mantids, this is like way more than Yeah. We can do a bug podcast. Anyways, the mantids lay their eggs at the end of summer, and then they winter. So the egg cases stay over the winter in the bitter cold. And then when they stay warm for a certain amount of time, they know it's time to hatch, and then they

James: hatch out.

Okay. Okay. So. Well, there you go. Springtime. Sweet. Springtime. Nice.

Jessi: Anyways, we're not talking about bugs, we're talking about real estate. No, what I actually

James: want to talk about, yes, real estate, and specifically, I want to talk about some macro trends. that are happening in the real estate market. And, and just talk about how those trends are impacting the real estate market.

If that makes sense. So not all of them are like, Sure. So we're not just like, Let's talk about, How do I say it? They're not all directly about real estate. They're just like big trends that are happening right now. And here's the impact There might be an impact.

Jessi: They have

James: on the real estate market. That

Jessi: makes sense.

Just, can I clarify? Are you going to talk about like, what is a macro trend? I mean, I

James: can guess,

Jessi: but I want to make sure that I, that I'm thinking of it the right way. So macro means big trend is like a change or heading in some direction. Yes. So a big change. You got it. Okay. Yeah. All right.

James: Yeah. Yeah. I didn't know

Jessi: if it was some like.

Specific term that I don't know.

James: No, like sometimes there are specific terms like they have like macroeconomics It's talking about really again. It's like big Measurements related to economics as opposed to micro which is like we're looking at a specific business. That's like market macro equals market Which I think in some ways is still the same, but yeah, no, just the idea of like, what are some big trends that are hitting the real estate market?

And I got I got a bunch of them. Oh boy. I kind of, I know I broke them into three different categories. We have economic, we have social slash political, and then we have technological. Okay. Cause I think those kinds of three are, and there's, there's obviously some blending between all of them. And so I want to start with the economic and I have a, I have a guess, or I have a hunch that you can guess what the biggest.

Trend is economically speaking right now.

Jessi: Inflation.

James: Yeah. That's my number one.

Jessi: Nice. Yeah. Cause groceries are expensive.

James: Oh, that's how, that's

Jessi: how I feel it. That's where I see it the most, but

James: yeah.

Jessi: In housing, you're not

James: alone. I did a an email update and one of the things I talked about were gas prices and I was just like filling up the tank.

I was like, I just, I almost, I can't look. Yep, it hurts my soul because now we don't have a Prius. We have a van. Yeah, it's like, oh, I'm missing 10 gallon days Yeah, it's tough for sure. Yeah. No inflation is definitely and it has a direct impact on the real estate market No surprise because as

Jessi: costs go up for fixing things for building things.

James: Yep

Jessi: The cost goes up for buying them and renting them and

James: yeah, yeah all of all of the

Jessi: above.

James: Yeah an interesting thing too that I thought was super fascinating is And this is specific to this area that we live in this may not be true across the United States So your mileage may vary But I was recently talking with an appraiser because we were, we have this property under contract and there's a potential to put something in the backyard because it's a bigger lot.

And the thought was like, well, maybe we could put an ADU back there. Super easy. You could attach it to the current system and you don't necessarily, you may get away with not having to bring in a new sewer line and stuff like that. And so it's, it's, you know, advantageous, but what was super interesting talking with the appraiser.

As he was saying, about on average, the final value of the ADU is only worth about 50 percent of the construction costs. So if you spend 200, 000 building an ADU, you can only expect an increase in the property value of about 100, 000.

Jessi: Interesting.

James: Now, part of it is because you lose backyard space or wherever space on your yard.

But it's just this, there's currently in this area, a mismatch between construction costs Which is nuts because home values have been rising.

Jessi: Right.

James: That should just tell you how much construction costs have also been going up. Oh.

Jessi: Huh. Yeah. That's, that is interesting.

James: Yeah. And, and honestly, so, and here's part of the hard part about it is, as a result of that, the math that makes the most sense is to put in a duplex in that backyard.

Not keep it as a small ADU with a yard, but instead like you try to maximize the amount of square footage that you possibly can. And a duplex gives you enough economies of scale where you go, all right, the math starts to work out. In this case, it's breakeven. So it's still not worth doing it.

