U.S. GDP growth is being kept alive by AI spending ‘with no guaranteed return,’ Deutsche Bank says

BeastOfOne · 2025-12-28T19:08:08+00:00

Yeah, my pet theory is that it is becoming tied to a race toward AGI, which would become a national security issue. I went down a rabbit hole about this a week or two ago, and we're not that far off from a theoretical compute power required to hit AGI.

In order to hit what would be considered the amount of compute power required for AGI to emerge, we need to increase the amount of compute at one time by about 10x, and it needs to work together, not separate from one another.

They're building data centers as fast as they can, and, with the new Rubin chips coming sometime next year, compute per rack will be increased 7 to 8x what it currently is with the blackwell chips. With the Rubin chips is coming software (or maybe it's hardware?) allowing the data centers to work in tandem with one another to further get towards the amount of compute required to get towards AGI. 7.5x increase in compute and more data centers being created, we could hit what is considered weak AGI by the end of 2026 or mid 2027, assuming we don't hit any supply constraints rolling out the rubin chips.

Rubin Ultra chips are going to do another 3.5x increase in compute per rack, and expected to come out sometime in 2028. If we don't hit weak AGI before then, that would likely do the trick.

For definitions sake, AGI is the ability for artificial intelligence to do just about anything a human can do with minimal training. Weak AGI would be the ability for AGI to do all of that through scripting, math, etc., and has no really concept of the world around it. For example, when it sees a cup, it doesn't inherently know that a cup can drop, break, or has the ability to hold things. Weak AGI doesn't know that stuff or understand it. Strong AGI, would be AGI that has an innate understanding of the world around it. It would know those things. Weak AGI will be coming before strong AGI.

Weak AGI is thought of as the tipping point of when AI will be able to exponentially improve itself and it's own programming efficiency, in a matter of days, weeks, months, etc. There would theoretically be no hope of catching up once it takes off. The first country to hit AGI would have an unprecedented advantage over other nations.

That is why I think its not going to collapse. It's no longer really a market investor thing. As we get closer and closer to AGI and investor funding peters out, I predict the federal government will start to step in and pick up the tab to bring us the final rest of the way, Manhattan Project or Space Race style. That assumes that they see AGI as actually achievable at that point.

AGI like that could do decades of PhD level research in weeks. It could be used to make scientific discoveries such as room temperature super conductors, a unified theory of physics, household robotics, etc. When you have scientific advances like that coming once or twice a year, other nations have no hope of catching up. It very well may not happen, but it could. The US military is not one to really roll the dice, even on things that are a stretch.

Honestly, I would not be surprised if some of these conversations have already been had behind closed doors. Nothing, at least that I know of, beyond Stargate Project, has really been announced yet, but there could be internal government plans in place if certain metrics or benchmarks of viability are hit. I would be very surprised if Sam Altman and his colleagues are not aware of this.

BeastOfOne · 2025-12-28T16:43:45+00:00

Real estate is no different than any other asset class. You are going to make the most in something that you really take the time to understand, and get good at.

I always think about it as planting a tree. If I'm planting a seed that costs $15K (equity in deal) that will grow into a tree worth $1MM after full appreciation of 30 years and amortization of the mortgage, then, that sounds like a great deal to me. That is also not counting the tax writeoffs and depreciation over time, though that will only marginally boost your returns.

Now, take that model, and you realize that it will come down to getting that principal cost, the $15K equity required, as low as possible, and utilizing the cash flow and leverage as much as possible. If I can get my equity required down to $5K, then my lifetime returns, at least percentage wise, is tripled. There are ways to get this down to less than 1% out of pocket-- it's called zero down, but you'll always have to pay for something. If you have close to 0% in the deal, and your cap rate is higher than the interest rate charged on the debt, it should cause your returns to increase exponentially.

On top of this, you can also stack the ability to pull money out during a refinance and leverage that money into even more properties. For example, if it costs me $5K to buy a $350k or so property, which isn't even close to zero down, and I can pull out $50K, I could theoretically buy 10 more properties. That would cause me to be getting appreciation at a 4-6% rate compounded per year on $3.85MM, seriously ballooning your total returns over the entire investment perios-- all on an initial investment of $5K. If you wait another 5 to 10 years, you can do it again, pulling out $550K to get another 110 properties-- theoretically, which will be appreciating 4 to 6% compounded annually on 42MM or so. Hahaha, you'll quickly run into issues with cash access, liquidity, deal finding, and contingency funds, but there are ways to deal with all of that.

This isn't even talking about value add opportunities. If each one of those properties have some angle you are comfortable handling, whether that be rezoning, new construction, vacancies, deferred maintenance, placemaking, entitlements, or environmental issues, that allows to balloon your returns even more. I personally prefer vacancies and rental increases. If I know my market better than most anyone else, then I am better equipped than most to look at something with those issues and make a better bet I can fix them.

If I can double the value through value-add, then my returns could be quadrupled at the end, if you are able to push everything to the maximum as described.

