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I think we’ve become very used to having access to data in the United States in many different parts of our lives. I’m currently in Honduras, in the Bay Islands off the coast of Honduras, which is in the chain of islands along the barrier reef that runs from Belize down through Honduras. Side note, diving is fantastic. But that’s not the point of this. I was looking at some real estate. Again, just from the side because I don’t have a good excuse.
I think I want to have someplace for tonight. This is a perfect example of getting very used to having access to data in the United States. Whether or not it’s free, or you have to pay for it, just the concept of having access to data has become very commonplace. Even if you’re not sophisticated in analytics, it’s not a significant part of your business.
All about data
I’ve got some animal, some funky things going in front of my deck, in front of the ocean. I can’t remember what this thing is called. It’s a bit of a brown, furry thing. It’s adorable. Hey, cutie! All right, I have no idea what it is. I can’t remember what they told me. Guayaba or something like that. I don’t know. It looks kind of like halfway between a giant rat and an Oops! I caught its attention. Okay! Anyway, I’m going to try not to scare it away while I talk to you.
We’ve gotten used to data. As I’m looking at real estate down here, for example, trying to figure out what comparable properties are for sale, people can ask all kinds of wild numbers for what they want in terms of real estate, whether it’s land or land houses. If you’re looking at something like buying oceanfront land, and you want to build a house on it, and either sell it or rent it out when you’re not here, basically, what you would do would be to put together a spreadsheet to calculate that.
Analyze the data
I’ve got woodpeckers, too. They’re just making all kinds of noise. If you can hear that chirping in the background, that’s a woodpecker.
To do those analyses, you need some primary inputs, like what it costs to get the land? What does it cost to build? What would you be able to sell it for, and for what would you be able to cash flow it out, rent it out? Things like Zillow and other tools give you an extraordinary amount of information so that you can very quickly access that kind of data.
Even if it’s just looking for a few comps, even if you don’t analyze large amounts of data, even just having a couple of things, there’s some more to know, “Okay, what does a two-bedroom 2,000-square-foot house or three-bedroom 2,500-square-foot house sell for?” Well, you can see sales data. We don’t have that information down here, and it’s very frustrating.
Don’t be vague
It’s even more frustrating because when you talk to real estate brokers, they will give you vague generalities like, “Oh, 350, 550,” whatever the numbers might be. Or when you ask them, “Hey, how much is it going to rent for?” Suppose they throw out some numbers, but they’re pulling stuff out of there. I don’t trust numbers where people start throwing things out. I mean, they’re frequently wrong, or they’re telling you what they think you want to hear.
There’s a minimal way to validate that data efficiently. Even if you try to get multiple inputs, contacting a rental management company or something like that and saying, “Hey, how much would it rent for?”, again, they’re going to give you verbal information. They’re not going to provide you with data very likely, how you’re going to get comps and things like that, to have a good understanding.
It’s very, very frustrating, coming from an analytic background, to not be able to have that kind of information. It’s become so democratized in the United States, where everybody has access to something like Zillow where they can see what’s going on. In some places in the United States, you can see how much people are paying for rent. That’s certainly the case in Santa Monica. That data is all public. You can see all the rent-controlled units, what they’re charging for those units, and so you can see that information.
Indeed, places may catch up. But it’s interesting to sort of think about how we’ve gotten used to some of these things, for instance, in our personal lives. I think most Americans are used to something like Zillow now, even for renting apartments. You can get a good idea of what everything else is out there. You don’t look at a newspaper anymore. That kind of stuff is gone. And, of course, you can even see historical data in terms of property rentals within something like Zillow. So you can see a property that’s no longer available, but they put it on the market six months ago.
Oops! I’m getting eaten by mosquitoes. I’m sitting outside, and it’s sunset. I’ve got a beautiful sunset going down over the ocean from my deck, but I’m going to start getting eaten alive if I’m not careful.
The moral of the story is, I think, increasingly, markets and everything will move in that direction. We should see things like that increasingly in healthcare as well. I thought some of that would happen with the Trump executive. How? Well, in order in terms of pricing for healthcare, in terms of fee schedules. We’re starting to move in that direction. I think the trend will increase there, but it’s interesting to sort of move back in time and deal with where we were in the United States a couple of decades ago. It’s challenging, but it also makes me appreciate where we are in the United States in some ways.