Jessi: Nobody has a yard.

James: Yeah, and that's that's actually been a huge problem recently with construction because construction costs are so much you might as well go for the biggest best you can because you're like, well, I'm already spending a Big chunk of money just to put the building here I might as well go for the nicest which causes a problem with affordability which happens to be related to our second big macro trend, but yeah, but inflation is It's huge.

So some of the things that we might see as a result of this, and we've already seen some of it, is continued or more stringent rent control, rent control measures. Okay. So in Oregon was one that was already affected by that. They had an algorithm in place where they said the, the rent is CPI, which is your consumer price index measurement of inflation, plus like 7%.

Mm hmm. And last year they said, Oh, but we're going to cap it at 10 percent because all of a sudden it rose up to 15 percent and they were like, well, that's not what I meant. And we're like, dude, inflation's a thing. And so you might see more things like that. You might also see more subsidies slash assistant programs start to step in and say, Hey, we're going to help bridge some of these gaps here.

Right. Because there is. Not necessarily wages catching up with the cost of like you're talking about with food and things like that. Yeah, so that's like, that's a huge trend. I think we're all aware of it and it is, it is really bad from a, from a wealth standpoint. Now, having said that, as you and I, we have over 2 million in debt.

Inflation is awesome from that standpoint because it means our debt is becoming less and less valuable every single year. Relatively speaking. Yeah. Yeah. So it's kind of like for us, it's like,

Jessi: ah, you

James: know, it's a,

Jessi: it's a plus and minus,

James: but that's a big one. Okay. Another economic one. Is around housing supply.

Do you think that we have plenty, way too many houses? Or not enough houses? Not

Jessi: enough houses.

James: Not enough houses. Yeah. No, exactly. And this is a trend. I'm not sure

Jessi: why, but. Yeah.

James: We can talk about that. And this is a trend that just continues to get worse and worse and worse. Mm hmm. It actually stems all the way back to 2009, 2010, we've been living with this one for a while.

So if you remember back then, we kind of had a little housing thing happen.

Jessi: And was that a macro

James: trend of sorts? Oh, that was, that was not a trend. That was a bulldozer. But one of the things that happened was all construction stopped. Like, I don't remember the exact stats, but it was like a, a single digit percentage of construction happened.

And that was true for like three or four years.

Jessi: Okay.

James: And we got so far behind in the housing supply, it is, for all intents and purposes, impossible for us to ever catch back up.

Jessi: Really? This is

James: a trend that is going to be with us for a really,

Jessi: really long time. Is that because Housing construction stopped, but population growth kept going.

James: Huh. Yep. And immigration. Yeah. Okay. And there's been this drive towards more Isolation is not the right word, but people want to live all by themselves. Right. They don't, I was on the phone today with someone who, Yeah, they don't want to share housing. He's like, I want to be more independent and experience more freedom.

Yep. And there's just decisions like that. And that is by far the trend. Mm hmm. And yeah. So The problem though, is that anytime demand outstrips supply, that means you get higher prices and lower vacancy rates, which from a landlord perspective is, is a good thing if you're already in the game, but in general, man, it's not hard.

What, and what that allows us to do though, it also allows us to be stricter on our tenant screening

Jessi: because

James: we get multiple applications and this is something we've been experiencing for years already but it was just Continue to get worse

Jessi: pool of people is huge compared to what's available. And so,

James: and, and in an interesting way, because of this, it opens up some secondary and tertiary markets to be interesting to invest in because of this, because this demand supply imbalance is pretty much everywhere.

So the general rule was you wanted a place that was big, you know, diverse, a lot of people to begin with, and you wanted one where the population was growing. Income was going up and employment was out as well. You're talking about like cities you might invest in. Just in general, correct. Yes. Yeah, thank you.

And so, but what's interesting is now, like there's some tertiary markets where, well, the demand is still its way at stripping supply, so rent growth is still growing. I'm still going to be able to rent this out easily, even though there might only be 10, 000 people in this city, which normally you go, I'm not even interested.

