Grocapitus CEO says AI should try to kill your apartment deal

Neal Bawa says real estate investors are using AI the wrong way by asking it to approve deals. He urges buyers to use chatbots as a skeptical committee that stress-tests assumptions before closing on apartments.

Why it matters: - Apartment investors can use AI to surface risks before closing, instead of relying on a chatbot to greenlight a purchase. - Bawa argues the biggest value comes from finding bad assumptions early, before mistakes turn into losses that can cost millions. - The approach matters for multifamily buyers weighing rent growth, refinancing plans, expenses and nearby supply.

What happened: - Neal Bawa, founder and CEO of Grocapitus Investments, said in a new video that investors should stop asking AI whether they should buy a deal. - Bawa said AI works better as a skeptical investment committee that tries to reject the deal. - The video includes the full prompt Bawa uses, along with a written transcript. - Grocapitus made the video available at the full video and transcript.

The details: - Bawa said investors often become attached to a property and then defend their own assumptions. - He said his prompt asks AI for the five biggest risks first. - The prompt then asks which assumptions look too optimistic and what information is still missing. - Bawa said the AI reruns deal math using flat rents, rising expenses and a higher exit cap rate. - The prompt also tells the AI to look for nearby apartment construction that could affect the deal. - The final step asks for the best case for walking away from the purchase. - Bawa said finding a bad assumption before closing costs almost nothing, while finding it after closing can cost millions. - Bawa said the prompt tells AI to keep verified facts separate from guesses and never invent a number to fill a gap. - Bawa said if AI does not know something, it should say the information is missing. - The prompt ends by asking the AI to choose one of four outcomes: proceed, proceed with caution, do more research or pass. - Bawa said investors do not need a complicated AI system or custom software.

Between the lines: - The message is less about automation and more about discipline. - Bawa is positioning AI as a challenge function, not a decision-maker, which may appeal to investors worried about confirmation bias. - The framework also reflects a broader caution: AI can help pressure-test a thesis, but it still needs human judgment because AI can invent details.

What's next: - Bawa says the final investment call should stay with people, not AI. - Grocapitus continues to teach lessons from its investing business through the Multifamily University YouTube channel. - More information is available at Grocapitus and Grocapitus News.