How AI Catches Bad Real Estate Deals Before You Buy | Smarter Real Estate Underwriting

Daniel Tsikata (00:00)
One thing that I’ve realized is that sometimes T12 documents, all these financial documents, they look accurate when you look at it. But then once you start digging in, you realize that there are some mistakes in there, like some little, little mistakes that it sometimes it takes humans like a long time to catch, or just might not even catch those errors at all. But AI does a really, really great job to spot all those.

Areas.

Scott Bursey (01:59)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host, Scott Bursey. And today we’re delighted to be joined by Daniel Tsikata of DealWorthIt, a true innovator in the space who is transforming how we leverage technology for smarter, faster decisions. In this episode, Daniel is going to break down how to stop guessing and start scaling with data-backed precision. You’re going to walk away with a game plan to accelerate your deal flow without

Sacrificing accuracy. Daniel, welcome to the show.

Daniel Tsikata (02:35)
Thank you so much for having me, Scott. It’s an honor to be here. I’m a huge fan of your show, Investor Fuel. And I do listen to the podcast. I’ve listened to a ton of the previous guests and I’ve learned a lot from those episodes. So thank you for having me.

Scott Bursey (02:53)
It is sensational having you here, my friend. For those of our listeners who may not be familiar with your journey, please give us the 90 second highlight reel of how your career ignited and where you’re pouring your fuel now.

Daniel Tsikata (03:09)
Awesome. All right. Thank you, Scott. So my name is Daniel Tsikata. I’m the founder of DealWorthIt. I am a real estate investor and a former Microsoft software engineer. I built this software, DealWorthIt, because it was a personal problem, problem that I personally experienced.

disconnected tools, manual data pooling, entering assumptions into spreadsheet and typing the data for decisions. It was just too much every everything things were happening everywhere. So we I built DealWorthIt to bring all that into one place. So bring research, bring document imports, underwriting, scenarios, reporting, all into one umbrella to help investors save time and to close more deals.

Scott Bursey (04:08)
That’s an incredible path, Daniel. And what really caught my attention about you was the way you’ve been able to bridge the gap between complex software engineering and practical real estate investing to solve such a major pain point for our industry. Building on that, curious to know what specific technical advantage do you feel DealWorthIt gives a solo investor over someone doing manual analysis?

Daniel Tsikata (05:37)
Well, thanks. thanks for that. so Scott, I have noticed that a lot of investors that I’ve interacted with, and also when I started, I noticed that a lot of investors use Excel spreadsheet, which is great. Spreadsheets are great, they are very, very robust. but the challenge that I noticed is that spreadsheets helps with the calculation of the numbers. But when it comes to researching data of the property, so let’s say you’re looking for

market data, you’re looking for rent trends, say you were looking for crime rate, like any information that is important about the neighborhood, about the market, for you to make that better investment decision, you cannot get that using Excel. So our software does not only help you analyze deals, but it helps you analyze deals, research data,

For those deals, research the market for those deals and using those market assumptions to predict how your deal could perform. And also suggest to you some of the best practices and some of the things that you need to do in order for your deal to either be a good deal, or if let’s say the deal is not going to cash flow, it warns you ahead of time so you don’t make a mistake. one famous thing that I go by, mantra that I go by, is that it’s better.

To lose on a good deal than to get into a a bad deal. It’s it’s bad to lose on to be in a bad deal. So that’s that’s what I go by. so DealWorthIt helps investors to save time on bad deals so they don’t waste even more time analyzing a deal that is not going to go anywhere.

Scott Bursey (07:30)
I love that. What do you think is the biggest hurdle investors face when they first start integrating AI tools into their workflow?

Daniel Tsikata (07:42)
That is great that is a great question. So one thing that I’ve noticed about investors and also AI tools, using AI tools to analyze properties is that one thing I’ll say is that AI is incredible. It’s great, it helps save a ton of time. However, AI is not perfect, AI does make mistakes.

And most of the time when you go on ChatGPT or Claude, it tells you that AI makes mistakes. So make sure that you validate your answer or you review your answer. And that is one thing that I’ve noticed is that some investors tend to trust every output that comes out of these AI tools as the holy grail and they run with it, which could be very, very expensive mistake to make.

how the ins and outs of a deal is, you might end up thinking a deal is a good deal, even though it might not be a good deal. Another thing I noticed, another mistake that I noticed that new investors make is that they fall in love with a deal before they even calculate the numbers. So they see a deal, it looks shiny, and they just want to get that deal without even running the numbers. And

They try as much as possible to make a bad deal work in their favor because they are in love with the deal. which is a problem that we solve. We we ensure that you analyze the deals and determine we tell you if it’s a good deal or a bad deal in order for you to make that decision. And you don’t just blindly fall in love just because the numbers in your eyes or the pro forma numbers that you’re using to analyze the deals look good.

on paper or in one assumption. So yeah.

