Joe:  What's up, guys? Joe here, REI in Your Car.

Joe:  And I was actually recording this podcast episode while I was driving and I thought, you know, this is too important. I need to really focus and concentrate because this is a very, very critical and important topic that we, a lot of people have been talking about and a lot of my friends have been thinking about people outside of real estate investing, right?

And so this is a critical time because AI is, whether you like it or not, no matter what you think of AI, it’s disrupting our economy. And I predict, I’m more optimistic than pessimistic, right? Anytime we’ve had big disruptions in the past, you know, with the industrial revolution, with the computer internet revolution, the worldwide web when it came out, you know, it actually created more opportunities. A lot of people did lose jobs, you know?

You know, I remember hearing predictions that with the cloud, people would not need paper anymore. And this is going to disrupt entire paper industries, you know? And, you know, even down to the companies that make filing cabinets and all of that. Well, it turns out after the cloud, people were printing more things than ever. Paper consumptions actually went up. People were not scanning all their documents like everybody thought they would. You know what I mean?

So a lot of times these things you hear in the news are just wild exaggerations and people freaking out over nothing. All right. So anyway, but this AI stuff, it’s really, really critical and we need to be aware of it because I think, and I’m predicting a lot of people will lose their jobs, but the people that lose their jobs aren’t necessarily going to be losing it because of AI taking over. They’re losing it because they don’t know how to use AI to become more skilled in the workforce.

There’s a research company called Citrini Research and they wrote an article that a few weeks ago, I’ve been thinking about this ever since I read it, I thought I need to do a podcast about this. It was fascinating. It went viral in New York, a Wall Street type of circles. I heard about the article in the Wall Street Journal and apparently as I was reading it, it was going viral in the financial markets all around the globe because what this article did, it’s fascinating.

It wrote it like it was June, 2028, talking about what happened in the last two or three years. And it’s a fictional piece, right? But it’s written not as kind of a prediction, but as a thought exercise, exploring what might maybe could happen looking back in the past. So it’s a what if story. Again, it’s not a prediction as much as it is a warning, which I think is really important that we need to be thinking about here, especially as real estate investors.

This ties into real estate because, okay, you read these predictions and you think, so what, how does it affect me? What do I need to do? What do I need to be aware of? How can I prepare for it? This whole thing is written about what could go wrong. And this is fascinating.

If you want to find this article, if you go to citronresearch.com or just Google Citron Research AI Prediction 2028 or something like that, and you’ll find this article. But what it’s saying is looking back over the last three years, it’s writing about what happened. It says that the market stock market crashed 38%. Unemployment hit 10.2%. AI replaced white collar workers.

And everybody agrees with this. It’s not going to replace the plumbers and the electricians and the HVAC technicians and the mechanics or the people making coffee, but it is going to replace the white collar folks, which are most of you guys listening to this, okay? Software engineers, product managers, consultants, gone.

Companies fired people and brought more AI into the mix for all of the savings. And you hear this now, I’ve heard that in earnings calls, when these big companies do their earnings calls, whenever everybody listens in, they’re bragging about how much their company is saving by bringing in AI. And if you don’t talk about how your company is using AI, then you get suspicious. And then people are wondering like, well, what’s going on? Do you understand what I’m saying?

The stockholders and shareholders and all of that and the boards, they want to know what are you guys doing right now to how you bring in AI to bring down costs. And so what’s happening, what they’re talking about is the economy looked great on paper, but it actually really wasn’t.

GDP productivity numbers looked amazing, but these people that were losing their jobs or who were afraid to lose their jobs were not spending money. So there’s this thing called the ghost GDP. We think the GDP gross domestic product is doing really, really well, but it’s actually not because people aren’t spending the money.

And this is what was fascinating to me. I think the most fascinating thing here. Software companies were collapsing left and right. SAS, you know, service or software as a service companies were collapsing because AI can rebuild their software in weeks. And then these software companies were actually laying off staff, replacing them with AI.

For example, you know, we use Slack in my business all the time and already there’s copycats built with AI that can do what Slack does. And I don’t know how much money we’re spending, a few thousand dollars a year on Slack. And I could actually, if I really wanted to, go build my own Slack with AI. That’s not going to work as good, but the changes that have happened just in the last three months make it a lot easier.

I personally have built two or three different softwares using Manus.im. It’s an AI agent to rebuild software. And it’s absolutely incredible. Just recently I asked Manus to go research something. It not only told me the results, it built a software tool so I could interact with the data.

A lot of people are going to cancel subscriptions because they can build their own tools for free or find cheaper alternatives built with AI. So this is really going to impact the software industry.AI agents are also predicted to destroy middlemen businesses. That’s interesting because as wholesalers, we are middlemen. I don’t know if it will hurt wholesalers as much as realtors, but it’s something to think about.

They’re predicting travel websites, insurance renewals, and even real estate commissions could disappear or change drastically. Crypto may become more prevalent, which could hurt credit card companies that rely on transaction fees.

AI is already helping people find and cancel subscriptions they forgot about. You don’t even need to log in anymore—AI can do it for you. Displaced workers will flood the gig economy. People who were making high salaries may end up driving Uber or delivering food, which pushes wages down overall. They also predict private credit markets could collapse. Loans to unprofitable software companies could go bad, affecting investments like annuities.

Even prime mortgages could become risky if people with good credit suddenly lose their income. Government response may be slow, tax revenues could drop, and political gridlock could make things worse.

Now, this could be worst-case scenario thinking, but it’s still worth paying attention to. So what can we do as real estate investors? First, consider getting out of tech-heavy markets like San Francisco, Seattle, and Austin while prices are still high. Second, look at migration trends. People are moving to places like Boise, Chattanooga, Knoxville, and Spokane where the cost of living is lower. No matter what happens, people always need a place to live. Affordable housing will always be in demand—especially blue-collar, middle-income properties. Stay in that $150K–$300K range. Those properties are the most resilient.

Consider focusing more on rentals than flips. Rentals just need tenants, and demand usually increases when people stop buying. Never buy a deal to rehab unless you can wholesale it first. That rule will save you. Look for distressed white-collar sellers—people who lost high-paying jobs and need to sell. Avoid luxury rentals and high-end Airbnbs. Those tenants are often the first to disappear. Look for properties near infrastructure like data centers and power plants. Keep your debt low and stay conservative. Make sure you can survive months of vacancies. Save your cash flow. Don’t spend it. You’ll need reserves. Think about becoming the bank. Offer seller financing when traditional lenders tighten up.

Build a war chest. The investors who bought during downturns created massive wealth. The economy will recover. It always does. And when it does, those who were prepared will win. I might split this into another episode because there’s more to cover, especially how to actually use AI in your business. I’m not doom and gloom. I’m excited. The opportunity is huge if you’re paying attention and willing to adapt. Go check out the article. Just Google Citrini Research 2028 prediction. Let me know what you think.

We’ll see you.