Senior Housing Investors
Bringing you the innovators, investors, and leaders across the full spectrum of assisted living and senior housing, all of whom provide for the betterment of our senior population.
Senior Housing Investors
AI Meets Senior Housing: Transforming Investment Strategies with Daniel Holmlund
In this insightful episode, Daniel Holmlund, founder of the Alternative Investing Club and a veteran AI expert, delves into how artificial intelligence is reshaping the landscape of senior housing investments.
From his extensive experience at Intel to leading innovative investment strategies, Daniel shares how tools like Retrieval-Augmented Generation (RAG) and agentic AI are streamlining due diligence processes, enhancing decision-making, and identifying lucrative opportunities in the senior housing market.
Whether you're an investor, developer, or operator, this conversation offers valuable perspectives on integrating AI into your investment approach.
The largest part of AI is that it challenges business people to rethink how they do their day-to-day activities, and working with AI is a mindset shift. It's similar to what many business people have experienced in terms of being able to delegate work. A lot of small business entrepreneurs have difficulty, at least at first, with delegating work to other people, hiring other people. This might be more common with engineers, who like to do everything themselves. But the same sort of mind shift change also applies to AI. Ai is literally changing every industry we have right now. It's being talked about, you know, from the largest governments to the smallest of startups, and in every single industry that's out there.
John Hauber:Welcome to the Senior Housing Investors Podcast. If you are an owner operator, investor, developer or buyer of senior housing, you've come to the right place. The best way to stay connected with us is to sign up for our weekly newsletter at havenseniorinvestmentscom. This podcast doesn't exist without you, our community. Thank you for listening and reach out to us anytime.
Kelsie Heermans:Welcome back everyone. I'm excited to introduce today's host, john Hauber. Joining him is Daniel Holmlund, founder of the Alternative Investing Club, an AI expert and longtime senior software engineer. You're in for a great conversation on how emerging tech is shaping the future. Take it away, john.
John Hauber:Thanks, Kelsey, Daniel. Welcome to the show.
Daniel Holmlund:It's a pleasure to be here, John.
John Hauber:Absolutely. It's good to have you, and so you know we're going to jump right in and tell us a little bit about your background and your time at Intel.
Daniel Holmlund:Yeah, okay, so I've been a computer software engineer for 24 years now, and about half my career has been at Intel. I started there in 2010 and went through 2023. And I was one of those programmers who actually enjoyed talking to people, and so, after being in my cube and programming for a number of years, I actually became part of the teaching team there and we would train developers all over the country. Originally, it was in industrial manufacturing processing for the first part of my time there so how do you integrate CPUs with industrial equipment in factories? And then the last half of it was actually with Intel's generative AI product called OpenVINO, and it started off as a computer vision project and then gradually encompassed other areas, such as generative language and speech recognition and other AI processes that we think of nowadays.
John Hauber:What year was that where you were starting to work on AI?
Daniel Holmlund:End of 2016,. Beginning of 2017 was the transition over there beginning of 2017 was the transition over there.
John Hauber:So AI, basically in some form or another, has been worked on for the last nine years. It's not something that just all of a sudden popped up.
Daniel Holmlund:I mean, the roots of it go back all the way to the 1950s and probably the modern incarnation of it started at Google in 2011 with some of their in-house projects and it was kind of Google internal for a while, but it hit the mainstream. You know 20, 2017, 2018 for developers and then the larger community after 2020 and 2021.
John Hauber:So tell us so far in your expertise with artificial intelligence what's been the favorite part of your learning journey.
Daniel Holmlund:You know, I probably should relate this back to my learning journey in terms of real estate as well. You know, my background is in 2018. I actually started the real estate club at Intel and I have been running that club every single Friday. It's now called the Alternative Investing Club because I'm no longer at Intel and so it's a public club. We grew that group to a little over 1300 people in about four years all Intel employees and then when AI started to hit, you know, at least for me, the largest part of AI is that it challenges business people to rethink how they do their day-to-day activities, and working with AI is a mindset shift. It's similar to what many business people have experienced in terms of being able to delegate work. A lot of, you know, small business entrepreneurs have difficulty, at least at first, with delegating work to other people, hiring other people. This might be more common with engineers who, like do everything themselves, but the same sort of mind shift change also applies to AI.
Daniel Holmlund:Ai is literally changing every industry we have. Right now it's being talked about, you know, from the largest governments to the smallest of startups and every single industry that's out there, and people are really struggling to understand. How is this going to change my business process? And also, how am I going to be able to use this in order to, you know, stay competitive in my current environment?