Scott Bursey (09:44)
How do you recommend they overcome that initial learning curve?

Daniel Tsikata (10:25)
Great question, Scott. So what I would suggest for well for the two things that I mentioned. So the first one is do not fall in love with every deal before you run the numbers. the second one is that y some investors, especially new investors, they just go with the numbers that brokers provide to them, which is called pro forma.

Numbers, which is basically the future projection of the finances of the property. Do not use those numbers because you cannot underwrite based on future performance. So it’s always good to use the in-place rent, what is currently being charged, what the property is currently producing. In terms of AI, you need to do not trust every response that AI gives you. And that is why we have a tool like DealWorthIt that helps you.

determine whether it’s a good deal or bad deal. So even though DealWorthIt uses AI in its analysis and its doc document processing the you uses deal uses AI to process documents, we don’t rely on AI’s output. It goes through a series of checks. It goes through validation and we make sure that every assumption, every scenario, everything matches before we present that to you. And if we notice any red flag, we

inform you about it so that you are aware so you don’t just blindly trust the response. let me just chip this in quickly. We have for our we have a a document import feature called I mean we which allows you to import either T12 documents or rent roll documents. And usually when you run those documents through say ChatGPT or Claude, it just analyzes and provides you with the output. And

Sometimes they are wrong. So what we decide to do is instead of using those outputs behind the scene and just presenting you the results, we allow you to be part of the processing. So we give the the tool, the document to AI, AI processes it, we present the data to you, and you have to review to make sure that everything looks good before you accept and use.

the data for your analysis. So that way you know exactly what inputs are going into your deal and you’re not just trusting the numbers blindly. So we try as much as possible to be as transparent as possible.

Scott Bursey (13:06)
Great perspective. Daniel, digging a bit deeper, where do you see the biggest untapped opportunity for investors using data-backed tools in the current market?

Daniel Tsikata (13:21)
That is that is great. I great question, great question. And this is something I’ve been thinking about a lot, considering the fact that I’m more in the commercial real estate space. When it comes to single family properties, there are a ton of data out there. There’s information about pretty much every single family property in in the USA. But when it comes to commercial real estate properties, it’s very, very difficult to get certain types of data. mainly because

A lot of this data, like their financials, their financials data, their rental data, they are kept privately. So it’s not out there for you to just tap in and and and use. So the steps involved when you’re purchasing or you are interested in purchasing a a a like a commercial property, let’s say a self-storage or a multifamily apartment unit, apartment building.

Is that you’d have to reach out to either the broker or the seller, and the seller would have to send you the T12 document or the rent roll document. And you then analyze this document. But it’s just a waste of time. In terms of technology growing and how things are moving now, what I foresee is that there will come a time where we would not have to rely on the sellers or the brokers to send us those documents. Using technology, we should be able to just

Analyze the performance of the property and use those past data to auto-predict what the future performance is going to be. So that way analyzing the deal will even be even will even be more seamless. You enter an address and the tool will somehow predict based on the history and then uses that data to produce an outcome for you. There there is currently, I would say though, there is currently ways of

being able to get some of those data, but it’s still very, very difficult, especially when it comes to multifamily, when it comes to commercial real estate properties. But I foresee that in the future that will not be a thing anymore. It’s going to the gap is going to close and it’s things are going to get better. And investors will have more opportunities to analyze more deals and also find gems, hidden gems, rather than wasting time or waiting on

brokers to send them deals.

Scott Bursey (16:24)
Thinking about the landscape, what do you see as the biggest risk for investors who refuse to adapt to these new tech standards?

Daniel Tsikata (16:35)
Well, I I will great that’s a really, really great question because it’s I’m in the tech space and there are even people in the tech space that are still refusing to adapt to what’s technology where technology is right now, AI. usually there’s what I usually say when someone asks me a question like that is looking back in early in the late nineties and early two thousands when

The internet was upcoming. A lot of people thought it was just something, it was just a wave that would go away. But here we are today, we can’t do anything without the internet. Same way with AI, AI has come to stay. So the earlier you accept it and you embrace it, the better your life is going to be. I think it’s a great tool that we can leverage, and it’s always getting better.