But now it's suddenly interesting. And so that's one of those and you combine that with some other trends where people can, you know, in some ways work from anywhere that really starts to open up. In general,

Jessi: is the cost of development or the cost of building the same in most markets, or could there be opportunity, like in some of these tertiary markets, the cost of building might be cheaper.

And there's still that opportunity. So yeah,

James: it depends. It's not straightforward. One of the problems, usually building is actually more, it's, it depends. Part of it is availability of labor. Can you actually get the guys in to do the work? And that's harder in a lot of these markets, secondary markets. Yeah, you can do it like out on the coast.

That is like tertiary, maybe even lower than that. It's just, there's no construction guys out there. Everyone working on the coast lives in the Valley. Yeah. And drives the hour. Interesting. And the same thing for getting supplies and tools and So the cost is actually higher. Maybe. You know, it's kind of that weird, the cost of land is less.

And so when you think about the total cost of development, like these things, it's, it's weird. It's, it's not as straightforward as you want it to be. You always got to run the numbers. So housing supply continues to be a problem. I was reading somewhere, how did it go? They were talking about the demand for housing.

It was some ridiculous ratio that I had demand for housing continues to increase like 20 percent every year. And the supply of housing has only been increasing. It was something like 5 percent each year. And so it's just, it's like, and that ratio is not exactly perfect. Cause I don't remember it, but I remember it was like that where you're just like, Oh, that's, that's a problem.

Jessi: Yeah. So what do you, I mean, in my mind there's a bunch of homeless people. Is that, or there's a bunch of people living where they don't want to live?

James: Yeah, they're, they have roommates. They're living with family. They're living where they don't want to live. Which is always.

Jessi: Well,

James: yeah, but yeah, it's a thing.

There are, there's two kind of dynamic forces that can impact this to try to help it. You have central planning, then you have market forces. So central planning would be things like creating low income housing tax credits, that kind of thing. Section eight HUD or public housing, which historically has not been great.

So hopefully not that, but there are these programs where the government could just throw money at people and go, Hey, we're going to help you. So the low income housing tax credit is for builders. Right? Hey, if you build quote affordable housing, which have rules around it, we'll give you a tax credit for it.

Section eight HUD is directly to tenants saying, Hey, we're going to help you afford these nicer homes. So builders will build nice stuff. You'll still be able to afford to live in it. Public housing is kind of the, the middle of the road, right? We'll just build it ourselves and put you in there for cheap.

That doesn't, that doesn't, it's just, it's not a great environment. And then you have market forces. And I really think that that's going to come in construction breakthroughs, whether that's construction happening with robots, or doing like really prefab types of buildings, or 3D printings, or just finding cheaper, better materials.


Jessi: it's making the cost of construction more affordable.

James: Yeah, yeah, exactly. I was reading somewhere, they just, some lab somewhere figured out a new way of making concrete. And they were like, yeah, it's significantly cheaper, and it's still just as strong. I'm sure it's got to go through.

Jessi: Somehow I stumbled on this.

a YouTube video the other day of someone using Essentially like spray foam. Yeah their house Okay and and the comment section was the one that cracked me up the most because it was just like Both ends of the spectrum like yes, this is awesome. That's so cool. It was so efficient it was so great and other people being like This is horrible.

It causes cancer. It's not biodegradable. You're just going to clog up the world. I was just like, Whoa, okay. My, my favorite

James: is a aircrete.

Jessi: Right. That's my

James: favorite innovation. That's where you have concrete, but you essentially blow air bubbles into it.

Jessi: Foam it up. Yeah. You foam it up

James: and then you create walls out of it.

All right. So that's economic, right? You got inflation, then housing supply. Those are truly like the big macro trends influencing, not just housing, but everything right now. And in a lot of ways, just driving prices way up, making it easier to be a landlord because I just, the demand's there. It's huge. All right.

Let's talk about social and political. I think this is, this was really interesting. I, I heard this report recently, and it's, there is a perception and reality versus reality gap. So there is a perception versus reality gap. So according to the Harris poll, I thought that was so interesting. What's

Jessi: the Harris poll?

James: They're a group of people who do polls. Okay. They ask people questions.