Daniel Holmlund:One thing that a lot of people don't understand with AI is that AI is beginning to take the place of search engines for a lot of people. I'm on, you know, ChatGPT more than I'm on Google now doing the same sort of queries, Google now doing the same sort of queries, and one of the things that business owners are seeing is that when they go to ChatGPT or Claude, or, you know, DeepSeek or Gemini or whatever Perplexity, whatever your favorite large language model is, if they type in their business and search for it just like they would in Google, well, it comes up in Google, but it doesn't come up in the large language model. And so the customer journey. Business owners have to ask the question how can I get my platform represented while there? What's my SEO strategy for AI? Because it's different than search engines.
John Hauber:That's your expertise nowadays, correct? Daniel? You're focused on business processes with AI, so let's go a little bit deeper on that. How do you communicate, and what do you communicate, to businesses that are just starting to implement, or starting to dabble, bringing artificial intelligence into their business?
Daniel Holmlund:Sure. So one of the difficulties right now is that a lot of people are excited about AI and they know it's going to impact their business, but they don't know what to do with it. Most people, you know they're limited, really, to just typing into chat, gpt and getting a response back, and they don't see how this is actually going to transform their work processes. So one of the things we do is first, an initial thought exercise. Can you outline?
Daniel Holmlund:When we sit down with clients that we are helping to implement AI in their business, we ask them hey, can you sit down and create a flow diagram of some of your largest business processes, whether it's, you know, lead acquisition, or you know, moving an investor through a sales funnel, or you know responding to customer support, whatever it happens to be?
Daniel Holmlund:Can you create a flow diagram of that? And once we understand what the business is doing, then we can help you address how to implement AI with a strategy, because we can look at your business workflow and say, hey, this component over here this could be replaced by AI, but right here you need a human in the loop that's going to check AI and make sure that you're not sending, you know, wrong information or hallucinated information to your client. So I actually I have two different jobs. One of them is I run a real estate fund for the Alternative Investment Club, or an Alternative Investing Fund, actually and then my previous day job was working as a software engineer, and I do that with clients now. I help them implement AI in their businesses.
John Hauber:Well, thank you for that clarification. So let's kind of move toward that Alternative Investing Club and how you meld AI with commercial real estate industry. What are some of the tips and tricks do you have? So, for example, I went to a conference and they were showing me how to input a PPM, a private placement memorandum, along with an operating agreement into ChatGPT4 to see if there's any you know, any hidden fees or things of that sort. So tell us a little bit on how you use it in your alternative investment club and the commercial real estate industry.
Daniel Holmlund:Yeah. So when you're seeing a demo like that one of the it's really great in terms of demos and a lot of people have really great demos and then when you go to try to use it in the real world, it doesn't work very well. I guarantee you, if you put a you know, actually chat into ChatGPT, it would overflow your allowed tokens or AI tokens and it eats up and drives up your costs incredibly fast in order to operate like that. And one of the developments that has happened and this is more on a technical sense that has happened, and this is more on a technical sense and so for real estate investors, I suggest you look for SaaS companies or companies that are rolling these services out, and these services are called RAG services the Retrieval, augmented Generation Services and the reason why this is important is because, if you have 150 page PPM, the large language model is going to use however many tokens let's say it's a million tokens in order to read that entire thing, pull all the information out and every query that you ask it of, it has to go and synthesize and go through all that information again. So it's incredibly inefficient in terms of its processing, which is driving up your real costs in using it.
Daniel Holmlund:So, with retrieval, augmented generation and a lot of chatbots are using this, but there are a lot of applications that are built around it too. What happens is that document is pre-processed and it is converted into what's called embeddings, and those embeddings are a quick way of dividing up the document, and then, when you do your query, a search is performed in order to find the sections of the document that are relevant to what you're asking, and that, and only that, is sent to the chat GPT. It'll take the cost of a million tokens and reduce it down to, you know, 1% or less of what that cost is, and so we're starting to see a lot of tools that are RAG based, and the other big industry buzzword right now is agentic AI, and agentic AI is where, instead of searching through large documents, agentic AI has the ability to leverage tools so it can make an appointment on your calendar. Put a to do in your to do list. That's a great way of automating your business.
John Hauber:Do a walkthrough of the current AI tools that you're using today to make investment decisions or business processes within the Alternative Investing Club. Tell us some of those tools that you're using.
