How to Lose $881 Million

This trend is no April fool’s…

According to a catalog of recent media articles, the robots are coming for real estate.

By that I mean artificial intelligence, or AI.

If you believe the predictions, AI is about to revolutionize real estate and virtually every other industry.

Based on these articles, and a 2023 report from consulting firm McKinsey, AI could soon be used to comb through leasing documentation…automate interactions between tenants and owners…provided personalized real estate advertising that shows you what a home would look like with your preferred interior décor…and (the big one) make faster and more precise real estate investment decisions.

Now, I have no doubt about the potential of AI to automate various administrative processes. Or to help jazz up real estate brochures and online listings.

But trusting your investment decisions solely to an algorithm…

That’s a game fraught with risk.

Why I Put Boots on the Ground

Don’t get my wrong…

Macro data must always play an important role in decision-making. But my many years as an international real estate scout and investor have taught me that data can only tell you so much…

For two decades, I’ve been traveling light and fast, putting my boots on the ground all over the world…or toes in the sand, depending on where I am. Then there’s all the travel of my dedicated team. The annual bill for our travel and research is north of $1 million.

I’ve spent more nights in Airbnbs and other short-term rentals than I could count. And it’s paid off…

Thanks to this approach, I’ve gotten in on the ground floor of some of the biggest real estate transformations of the past 20 years in places like Cabo, Portugal, Spain, Panama, and the Riviera Maya on Mexico’s Caribbean coast.

And I’ve found some incredible deals to share with members of my Real Estate Trend Alert group in these locations. These are exclusive, off-market deals available only to RETA members.

Here’s a few brief examples…

  • Uplift of $388,844 in Cabo—Our first RETA members-only deal in Cabo was in 2015 in the 5-star Quivira resort. Our RETA-only price on a two-bed ocean-view condo in the best-in-class Copala community was $336,156. I bought one. An identical condo to mine two floors above me later listed for $725,000. That’s $388,844 more.
  • $220,000 gain in the Riviera Maya—In 2019, I brought RETA members the chance to own luxury two-bedroom condos in a community called Santamar on the Riviera Maya from just $174,800. A two-bedroom mezzanine-level condo with Caribbean views bought for $178,000 later sold for $400,000.
  • $105,000 boost in Panama—In 2019, I was able to bring members the chance to buy in a landmark community in Panama called Playa Caracol, on the 50-mile stretch of coast known as the Pacific Riviera. Members could own in the Residences at Playa Caracol from a RETA-only $184,300. A condo a RETA member bought for $220,000 listed last year at $325,000—that’s $105,000 more.

AI, despite all its potential, will never be able to repeat this formula for success.

And I present as evidence a $881 million real estate debacle…

Playa Caracol is the nicest beach within an hour or so from Panama City. RETA members have seen six-figure uplifts from off-market deals along this stretch of coast.

A $881 Million Debacle

You might recall that back in 2019, real estate listings firm Zillow launched an algorithm-based business called iBuying to purchase homes directly from owners, make repairs, and relist them on the market.

Essentially, this was a form of house-flipping powered by an algorithm.

Here’s how it worked: Homeowners could go to Zillow to check their “Zestimate,” a tool on the Zillow website that gives an approximate value of the home. If the home was in an area that Zillow was interested in buying, the owner could click a button, fill in a few details, and within 48 hours Zillow would make an offer based on its data. Boom!

The company was so confident in its pricing algorithm that it decided to remove the human element.

This went about as well as you’d expect…

Around 2021, as the U.S. real estate market surged during the pandemic, the algorithm began overestimating home values, and Zillow started overpaying for homes. The losses quickly mounted…

At the time, it was reported that the company lost around $500 million on this AI-inspired debacle. But the actual number turned out to be $881 million, as The Wall Street Journal later reported. During the fourth quarter of 2021, before it shut down its data-powered flipping business, Zillow was losing an average of about $25,000 on every home it sold.

I was early to caution about the dangers of iBuying…

Back in March 2020, when it was being lauded as the next big thing in real estate, I was warning it was a huge mistake. Here’s what I wrote at the time:

“I think it’s nuts. Algorithms should be used for helping you decide what to watch on Netflix…not as the sole assessor of the value of a home.

Don’t get me wrong…I’m all about the data. But there is no substitute for boots-on-the-ground experience and true local knowledge—it’s an essential element to any real estate analysis. While iBuying technology might work with new cookie-cutter homes in an established market, once any variables are introduced it can fall short.”

This calamity notwithstanding, AI is now back on the radar of major real estate firms. For instance, technology-driven real estate company Compass is investing $1 billion on an AI system to aid its agents.

It’s probably only a matter of time before another company takes a crack at a iBuying-style real estate business.

But no AI system will ever be able to make up for boots-on-the-ground research, because they can’t account for all the variables…

Why Boots on the Ground Beats AI

To find the best real estate opportunities, I follow big unstoppable trends. Then I position myself ahead of these big unstoppable trends.