Jessi: Like specific to politics, typically? Yeah, whatever. Just like, whatever.

James: Yeah. 55 percent of people believe that the economy is shrinking, but GDP is actually growing. So there's, that's kind of like, oh, okay, people, majority, right, of people feel this way.

But that's not the case. It gets worse. Forty nine percent of people believe the S& P 500 is down for the year, but it's actually up 12%.

Jessi: Oh. Why do people think it's shrinking and down?

James: Be honest. The answer is inflation. Oh. And the last one is, 49 percent believe that unemployment is at a 50 year high, but in reality, it's near a 50 year low.

Jessi: Interesting.

James: Yeah. And so that, this is just one of those big trends where, again, I think it's, I think it's two things. Number one, inflation. When you go to the store and you see your prices are 20 to 25 percent more than what they were a couple of years ago, you go, Oh my gosh, this does not feel good. Same with gas prices, the things we spend our money on.

And I think that bleeds into these other feelings. But I also think that we are in an era of polarization and distrust. Mm hmm. And I had, I had a quote here and I think part of what leads to it is if, again, it's why is there a perception versus reality gap? If leaders are telling me that male swimmers who are actually female swimmers and that's okay, why would I believe them when they tell me that the economy is okay?

Yeah. So I think that's kind of the like. We've lost some trust in some of our leaders because of things that they tell us. And so we get over here and they go, the economy is fine. Inflation is under control. And you go, ah, you've told me some other stuff that I can see is not true. So I don't know. And combine that with the feeling of inflation, you just get this perception gap.

So like, how is this going to impact real estate? I honestly, I don't a hundred percent know, but this is a big trend that is currently happening and it seems to just be getting worse. And I don't see this reversing course any time soon, outside of maybe once inflation does, once we all get used to the higher prices, I should say, like maybe we'll all start to be like, okay, all right, things are fine.

But I think like, it's, we're going to have this gap for at least the next four, maybe even 10 years.

Jessi: Do you think it will continue to increase that, that gap of, or I don't even know if it's a gap, but the perception of tenants. It's like there's, there is this perception of landlords are awful. They overcharge.

They don't take care of things.

James: Yeah.

Jessi: Yeah. Do you think that will just continue to grow? Yeah,

James: I think so.

Jessi: Yeah. I think so.

James: Unfortunately. Yeah, I do. All right. I got four social political things. Next one. Obvious one. So, remote, hybrid work, right? And so this has had all sorts of stuff first one is people want offices or at least flex rooms, right?

They want to be able to work. They want to be able to exercise. They want to be able to hang out. And so a little bit larger units are nice, but you also don't necessarily have to have a three bedroom. Like a two bedroom seems to me like this sweet spot where you go, Oh, I can have an office, this kind of area, but I can also have a bedroom.

Yeah, that kind of thing. They also want fast, reliable internet. Yep. That's the thing. I know. Remember when we bought our first, remember when we bought our first house? The very first thing I did was I tried to make a phone call. I was like, I want to have cell service. And today I would be like

Jessi: make or break deal.


James: yeah. And I was just like And now it is. And we walked into a couple places and went, I don't have no bars. We're done. I don't even want to see anymore.

Jessi: Well, we, I was just recently talking to a couple. They relocated and the wife was now working remote because they moved. Her husband is, you know, got a job here.

She's working remote. And it was like, that is a non negotiable. Like, she's working from home. She has to have internet. And so some of the places they were looking at was like, yeah, this is not an option. Yeah, you have to, it has to be a thing.

James: Yeah, and I think that's, that's related to that, like the secondary and tertiary cities starting to open up because if they got good internet and they got a good flex space and the rent is cheaper versus the big city.

Yeah, people are gonna move out there. Right. Totally happening. So all that's saying, I think For us, I think there's something to be said about those secondary and tertiary markets are very interesting to me. Yeah. So not thinking Portland, not thinking Salem or Eugene, though definitely buying stuff there, but more of a Corvallis, Albany, Lebanon, Sweet Home, which are smaller places and even maybe even further out east in Oregon, I think are intriguing to me because of some of these factors.