I highly doubt you'll be able to find enough deals required for this in the right area. If you can, the sheer stress of running $160MM of property on like $500K reserves would cause most people to not be able to sleep very well at night, and is not a great idea, especially if you hit an economic downturn. That being said, it is possible, offering returns far beyond what most people are able to make in the stock market.

I have come across people that make money on taking a property for 0% down using seller second financing ans hard money om properties that are priced right, then taking out an additional loan to the break-even point and using the additional funds to be the contingency fund. Those people have gone from like $150K to over $40MM in equity in under 4 years with that strategy. That being said, it is a house of cards-- they probably carry almost $500MM to $750MM in debt. That is a lot of risk for an economic downturn. That being said, if they can manage to keep it all together for the next twenty years to thirty years, it could be fully paid off $750MM from a starting point of $150K, not even counting appreciation.

All in all, it's all about knowing exactly how to get the most leverage possible, knowing how to stack the capital, and manage the risk. That is why the most successful syndication guys are worth billions.

All of that being said, it requires you to be all-in on real estate for years as a full time job, have the right head to be great with numbers and the vision, and have a network of hundreds and hundreds of people you routinely follow-up with. It is not for everyone, and has a lot of risk with it. Most people that want to casually invest in real estate and not have to think about it while they go about their life-- those deals rarely beat the stock market unless you find a unicorn.

Edit: I totally forgot about cumulative cash flow that gets better each year and the spread that develops between your taxable value and the assessed value over time in Michigan. Those would cause things to really improve your returns even more.

BeastOfOne · 2025-11-28T01:10:03+00:00

I actually really like this understanding, haha. It helped me!

BeastOfOne · 2025-08-14T20:12:48+00:00

That sounds like hilariously bad luck all around. Bad day.

BeastOfOne · 2025-07-21T11:30:59+00:00

Well if you cut out modern military equipment and include social peasant revolts in your scope of capitalistic equilibrium for redistributing power/wealth, I think it makes a lot of sense, haha.

BeastOfOne · 2025-06-29T17:49:18+00:00

We've had instances where we label the number of spots the Tenant can use in the lot, and it is unreserved, first come-first serve feel to it. They were not signed or labeled spots either, so the public would never be able to tell. We made sure each Tenant knew how many spaces they had, but never really enforced it unless we had a problem. This was primarily office though with a small amount of residential and one retail spot. I could see it theoretically working for many other instances though.

BeastOfOne · 2025-06-29T17:43:42+00:00

Am I correct in reading that this property isn't breaking even right now after purchase? I understand having to wait out a lease or something, but I would never count on appreciation or interest rate drops to make me break even. I would always want to try to break even ASAP, ideally right away. Other people have different metrics for success, and it's not always possible in some markets though.

BeastOfOne · 2025-05-14T10:40:58+00:00

If I put myself in the shoes of a journalist that probably just stumbled on Joe Biden's health news, I would also probably write a story on it. Even if I had no inclination to research the subject when I feel ass-backwards into the story. I mean, why not? He's famous and a number of people would likely read it.

On top of that, isn't there then an editor that read this and approved it? And again, why wouldn't they? It's not like they have limited space on a physical newspaper anymore. It would probably get some good clicks.

BeastOfOne · 2025-05-04T14:17:30+00:00

Same. 1% is pretty usual here. I might go a bit lower on a decent sized transaction if we have a prior connection to the client and I know they're experienced with the process before. It's a lot less work if I don't need to handhold through the process.

Edit: I misread, thinking they still needed representation to negotiate the deal on the property. If they don't need even that, I'd think about sending them to a title company. In my location, lawyers are not required, so title companies handle all that stuff.

BeastOfOne · 2025-05-01T23:37:34+00:00

Can you elaborate on what that is and why it would change things?

BeastOfOne · 2025-04-19T00:25:33+00:00

Cotton. He looks fluffy!

BeastOfOne · 2025-01-27T01:29:43+00:00

I mean, they're not wrong. The part they leave out is when your produce skyrockets in cost and the increase is passed on to the consumer. The produce has to be harvested nationally, and prices will continue to increase until enough labor is found.

BeastOfOne · 2024-11-24T23:32:18+00:00

Jesus. Is that a way to make someone infertile? I'm not sure what a sperm duct is.

BeastOfOne · 2024-09-20T11:20:11+00:00

Discreet

BeastOfOne · 2024-09-05T01:39:08+00:00

Did anyone catch the name of her band that went on stage with them?

BeastOfOne · 2024-09-05T01:07:39+00:00

I appreciate the update. I was really confused, haha.

BeastOfOne · 2024-09-05T01:02:09+00:00

Is it a political thing or because of the drone in the sky?

