Just as you are building and making your real estate business more efficient with AI, single-family developers are using AI to build empires.
Fortune Magazine’s Shawn Tully took a look at how Sean Dobson, CEO of Amherst Holidays, is using AI “to profit from properties most investors wouldn’t touch.”
Amherst Holdings, a real estate investing firm, has $20B under management and owns/manages some 16,000 single-family homes in the South and Midwest. It is considered to be one of the largest, fastest-growing players in institutionally owned rented houses, a $45B subsection of a sector within the housing industry that barely existed pre-Great Recession.
Amherst adds approximately 1,000 homes/week using AI data modeling to make dozens of offers per day. Currently, Main Street Homes, an Amherst subsidiary with $20B under management and an investment of $3.2B, generates $300M/month in rental income. Dobson’s goal is to have one million homes under his umbrella within 15 years, or 60 X what Amherst currently owns now.
Pipe dream or reality? According to Yardeni Research, slightly more than one in three households that would have purchased their first homes prior o the financial crisis is still renting and/or living with family members. Dobson said, “We’re catering…to these former buyers who are now either forced or by choice renters.” And Dobson is betting that what he calls “a whole new class of Americans” will become permanent renters due to student debt, tighter lending standards and lagging wage growth/savings.
Among single-family rental landlords such as Invitation Homes, Blackstone, American Homes 4 Rent, etc., Amherst is the only landlord focusing its business model and computer on “affordable suburbs in the solid middle of the US housing sector.”
Dobson relies on human beings to find cities, towns and neighborhoods where fixer-uppers can be profitable and he relies on AI to pick specific homes within those cities, towns and neighborhoods. Currently, he is targeting 1,000 zip codes in 30 metro areas. Sunbelt cities (Atlanta, Dallas, Memphis, Houston, Charlotte, Jacksonville) and Rust Belt metros (Indianapolis, St. Louis, Louisville) with highly diverse employment and no parked cars sitting in driveways in mid-morning are key.
Dobson’s proprietary automated purchasing system, Explorer, enables him to look at 1,400 new listings a day that meet his price and geographic criteria. Some 20% of those listings qualify and from there, he makes cash offers within 12 hours of the listings coming online. He “gets” 10% or roughly 30 homes daily to add to his long-term goal of one million homes in 15 years.
Clearly, Sean Dobson is an additive, not an either-or, kind of guy. Utilizing human beings, demographics and technology together is a present tense business model that seems to be working just fine for him and all of his real estate investors.