Another one, those Gen Z'ers, man, they've grown up, they want to rent their own place. They want their

Jessi: place. It's so sweet.

James: And they just like anything, so it's funny I was reading a couple of things researching it. I'm like, you know, those Gen Z'ers, they want amenities, you know, and they want to know that their house is green.

I was like, yeah, I've talked to some builders and they ever, they tell me every single time they just want more square feet. Just give me more square feet. That trumps everything. Every single time more square feet. So I don't care how many incentives you throw at them. Square feet, that's what everybody wants.

And so in some ways they're still the same. But if square feet is. If that is like factored for, right? Okay. You get the size that you want then. Yeah. Things like wanting city life and having online management and payment platforms and having flexibility in your leases. Yeah, they want it. And of course they want everything free, perfect.

And now shocker. But square feet is by far the number one. And, and they do

Jessi: make sense with that trend that people are wanting more of their own space. Yeah.

James: Yeah. And that, dude, you read my next one. They want more independence.

Jessi: Yeah. Yeah. It's like, I don't want to have to have roommates. I want space.

I want to be able to spread out.

James: Yeah.

Jessi: And I still want to have my bedroom and my workout room and my office and my whatever. Yeah.

James: Another one, another huge trend. That has been in the works for a while. And I think is starting to mature is the short term and midterm rental market. That I think has had just a huge impact on, on real estate.

And I think it was kind of this sleeper thing. Cause at first it was like hotels, that's your choice. And now it turned into all of these places, but what was super interesting and what's, Attractive about it to landlords is that, yeah, you can just, you can earn a lot more money at the end of the day because you are providing more of a, it's closer to like a service type of thing.

And so you can charge a lot per night. And if you think about you know, like a rental here, you may make like $2,000 a night on a three bedroom, but you could rent it out for $250 a night,

Jessi: 2000 a month. Oh,

James: 2000 a month. Or you could rent it out for $250 a night

Jessi: there.

James: Now you have increased expenses.

Mm-Hmm. . But you can quickly do the math in your head and go like, dude, I don't have to rent it out for that many nights. Yeah. If I hit a couple long weekends in there and, Mm-Hmm. , you know, like the numbers all start to work out really, really well. Mm-Hmm. . But the impact of that, again. Now there's even less

Jessi: housing.

James: Yeah, right. So prices continue to go up. Plus there's impacts on the community. If you don't have long term people here, you just have people constantly rotating through. And I think part of the, I think one of the issues is that landlords tend to focus on how much money they can make versus the hospitality side of things.

Right. And I think that's, A problem. And so it creates, it can create these bad vibes, I guess. I know we have rented multiple Airbnbs and on more than one occasion got to within like a week of leaving and they go, Oh, sorry, I booked it somewhere else or something came up. Sorry. I'm like, wait, what? It's happening.

Yeah. You know, and we do the last minute scramble and it's no fun. Oftentimes there are places that have deals that open up and you go, wow, why didn't I do this at the last minute anyways? But the point being, I think there's this mismatch of mismatch of hospitality and just in general, I think it raises up rates because.

Now we're not all talking about 2, 000 a month in long term. People are saying, well, you know, as a midterm, you can make 3000 and as a short term, you can make 3, 500 and we all kind of, that grounds us at a higher level where you go, oh man, I think I could rent this out for 2, 200, you know, some things like that.

So those are the four big social political. So I think there's this perception reality gap that Is a problem and there's no easy solution. Remote hybrid work is huge. We got Gen Zers who are really like, okay, I'm ready to take that next step. Then we just have these short term rentals, I think, are playing an impact on the market.

Jessi: Interesting. Yeah.

James: Right.

Jessi: Yeah. I guess I haven't thought too deeply about any of those, but I can see it.

James: Yeah. All right. Last section here. I really feel like we're tearing through it, but that's okay. Technology. Let's see. Can you guess what I think would be the number one? Yeah.

Jessi: I don't know how, but that's the macro trend right now.


James: So I got It was, it wasn't a demo. He didn't gimme a demo. It was super weird. But I met with a sales guy for a company called And Colleen. Colleen. Like the name? Like Colleen. Like a person? Like a

Jessi: lady?