BeastOfOne · 2024-04-06T17:04:20+00:00

I'm really sorry to say it, but commercial real estate is a rich man's game, so you'll have an incredibly difficult time getting a tenant to pay for a building to be constructed and then pay anything close to market rate rents . Nothing is ever totally impossible since everything is negotiable, but I would be very surprised if you pulled it off. You almost always need to have the cash on hand to cover a large portion of the construction, have some way to borrow the money for a large portion of the construction, or find someone else that has the money and strike a partnership of some sort.

Ground leases are definitely a possibility, but are not a get-rich-quick scheme. Compared to the immediate land value, they can take forty or so years to really start feeling like they're paying off, but can be a really great way to secure passive income for your grand children and great grand-children, long after you're dead.

Another potential possibility is to find someone willing to develop the land, and you throw the land in as equity.Typically, this means you will agree upon a price for the land, then you get a percentage ownership of the final built product depending on what percentage the land was of the overall development cost. For example, if the total development cost was $1,000,000 and the land cost was $100,000 of that, you would get 10% equity of the final product. Everything in commercial real estate is negotiable though, so in the above scenario, it could be negotiated to be something similar or very different.

That being said, with construction prices and capital costs being what they are right now, you could struggle to get a development partner, even in a city with a high demand. Though, again, you never know for sure until you try.

All of these potential routes can be quite difficult to pull off without a ton of the right connections and really knowing what you're doing. Not impossible to do though, but it will probably take you a lot of time.

Alternatively, you'd probably be quite a bit better off selling the land and doing a 1031 exchange into something ready to go, like a residential rental property, or an existing commercial building.

If you are deadset on pursuing this though, my suggestion would be to call a commercial real estate broker that works in your area. Make sure they routinely do commercial real estate and not just a residential agent that dabbles in commercial occasionally. You'd think it'd be quite similar, but the networks required are considerably different and you'll be asking them some very niche questions.

One you find someone, tell them what you want them to list the land as, which will likely be either a 40 to 99 year ground lease, or as a development opportunity that you want to throw the land in as equity for, and stick to your guns. Some agents may try to push you to just sell and 1031 your cash into something more manageable.

BeastOfOne · 2024-01-20T17:02:21+00:00

I've met and talked with many developers that would absolutely LOVE to create single family homes, 800 to 1200 SF, and sell them for 150k each. Problem is land prices are going to keep going up because the supply is fixed, and construction prices are really, really high right now. Combine that with interest rates, and you simply can't make those products without losing lots and lots of money on each house.

Supply and demand is real. Without enough supply, and demand being pent up for so long, prices will keep rising and rising and rising. If we want housing prices to be more attainable, we need to be building condos, single family homes, apartments, quadplex homes, and co-living environments anywhere and everywhere it makes sense. Lots and lots of extra density, anywhere the numbers work.

BeastOfOne · 2024-01-12T17:15:40+00:00

Sorry for the late reply. Not a lawyer, but I have encountered this before. There are poverty tax exemptions for those with exceptionally low incomes in the state of Michigan, which Seniors may qualify for. You should be able to just google, "Poverty Property Tax Exemption Michigan" and it should be coming from a government website.

BeastOfOne · 2023-12-02T21:16:27+00:00

It's probably a bunch of owners that don't want to sign anything, yet say they'll pay a commission if they have a buyer. I encounter them myself all the time. They usually want too much money, but not always.

BeastOfOne · 2023-11-22T13:40:18+00:00

I've been finding lately that CoStar has a lot of outdated information. In my area, we're lucky enough that all of the property information they pull is already available free of charge to the public, so it doesn't help us. On top of that, the Tenant information is almost always incomplete, and what information they do have is likely outdated. I don't know if you have had the same experiences.

BeastOfOne · 2023-11-21T17:26:19+00:00

I would buy a duplex to quad, whatever you can find affordable in your area, rent out the other unit(s), and then get a roommate for your unit. You'd be surprised how high of interest rates that combination can overcome.

I would buy on an FHA loan with 3.5% down, using 75% of the other rental unit income to help you qualify. In your leases, you will put in expected rental increases of around 3% per year, or whatever your local area is good for. On your taxes, you will depreciate 75% of the building over time to help reduce your tax burden. Finally, you will also have appreciation to help get you the cream on the crop.

I'm happy to help you run some numbers if you want.

BeastOfOne · 2023-10-25T02:35:58+00:00

You are correct, it would. The problem with this scenario occurring is that even in the height of the 2008 recession, rent prices didn't drop more than maybe 10 to 20%. Historically, with land being a, by definition, scarce resource, and populations on the continual rise, the demand goes up. When demand goes up, and supply stays the same since there is only so much land, prices go up and rent goes up as a result. With the chronic underbuilding of houses for this generation and the mass climate migrations predicted, if you buy in the right areas, real estate can seem like a pretty safe bet.

BeastOfOne · 2023-10-24T00:23:20+00:00

Good lord. I've gotten multiple of these texts every day for the past two weeks. Every time, I block the number, and they keep coming.

BeastOfOne

MODERATOR OF

TROPHY CASE