So for people that are skeptical, I would say that just think about back in the days when internet became a thing, and some people were skeptical about it too. The say that’s the same way AI is going to be. So the earlier they embrace it and take advantage of it, the better it would be. I think in a couple of years from now, it’s the people that know how to use this advanced tools, this AI tools, are the ones.

that are going to have the advantage and have access to all the best deals. So for if you’re an investor out there and you haven’t embraced AI yet, you should start looking into AI. The best way to start is to go to dealworthit.com and get started from there.

Scott Bursey (18:21)
And let’s stay on that same path, Daniel. Keen to learn what’s one trend in AI or automation that you think is being completely overlooked by the average real estate professional?

Daniel Tsikata (18:37)
Great, great, great question. So A AI trend that’s is being overlooked, right?

Scott, can you hear me?

Scott Bursey (18:49)
Yes, yes. A trend that perhaps somebody’s not able to to capitalize on or doesn’t even recognize that it’s something that they can capitalize on.

Daniel Tsikata (18:59)
Yes. That that is a great question. So when it comes to real estate and AI, it depends on what type of real estate you’re investing in. for people that are in single family, they single family it’s like I mentioned earlier, single family properties are all over. So there are a ton of use cases for AI. You can literally use you can literally just

enter an address and the like AI is able to scrape accurate data about those property comps and also like estimate repair repair costs. If you’re into fix and flip, if you’re into wholesale as well, estimate repair costs and suggest all that to you and generate a report for you. So in that case, that’s a very, very good use case. And I think

A lot of people are not taking advantage of that enough. people, I mean by people, I mean people that invest in fix and people that embrace or do fix and flip and also wholesaling. For people in commercial real estate, the part that I think they are not utilizing AI well enough is that when it comes to analyzing these financial documents, if say

Like some of those documents, some of these T12 and rent roll documents, they are huge. Like it’s a property. If a property has, let’s say, 300 units, that means 300 individual rent roll records that you have to analyze yourself, either yourself or if you have a team, or probably you know, you outsource. But it’s just too much work for human to do, like one person to do. Not to talk of the

The the the T12 documents.

And Scott, one thing that I’ve realized is that sometimes T12 documents, all these financial documents, they look accurate when you look at it. But then once you start digging in, you realize that there are some mistakes in there, like some little, little mistakes that it sometimes it takes humans like a long time to catch, or just might not even catch those errors at all. But AI does a really, really great job to spot all those.

Areas.

And I always go back to DealWorthIt. because we have this when you upload a T12 document or a rent roll document, the AI is able to trigger the things that are not in line. Any if there are any warning, any errors, it’s able to inform you about it. If let’s say I remember that there was this document that a customer sent to us, it was a rent roll document.

And the customer was saying that it’s say it’s this amount of units, but our tool is showing this amount of unit. Apparently he missed out where we also warned him about duplicate records. So what happened is that the rent roll had duplicate records in there, which he he missed, he missed out, he missed out on.

By using our tool, using DealWorthIt, he was able to identify all those all those errors. And also calculation errors in T12 documents as well. And sometimes sometimes expenses could be more than the income, and that is a red flag. That is something that you need to also be notified about. And I think these are some use cases for both single family investors and multi and self-storage or

Commercial real estate investors need to utilize AI to be able to leverage and also close more deals as a result.

Scott Bursey (22:55)
That is such a vital point to highlight for our listeners. Daniel, interested to know what does your professional network look like right now?

Daniel Tsikata (23:06)
My professional network? Great, great question.

Scott Bursey (23:11)
Yes, and better and

Daniel Tsikata (23:15)
Well be because I’m a

Scott Bursey (23:17)
And also, how much stock do you put into your professional network?

Daniel Tsikata (23:23)
Okay. So because I I am from a startup background and also an engineering background, I have a lot of people that are in that space, engineers and also startup entrepreneurs. and because I also invest in real estate, I have a ton of people that are into real estate as well. And believe me, on you know Scott.

When I first got into real estate, I started as a wholesaler. I think that’s just like the entry point for every investor, right? But now but now that I’m into commercial real estate, I have more people that are that invest in I have more people in my network that invest in apartments, that invest in self-storage, and also people that purchase like businesses in general. So they purchase businesses and then they make those business better and either sell or they they they keep running.