James: Yeah. C-O-L-L-E-E-N.

Jessi: Okay. Colleen. A I.

James: Yeah. A lot of them, they, they name them after.


Jessi: Like Siri or, yeah.

James: Or Claw Alexa or whatever. Yeah. Which I actually think chat GPT need the, they need to come up with a better name. Our kids can't say it. Which I'm like, yeah, they just, they struggle to say those words. And to me, I'm like, that's a non starter. They need to change it. It's name it.

Poor branding. It's, it's not going to become a verb just because of it's, it's bad name. But anyways cool product though. Just call

Jessi: it Chad.

James: So. Colleen dot AI helps you with your leases and rent reminders and communication. So yeah, it's communication tools. So if you've like rents due on the 5th, that kind of thing, it will send a text message or an email, Hey, friendly reminder, rents due on the 5th.

And then if you, if it sees in a system that you haven't paid it, it will follow up with you. And if the tenant says, Hey, I'm going to be late for like four or five days, it can come right back. Yep. No problem. We gotcha. We'll look for it then. And then in four or five days, if it doesn't see the payment, So this

Jessi: is all AI.

This is

James: all AI. Not a person. Conversing it

Jessi: back and forth.

James: Yep.

Jessi: Oh.

James: Yeah. Same with renewing leases. When it sees that your lease is coming to an end. Yeah. It'll 90 days prior or whatever, like, Hey, so your lease is kind of due. What are you thinking? Thinking about moving not, and it can have those replies back and forth.

Yeah, it's kind of weird. So there's things like that, that are coming onto the market, which I think is super interesting. A lot of it is still new. Prices are high is what it is. Another cool one is a virtual staging. Which, honestly is a little weird to me because what you see in the picture may not be in real life.

So like two things will happen. A, if you're taking photos of someone's home, like either to sell it or to rent it, you can remove stuff from the room and it'll fill it all in. So you can get rid of personal stuff. Yeah, that's kind of cool. Yeah. Or you can. You can fill it with furniture so people can see pictures of, Oh, here's what it would look like furnished.

Jessi: Yeah. You just have to put a little disclaimer. Yeah. Not included with the room or whatever.

James: I also think it's really interesting where I should say, not necessarily interesting, but it seems like the big trend with like generative AI stuff is it is trading labor for technology. So for example, I was talking with a PM and she uses a system called app folio and she currently spends.

60, 000 a year using software, which in the past would have been three or four people. And so she like spends what, in my opinion, is a lot of money, but it saves her a ton on labor costs and has allowed her to stay relatively speaking lean. And that is by far her biggest expense in running her company.

And so I think we're just seeing more and more trends like that.

Jessi: Yeah, I can see that. Cause

James: I

Jessi: mean, even thinking about our business, it's like. You, in the past, have hired people who did some of those things, you know, they followed up with tenants who weren't paying or gave a reminder for leases or whatever.

And as

James: technology's gotten better and better, I ultimately was able to let them all go. Because I was like, man, I can literally do this all myself now. I don't need them. It's super easy. Yeah. I think far off, this is me wishful thinking trend, I think you're going to see a lot more like robots. Like, think house cleaners or security.

Weird. Those kind of things. Again, like. Like a cleaner bot? Yeah, yeah, Roombas that are going around the house cleaning things up for you. It's gonna be sweet. Changing the sheets. Well, no, I mean it could be short term, but I'm thinking more like during rental terms.

Jessi: Oh. Like you have a team of bots.

James: Or I just, I've got a bot and I sit in the corner and I go, clean the room.

I'll be back tomorrow. And, and it just, it starts at the Somehow it's able to scrub the ceiling, like a pool cleaner, but it can scrub the ceiling and get the fan, get the windows, get the doors, get the floor, get the appliances. It can be pretty cool. And when you get that, let's just

Jessi: get one for our house to test it first.


James: Yeah. That one's that's off in the future, but I've started reading where people have been experimenting like Boston dynamics is a classic one, but now with Jen or Dave, AI and these multimodal being able to take images and process them really quick. Like we're, we are going to see some massive advances in robotics because the processing power is going to be there because they've already got the dexterity and stuff.