I find the right location…and the right real estate…at the right price. And I make a point of doing business with the right people.

I get in on the ground floor. I get my boots on the ground. And I’ve brought some killer, exclusive deals to my RETA group using this approach.

  • In August 2021, RETA members could get a penthouse in a community in Cabo called Cabo Costa for $249,000. I got one. Today a penthouse in Cabo Costa lists for $499,000. That’s $250,000 more.
  • I brought RETA members a deal in the chic beach destination of Tulum, along Mexico’s Caribbean coast, in 2019. Members could own two-bed condos in a community called Gran Tulum from just $175,000. The developer says two-bedroom condos there list at retail for $409,900—an uplift of $234,900.
  • RETA members could buy in Casares Costa in Spain’s Costa del Sol in 2020. A RETA member bought a luxury condo here for €327,000. It was sold last year for €550,000—a gain of €223,000.
  • In 2022, I recommend condos at a best-in-class community in Cabo called Monte Rocella. I bought two condos alongside RETA members in this deal. A condo that RETA members could buy for $272,600 in May 2022 has been listed $485,000. That’s an uplift of $212,400.

The thing about spotting big trends is that you can’t do it with data alone. Data can’t tell you what will happen…only what could happen based on past events. (Otherwise, we’d all be able to see the future.)

Understanding what trends are unstoppable, then, requires factoring in the human component.

Is a destination inherently desirable…is it internationalized…how it is perceived by the people going there…which markets does it appeal to…is an influx of investment and visitors temporary or permanent…

These are factors that you can only get a sense of by putting boots on the ground…by talking to visitors and developers and market insiders, often over long periods. Sometimes I’ll be scouting a market for months or even years before I act on, or recommend, any deal.

Boasting white-sand beaches and stunning azure Caribbean waters, the Riviera Maya on Mexico’s Caribbean coast is an inherently desirable destination…a key factor in its long-term growth potential.

All that said, I’m by no means knocking AI. It’s unquestionably going to change a lot about how companies do business. Even some of my team are experimenting with AI to see how we can use it to streamline certain administrative processes.

But AI will never be a replacement for boots-on-the-ground research…

And even if predictive AI did one day reach the point where it could make these sorts of determinations, then it would still lack the “RETA edge.”

RETA members buy in exclusive off-market deals, using our group buying power to get lower prices than anyone else will pay, and often before anyone else has a chance to get in.

That’s an incredible advantage… And it’s a win-win for us and the developer we work with.

The developer sells a large chunk of their inventory right off the back and in return they hand us big juicy discounts…ensuring we pay way less than anyone else.

This is an incredibly rare advantage to have. And it’s something no predictive AI system can beat.

And that’s why RETA members can see explosive gains, over and over again. Gains like a $388,844 uplift in Cabo…a $220,000 gain in the Riviera Maya…a €223,000 boost in Spain’s Costa del Sol…and so many more.

And this boots on the ground approach is why I have a pipeline of incredible deals lined up for RETA members, with potential upcoming opportunities along the northwestern coast of Costa Rica…in the eye-wateringly beautiful beach destination of Cap Cana in the Dominican Republic…on the Pacific beaches of Panama…

No one else does what we do at RETA…

(If you’re not a RETA member, learn more and find out how you can join here.)

No one else does what we do at RETA…


Ronan McMahon, Overseas Real Estate Expert

P.S. My scouting itinerary is packed… As I write, I’m boots on the ground in the mountain town of Mazamitla, south of Guadalajara, in Mexico. I’ll be sending you my thoughts on that very soon. After that I’ll be scouting the towns of Chapala and Ajijic—located on the shores of Lake Chapala, Mexico’s largest freshwater lake—and the beach towns of Puerto Escondido and Huatulco. Stay tuned to Overseas Dream Home…scouting reports from these destinations and more coming very soon.

The charming town of Mazamitla in nestled in the Sierra del Tigre mountain range and boasts a cool climate.

Your Daily Dream Home

Lot et Garonne, Aquitaine, France


This charming 19th century estate lies on the fringes of the Parc Natural des Landes de Gascogne, in the south-west of France.

The first floor of the main house has a kitchen, dining room, bathroom and utility room. The wrought iron spiral staircase leads to the second floor, where you’ll find four bedrooms and a bathroom.

The first guesthouse has four bedrooms, an enclosed courtyard, two bathrooms, and a large open plan kitchen/dining area.

The second guesthouse has a spacious living room area, four bedrooms, two bathrooms, and  its own private terrace area.

The property also has a recently installed swimming pool, with a sun deck and outside shower.

Click here to find out more

Remember, we don’t make money from any listing shared here in the Your Daily Dream Home section. We have no dog in the fight. We’re just sharing cool properties we’ve found.

I haven’t visited this property or done due diligence on it. If you’re interested in the listing, you should hire an attorney and do your own due diligence.

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