Daniel Holmlund:Sure. So right now, notebook LN and Notebook LN is a RAG product. That's exactly what it is. It's a great example of a RAG product.
Daniel Holmlund:I'm also using OpenAI has the functionality to do what's called function hauling, and so, as a real estate person, I have access to a lot of information, from Esri, for instance, that has a huge amount of demographic information, and one of the nice things about Esri well, one of the nice things is it has a huge amount of information. The thing that's not so nice about it is that it's really difficult to use, and so I've actually put together a OpenAI front end to Esri that I use a lot that will allow me just to pull up a map and say, in English or Spanish the LLM, you know, does multiple languages, but in natural language, find this property, pull it up on the map, show me the average income in a one, three and five mile radius and generate a report based on that, and so you can use function calling with open AI. And now, for most people, what you're going to need to do is you need to go find a software provider that provides that as a service, and I think most people, what you're going to need to do is you need to go find a software provider that provides that as a service, and I think Esri is coming out with an AI product. I don't know what it entails yet, so I use that quite a bit.
Daniel Holmlund:I use automations with Zapier and I also use a tool called N8n, which is similar to the types of zaps that you can create with Zapier. The only difference is that you can run it on your own machine rather than running it on Zapier service, so it's cheaper. I also use mainly rag tools, to be honest, because a lot of what we do in real estate is we go and pull apart a PPM or pull apart an investor, investors, a broker's, om, and find all the key details and ask those key details to be put into our financial models. If you've got a system that can do that, you can speed up the number of you know acquisition, potential acquisitions that you're looking at by an order of magnitude, and so that's a big area to investigate as well.
John Hauber:Okay, so if someone wants to understand more about RAGs systems, do they just Google RAG systems?
Daniel Holmlund:Yeah, so you can. Google retrieval, augmented generation or RAG, and also Google agentic. There are one of the difficulties right now is we're moving through the hype cycle is that there are so many tools out there it is insane and they're changing so fast. We're going through that initial blossom of, you know, 10 100,000 businesses opening up and over the next couple of years we'll go through market consolidation where the ones that don't make it through market consolidation, where the ones that don't make it don't make it the ones that make it get bought up and consolidated. Right now I recommend Notebook. Lm is a good one to start with. It's really, honestly, the lowest hanging or easiest to use. I should say not lowest hanging.
John Hauber:It's pretty incredible and our listeners who listen to the Senior Housing Investors podcast have heard two individuals going into a deep dive on reports that I send them and the feedback we're receiving is that it's fantastic.
Daniel Holmlund:Let me talk about how I actually use rags. In the Alternative Investing Club, we have a speaker every single Friday. I'm really proud of our track record. We have brought in speakers on average 47 times a year on Friday for the past six years, so it's like clockwork every Friday, and that has allowed the members of the alternative investing club to be more educated and to be exposed to more opportunities. And so one of the things that we do is that we bring people in, potentially as educational talks, as pitch talks, or they can be part of the club fund, meaning that they're going to come in and give a pitch and our club fund is going to raise funds for their particular deal. And that means that I need to go through a lot of different investments and model them out.
Daniel Holmlund:If somebody is going to come in and pitch a deal in the Alternative Investing Club, we need to do some due diligence ahead of time, and we do caveat it that we are not a financial advisor, we're not a tax advisor, we're none of those things.
Daniel Holmlund:We're investors that have a club for investors and by investors, but at the same time, I'm also running the club fund and we need to do our due diligence ahead of time, and so we will. We'll take the OMS and the investor presentations and run them through. You know our rag software and it will generate, you know, a nice investor return profile based on the information there and it will highlight, like things like where the red flags in the deal, what are the? What type of investor would be looking for this deal? Is this an appreciation investor, somebody's looking for tax savings, somebody's looking for income? It goes through and basically we can, we can feed our due diligence checklist to it and it will go through and do the checklists on it, and so that allows us to get through more deals and weed out ones that we don't necessarily want to present at our club.
John Hauber:So tell us some of those key numbers that you look for in an opportunity, so that you're not inundated with a bunch of opportunity deals that you're like. No, I wish I would have said that this is our kind of our mark of what we're looking for. So tell us what you're the funder in the Alternative Investment Club is looking for today.