It just needs the instructions on what to do with it. And like, I, I would not be shocked if in the next 10 years, like that's a thing. It might be crude, but it'll be a thing. Yeah. Pretty cool.

Jessi: I could see it definitely for things like carpet cleanings or. You know. Yeah. More nuanced cleaning is Yeah,

James: maybe.

I don't know. But it's coming. It's pretty cool. Another one is, and this one has been a trend for a while, but just big data is, is a thing. And, and this is a trend that we're just, we're starting to see things become more and more affordable at the end of the day. So like for example, the goal is really to turn unstructured data into structured usable data.

So there's a ton of unstructured data out there. There's MLS listings, there's Rental listings, there's all sorts of stuff where there's a ton of data but it's all written in paragraphs or bullet points or it may not be all structured the same. And it's just hard to get all of that and make sense of it.

And there are companies out there who are working hard to, to make it all the same. And so they're gonna provide like market insights. Hey, here are what the sales price are, here's what cap rates are, here's where rents are trending. Is that

Jessi: similar to what you were doing with your other company? Yeah. And taking like inspection reports and trying to evaluate the big data or find a system that evaluates it all and then compiles trends and things.

James: No, totally. I think there's existing systems out there. Like Rentometer is one of them where they do that with rental data. And so it's very specific, but they're trying to help you figure out trends co star, they are buying up companies left and right related to this, to build these things. Air DNA is actually one where that plugs into Airbnb and we'll look at what hosts are providing and give you insights.

So you know, okay, here's how much to charge. Here's how to do things. Yeah. Right. And so there's a bunch of things like that. I think there's, Big data is helping with management and planning. So I don't personally have the software, but I've seen the software where it can help you figure out what the charge for rent, and it can actually tell you if you want to do long term, here's what it would look like if you want to do a six month lease or a three month lease, here's how to price these things based on the market.

Jessi: Okay. Based on market trend. Yeah.

James: Yeah. And help you optimize your portfolio using big data. I think that just becomes super

Jessi: smart.

James: Cause it becomes more and more accessible to

Jessi: do all of that research. Takes a ton of time and effort, and you're not necessarily Efficient at it.

James: Yeah, and one of the things that it's doing is it's helping us all become more similar in our pricing And how we see and think about the market.

Mm hmm. I think it's helpful All right. Last one. This one's kind of a I don't know how to say it This one concerns me. This is the ratio I've okay. I was wrong on the construction ratio Ignore what I said for that. Okay, okay That was wrong. I was thinking about this one. I didn't actually write it down, but I, I now, now I know what it is.

It's insane. Okay. This is the dark horse. Okay. Electricity, the supply and demand for electricity is this massive tidal wave of a trend that very few people are talking about.

Jessi: Okay.

James: Okay. Ready for this? The demand for electricity Is in sane and how much it's growing. It's growing because we all want electric vehicles.

Now it turns out using AI requires a ridiculous amount of energy to use all those computers. We all want smart homes. We are all transitioning to heating and cooling being electric. Population continues to grow. People want to work from home and so they're more distributed. The demand for electricity is growing at 20 percent a year.

Guess how much our supply of electricity is growing. You

Jessi: gave me the stat earlier, but

James: it's only 2%.

Jessi: Huh? Well, that's worse.

James: Yikes. Glad I've seen this. I remembered what it was now.

Jessi: Oh my word.

James: Yeah. So all that. So I think as an investor, if you have an opportunity to invest in some sort of electrical startup thing, it's worth it.

Jessi: Like creating electricity.

James: Yes. Creating slash providing slash distributing anything in that realm.

Jessi: I

James: think it's going to be a really, really, really big deal.

Jessi: This is going to show my naivety. Are we still relying mostly on, like, Fossil fuel for, to generate electricity for the most part.

James: Yeah, we are, but that could be another, some sort of green energy solution.

I've, and that's, I mean, I'm one of the weird parts, at least in the U S is we're not super fans of nuclear power plants because that would honestly probably solve most of the problems. Cause they're super efficient and we just were like, nope, cause they can blow up and that can be a problem. I think that's, A little short sighted.