So I have a vast majority of people in my network. I have lenders as well because when you find a deal, you need to close, you need to find someone to either sponsor the deal or someone to finance the deal. So lenders are in there. I have brokers in there as well. so it’s it’s it’s just a mixture of people. But but but I I I’ll say one thing though. Your network

Like there is this, I’m not sure who said this, but there’s this quote that goes, Your network is your net worth. And the people you surround yourself around with is the people you you hang out with, it’s what you become. So you become the people you you hang out with. So if you if you’re hanging out with thousandaires, you probably end up being a thousandaire. If you hang out with millionaires or billionaires, that’s the same standard. So I usually

I’m very cautious about the people that I allow into my network. I mean, I I’m still friends with, you know, a lot of people, but people that I go to for advice, people that I discuss business related things with, are people that I’m aspiring to be. Because I’m always trying to be the least knowledgeable person in the room. So I’m always I always want to be like the dumbest in the room so that.

Whatever someone says I can learn from. So that’s my my goal. So I’m always reaching up, I would say.

Scott Bursey (25:50)
Building the right circle is everything in this game. And Daniel, knowing what you know now, what is the most important piece of advice without sacrificing accuracy?

Daniel Tsikata (26:08)
Sorry, the important piece of advice.

Scott Bursey (26:12)
Yes, yes. What kind of words of wisdom could you give them?

Daniel Tsikata (26:17)
Well, for for someone starting new, either in real estate or anything at all, I think investing in yourself is super important. Like being able to build yourself up because at the end of the day, everything you do has to come from you. Like before I even started in real before I got into real estate, but the first

I think well, just give you a quick background. The first book that introduced me to real estate was Rich Dad Poor Dad. I think that’s the book that a lot of people brought a lot of people into real estate. So I listened to Rich Dad Poor Dad. I saw an ad about a real estate event happening around. I paid for it. It was a couple of thousands of dollars. And I was supposed to invite one person. I told all my friends nobody was interested. I went by myself.

And that was how I started. And after that, the next year I purchased my first home and then I started that way. So if I hadn’t invested in myself and I hadn’t acquired that knowledge, I don’t think I would have taken that step. So having the right mindset, investing in yourself, having the right mentor or mentors to look up to. it doesn’t have to be someone that you jump on a call with or you talk to. It could be

someone who posts online that is doing something that you want to learn from. It’s very, very in important. and when also one one other thing too that I don’t hear a lot of is that people talk about investing in yourself. That is one part. You can always invest in yourself, but the most important thing is taking action. Because if you invest in yourself and you don’t do anything about it, nothing is going to come out of it.

But taking action and pushing hard, like always think, have the mindset of your bank account is always zero dollars. Have that type of mindset and always go for the grind. So that’s how I I always approach things. I always try to have the right mindset and act. Whether it’s going to work or not, at least I’ll give it a shot. So that’s that’s how I I I I see it.

Scott Bursey (28:36)
Thank you for sharing such a practical strategy. And for those of our listeners, Daniel, that want to keep this conversation moving, stay in your lane, or collaborate with you, what is the best way for them to reach you directly?

Daniel Tsikata (28:52)
So to reach me directly, my email address is [email protected]. So D-A-N-I-E-L, the at sign, D E A L W O R T H I T dot com. So dealworthit.com. And we are also on we, I mean, we you can connect with us on social media, on Instagram, on TikTok, on Facebook, on LinkedIn. just search DealWorthIt and you should be able to get in touch with us.

And I’m really happy to meet with all investors out there. if you are an investor, if you’re a coach, if you are in the business, or if you just want to talk about anything in general, you want to talk about AI, you want to talk about tech, wanna talk about investing in real estate, wholesale, anything at all, feel free to reach out to me. I’m I’m really happy to connect with you all.

Scott Bursey (29:44)
Daniel, thank you so much for joining us today on the Real Estate Pros podcast.

Daniel Tsikata (29:50)
Thank you so much, Scott. It was an honor. I really enjoyed having this conversation with you. I wasn’t sure what to expect, but it’s it it it was it was cool. I I really enjoyed how you know you asked the questions. You you you you I you know I can tell that you’ve been doing this for a long time. You know the right questions to ask, and they are thought-provoking questions and questions that our listener your listeners would find value in. So

Thank you so much for your time. I really do appreciate talking with you.

Scott Bursey (30:25)
It was an absolute pleasure, Daniel. And to our listeners, we appreciate you. If you receive value from today’s episode, please subscribe. We’ll be filling your tanks with a lineup of elite guests, just like Daniel, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.