Real Estate Observer This newsletter will provide frameworks & analysis you can use to confidently invest your capital in private market real estate. It is written from the perspective of someone who reviews many deals in search of one that fits my personal or my investor community’s preferences. |
Before we get started, I’d like to thank you for reading this newsletter the past year. Writing it has been incredibly rewarding, and I'm excited to keep it going in the year ahead.
If you'd like to connect or catch up, feel free to grab time on my calendar here. I’m happy to be a resource for anything real estate related.
AI is changing the world and it couldn’t have come at a better time for limited partner investors. There’s a growing push by many LPs to:
Increase their knowledge on real estate investments
Perform more substantial due diligence
The challenge is that most LPs have other commitments and careers not related to real estate (which is why they’re “passive” investors in the first place).
Today, we’ll work through a very easy & quick use case on how you can potentially use AI to your advantage.
This is where Notebook LM comes in…
You've probably heard of ChatGPT, but NotebookLM works differently (and much better) for document analysis.
The problem with ChatGPT are the hallucinations. We've all had it confidently tell us something that's completely wrong, or worse, make up "facts" that sound plausible but aren't in our documents at all.
NotebookLM solves this.
You upload your source materials and then ask questions like you would with any AI tool, but the difference is that it only pulls answers from what you've uploaded as a source.
There’s no made-up information and it provides citations showing you exactly where it found each answer.
You can upload:
-Investment decks
-PPM and operating agreement
-Any other due diligence docs or financials
Then you can start asking questions and prompting Notebook LM like this:
Deal Structure:
"What are the key terms including preferred return, profit split, and hold period?"
"Can you walk me through the distribution waterfall step by step?"
"What happens to distributions during the hold period vs at sale?"
Financial Analysis:
"Walk me through the sources and uses of funds"
"Explain all the fees the GP can charge"
“What rent growth is projected? What expense growth is projected?”
Due Diligence:
"What are the most LP-unfriendly terms in this agreement?"
"Who are the GP team members involved in this transaction?"
"Are there any inconsistencies between the offering memo and operating agreement?"
What NotebookLM Doesn't Do
NotebookLM doesn't replace your judgment.
You still need to determine if:
The answers are 100% accurate
The terms are good or bad for your situation
The deal aligns with your investment criteria
Think of it as a highly efficient research assistant. It won't make decisions for you, but it will surface the information you need to make better decisions faster.
Instead of spending hours hunting for specific clauses or trying to understand complex waterfall structures, you can get answers in seconds. This allows you to:
Dig deeper into the deals that matter
Ask better questions on sponsor calls
Spot red flags you might have missed.
I personally just use the free version of Notebook LM and it works great and only takes a couple minutes to set up your sources.
Investors who learn to use tools like this will likely make better investment decisions and save time while they’re at it.
Thanks again for reading and Happy New Year!
If you’re interested in North Carolina single-family development or existing multifamily opportunities, you can follow along by clicking here.
Clay Stanley
704-608-8488