A little too concerned about it, but but but yeah, it's it's super interesting. That is an area that is going to be huge and something to think about from an investment standpoint, especially when you're like, you're thinking about, okay, what does this rental look like? Who's paying for these kinds of things?

I think we're going to continue to see electric prices just grow and grow, and we're going to be short on, on power in a lot of places. Have

Jessi: you seen, or have you looked at, the trends of like, specifically Electricity costs for our properties over time?

James: No, cause I don't pay for it.

Jessi: Oh, tenants, tenants do.


James: Thankfully. Interesting. I think that was something smart that we, that whoever built the places. Sure. Thought of, and that's pretty general. That's like, and that's, that's accepted in this area. Yeah. Which is really nice. And so, I mean, I've seen ours go up some, obviously we've got. Seasonal fluctuations, right?

But yeah, I think this is a trend. Like I said, it's a dark horse. I think this is going to be a problem in search of some sort of breakthrough technological solution to help us solve it. It's, it's going to be very interesting because the demand, like I said, it's just, it's growing astronomically high.

Yeah. I mean, we've already seen it in California. My parents, my parents live there and they just talked about, Oh, rolling blackouts all summer long. Like it's going to continue next year and just like, cause it just, it can't, there literally is not enough to sustain it. Yeah. It's super interesting. So that's a, that's an interesting trend.

I'm still trying to figure out what to do with that one, but there's something there and yeah, I think it's worth knowing about and if you get an opportunity, take advantage of it. Hmm. So there you go. Those are the technological ones, generative AI, big data and electricity supply and demand. Which is driven by technological.

That's the tie in there. There you go. Those are some huge trends. And I know that was like, boom, just kind of threw a lot at you. But I think it's worth taking the time to think about each of them and going, okay, here's the impact. I, if I had to like boil it all down, real estate prices are going to continue to rise.

Rent. We'll continue to rise simply because we have some fundamental supply and demand issues that are not easy to solve and keep an eye out for different technologies that could potentially change that, but there's not much on the horizon. That's, that's going to have a big impact on it. That would be my, my final, like, too long, didn't listen to it, takeaway at the end.

So there you go. Anyone that was like surprising to you or concerning or exciting?

I'll put you on the spot there.

Jessi: Yeah. I mean, it might be just the recency effect and trying to remember everything, but electricity is. Yeah. It's kind of an interesting one that the whole technological side of things is the one for me.

That's like, Ooh, cause there's so much more wrapped up into that. Like the ethics of it and

James: you

Jessi: know, how will it actually impact the job market? And

James: I don't know. Yeah, that's true.

Jessi: There's some bigger questions there. Okay.

James: Fair enough. Very cool. Well, awesome. And if you enjoyed listening to this podcast, we would appreciate it.

If you left a review, we'd Or if you want to leave a comment somewhere saying which macro trend you are the most interested in would love to hear your feedback on that. And if you'd like to learn more about investing with us, you can visit us at So with that, thanks for listening. And have a great day.

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Furlo Capital Podcast

Furlo Capital
Real Estate Podcast

A conversational podcast between James and Jessi Furlo that dives into the intricacies of passive real estate investing. Our mission is to equip people to invest wisely in both property and residents so that, together, we can build wealth and improve housing.

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Let's build your wealth and improve housing, together

Passive Income

Tenants pay monthly rent, which covers expenses and generates a profit for investors. Plus, multifamilies appreciate and usually sell for a significant profit.

Consistent Above-Average Returns

Real estate is less volatile and historically outperformed the S&P 500 by routinely generating average annual returns of at least 10% after fees, inflation, and taxes.

Revitalize Local Communities

We give people a great, safe place to call home. This doesn’t hit the spreadsheet, but every property is managed and maintained with the residents as a top priority.

Extraordinary Tax Benefits

Your income is taxed much lower because of depreciation and because it’s taxed at a lower capital gains rate.

Below-Average Risk

More units mean less vacancy sensitivity. Plus, costs are distributed across a larger number of units, which also allows us to hire a professional property manager.


Unlike stocks, lenders like to finance multifamilies and the loans are tied to the property, not the person. This accelerates wealth building.