Daniel Holmlund:Yeah, we have five pillars of risk and, in general, the fund. One of the things I like about the fund is that once a person is qualified, we actually let the club decide how much money they're going to invest. So we'll send out a capital call after they talk and whatever comes in at that point, that's what we invest, and so the club has a very direct voice in the percentage allocations of the fund. That's what we invest, and so the club has a very direct voice in the percentage allocations of the fund. And the other nice thing about this is that it's not just real estate. We have debt validation in there and we have investing in aviation. So we had a fund come in that invests in purchasing 737s and other types of planes and then leasing them back to airlines, and they even purchase the engines themselves. And I never realized this when I was sitting in an airplane is that if you look out the window and you see that engine, there are investors that own fractional percentages of that engine and they're all in a fund somewhere.
Daniel Holmlund:One of the things that AI lets us do is evaluate. You know, look for our key metrics. Even if the asset type is very different, it tries to diversify, highly diversify the passive income sources that are in the fund, and so senior living is a great example of that, because it is a unique business proposition. The demographic trends are undeniable, it has value add income services and that it's not just collecting rent but it's also providing care and hospice and other other things which you know cause the rent to be higher or the income to be higher. Rather, variety of deals and then putting it in front of an audience is really, and letting the audience vote on what they want to put into it is really the key differentiator in our club fund.
Daniel Holmlund:In terms of AI, we're looking mainly for income. Right now, Most of the people that are in our club are well, there's a good gambit of everybody, but I would say it's 40s to 50s would probably be the average age. There's quite a few 20s and 30 year olds that are looking to figure out their investment strategy, but I think it's it's an older group and that might be an artifact of being at Intel, but those people are looking for asset protection or capital preservation and they're also looking for income and some growth, and so we really focus on investments that are going to provide, you know, immediate income and not not necessarily income. For instance, we avoid most development deals because you know development deals aren't going to provide income until the property is actually built, which could be two, three years down the line. And we also we also enjoy having a variety of groups in there.
Daniel Holmlund:So RVs we even had, we didn't. We didn't invest with this individual. But we've had some individual we had. We had a person come in whose entire fund was based on buying pricey casks of wine or barrels of wine and like high priced whiskeys, and he knew how to trade the market there and so he had a fund so he could trade the market and he had solid returns for many years. It was an interesting alternative investment class and that's really what we like doing is educating and showing people what they can do.
John Hauber:Yeah, so that's every Friday. You have someone new on either pitching an opportunity or educating the public on a particular asset class or investment area. What's the wackiest thing you've ever been presented with? Like what is this?
Daniel Holmlund:wackiest thing you've ever been presented with. Like, what is this? Oh well, honestly, the wine and whiskey fund was up there We've had on occasion. I mean, for the first four years, while we were Intel internal, we were an employee club. We did not allow any pitches whatsoever. And we did have some people that came in kind of under false pretenses and didn't do an educational talk. They did a pitch which could have gotten me in a lot of trouble with HR. I didn't tell so that that was a situation for a little while, and you learn to screen those people out.
Daniel Holmlund:You know, the airline one is also pretty wacky, actually in and here recently to the debt validation group. That's a really interesting one too, because what they do is they. They look for veterans and first responders who have medical debt. That's crushing them, and a lot of them do, and medical debt is the number one cause of bankruptcy here in the united States, and so people that are injured and they have high medical bills and unable to work, a lot of them are just paying it on their credit cards and they're paying, you know, 30% interest and they're in a hole they just will never dig out of.
Daniel Holmlund:And so what this group does, is they actually?
Daniel Holmlund:They find these people through they have an advertising agency that'll find these people and they go to the creditors and purchase their debt, so their debt obligation, and then they have a legal staff which specializes in saying, hey, the creditors over here were purchasing it but they were not following the fair credit practices, and so they're able to actually bring that debt to court and invalidate the, you know, sometimes 70 percent of it, but it's 50 percent. So, you know, one hundred thousand dollars of medical bills suddenly becomes, you know, 30 to 50. And then they turn around, they have a fund and they raise capital from investors and that's how they purchase the debt. They turn around, take that debt and restructure the deal with the first responder or veteran and they always give them a two-year time period and a hugely reduced interest rate it's often around 5% and they're able to get those veterans and first responders on a path to being out of debt and they also provide, you know, a 20% annual return to the investors. I love investments where you're actually helping people.
John Hauber:So that's what we call social impact investing. So is that where your heart is investing in, where it's helping others?
Daniel Holmlund:I like being involved in those types of deals and I will definitely favor them and definitely I want them to get airtime in the club because I want more people to think about investing. That way. I do tend to favor those. The other types of deals I like right now are actually tax abatement deals. A lot of MSAs throughout the United States right now are finding it.
Daniel Holmlund:You know, there's a homelessness problem and there is a low income housing problem, the shortage of housing, and so a lot, of, a lot of cities are trying to figure out well, how do we handle this situation, and there are different ways of doing it. Some are imposing rent control, some are using tax abatements. Tax abatements are a great way for an investor to come in and be incentivized to invest into a community incentivize to invest into a community, and so if you go look at I know Houston often has programs along this line, but a lot of cities do Basically, if you go to the city and find out what their tax abatement programs are, you can go in and purchase a property and get a huge tax deduction on that property. The nice thing about that from a investor's point of view is that you know the operator in a lot of syndications or apartment investments or other types of commercial property investments, are talking about value add in terms of bumping up rents. Well, in this particular case, if you can get a huge tax abatement, you can get a large percentage. First of all, you can make that investor return just by signing a contract with the city.
Daniel Holmlund:Let me give you a concrete example. I was involved with Lone Star Capital, who operates in Houston, and they had a very large package. It was three large properties for $100,500,000. And the deal that they had with Houston in this particular case is that if they dedicated and there's a lot of nuance to it, but basically it boiled down to if they dedicated 50 percent of the units to 80 percent of area median income residents, then they would get a 100 percent tax property tax abatement or they would be exempt from property taxes for a period of 99 years.
Daniel Holmlund:Wow, yeah, the program actually is gone now because I honestly I think it was it was too good of a program. Gone now because I honestly I think it was. It was too good of a program and we had the right to or Lone Star has the right to sell that property to the next person and they get an 85 percent abatement of property taxes for the same time period, and so the nice thing from my perspective, running a club fund is is that I don't have to depend on whoever the operator is to execute their business. Why I do have to depend on them, but it's not. The execution of the business plan is lower risk because the profit is made at acquisition time, when they sign those documents and they get the tax rebate, and then you know they have to run the property.
John Hauber:Well, obviously, but anything that reduces risk is worth looking at. You can acquire commercial real estate with underlying fixed rate debt at somewhere between 2% and 4% and it's a stellar deal. And so those who listen to the podcast and understand the program, that's part of the senior housing space and that is the HUD 232 Loan for Assisted Living communities. These are 35 years fixed rate and that kind of really de-risks opportunity or deals. It de-risks it because that debt is not going to change. As you know, and as Loan Star Capital knows, with multifamily 2021-2022, you get into these floating great rates and now they're all repricing and so if you haven't been able to raise rents which in many cities is is more difficult to do then your return to your investors is just cut. I mean, it's just very difficult. And then capital calls and all that other stuff that's going on currently. We'll work our way through it.
Daniel Holmlund:You probably talked about this on your podcast, I'm sure. But the tariffs, of course, are making new construction costs go, which means that older product is going to also appreciate along with it, Because even though it's older, it's already constructed. With construction. You know prices that are before the tariffs and so you can you can get them at better prices, and the rising construction rates are going to cause a tendency to appreciate. So you're getting. It's making older properties more attractive by making newer properties more expensive.
John Hauber:Well, you know, we're we're picking up a couple that were built in 1996, and they are just strong bones, well-maintained, just beautiful. And to replace these properties it's very expensive to do. We're picking them up for $95 a unit. There's no way you could go and develop today at $95 a unit, maybe $240, $250. So, yes, and 80% of all senior living communities facilities are in the United States are over the age of 20 years old. So let's wrap this up and, if you can, let our audience know what is the Alternative Investing Club, how can they get involved with it and how can they reach out to you to get involved?
Daniel Holmlund:Sure. So the Alternative Investing Club is a club for people who want to learn about alternative investing. We're an educational club and we also provide opportunities. That come through. It's open to the public. That come through. It's open to the public. Just go to AlternativeInvestingClubcom and fill out the call to action. It's at the top of the web page. That says give us your email address and we'll send you invites to our Friday meetings. And then also, if you're interested in implementing AI in your business, you know, write to me personally at Daniel at AlternativeInvestingClubcom. I work with clients to help them implement AI in their business. It's often in processing, whatever their acquisition workflow is, or lead generation, or social media and marketing, because AI can be used to generate those sorts of things as well.
John Hauber:Well, it's been a pleasure, Daniel, getting to know you and getting to know your passion for AI and investing and business processes, so thank you very much and hope you have a good day.
Daniel Holmlund:Thank you, john, and anytime you want to speak again at the Alternative Investing Club, the door is open.
John Hauber:Thank you so much you.
