The Real Estate Espresso Podcast

Latest Episodes:

The Best Waterfall Structures Oct 24, 2023

Show notes

On today’s show we’re talking about getting paid, and who gets paid and in what order. Investment options often include a waterfall provision. This defines the order of precedence of payment. This is an important element of any investment. On today’s show we are going to look at a few of the popular offerings we see in the market, and then we are going to share what we do in our projects. To be clear, we are not soliciting for investment here. This is an educational piece designed to explore investment structure so that you can better evaluate whether a particular structure is beneficial for you. Of course you want to consult your CPA to make sure there are no unintended tax consequences.

At the most basic level, the waterfall speaks to who gets paid in a project and in what order. There are infinite possibilities for the structure you could define for how investors and shareholders get paid. You can get as sophisticated as you want. But if investors can’t understand it, it’s not worth the extra complexity.

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Host: Victor Menasce

email: podcast@victorjm.com

Fiscal Or Monetary Dominance Oct 23, 2023

Show notes

On today show we are looking at a tug-of-war that is underway in the financial markets. There is also a competition for capital between government and private enterprise. For the moment it appears as though government is winning that battle for dollars. We have an economy that is partially being controlled by two gigantic levers. The first lever is monetary policy and the second lever is fiscal policy.

But before we use these terms, it would be useful to define them.

Monetary policy is controlled by the central bank. Those decisions affect bank liquidity, the printing of currency units, and the setting of interest rate policy.

Fiscal policy refers to the decisions made by governments to spend money. Fiscal policy affects taxation, entitlement programs, public infrastructure projects, military spending and so on.

We literally have a situation where central banks are standing with both feet on the brakes. Governments on the other hand, have their foot firmly on the Excelerator. If you have ever tried this in your car do you realize of course that you will either burn out your engine or your brakes very quickly. governments of course.

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Host: Victor Menasce

email: podcast@victorjm.com

Insurance Woes with Galen Hair Oct 22, 2023

Show notes

Galen Hair is a lawyer who specializes in litigating insurance claims on behalf of real estate owners against insurance companies. On today's show we are talking about the insurance landscape and what property owners can do in the current environment.

To connect with Galen, visit https://insuranceclaimhq.com/

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Host: Victor Menasce

email: podcast@victorjm.com

Workforce Housing with Jason Buxbaum Oct 21, 2023

Show notes

Jason Buxbaum is based in Phoenix Arizona and invests in developing and redeveloping workforce housing across multiple markets in Arizona and Texas. On today's show we are talking about the market dynamics and how they're changing. Opportunity that disappeared for a while is now reappearing in a different form.

To connect with Jason, visit JevanCapital.com

Sourcing The Best Product For The Job Oct 20, 2023

Show notes

On today’s show we are challenging some conventional wisdom. Subtrades are pretty set in their ways about how things get built. They have their preferred suppliers. They expect materials to be packaged in a specific way. They have familiarity with a regular and repeatable process for installing materials. Any deviation from those tried and true methods is going to disrupt the normal flow.

The key to building cost effectively often requires creativity. That can mean alternate sources of supply. Some materials can be purchased in lower cost geographies and shipped all over the world. The problem is that some materials have not been tested or certified to US or Canadian standards. Building codes are international in nature, but they are also highly localized as well. Many local jurisdictions point to the national codes and standards. But they often have local regulations to meet as well.

Importing products that are not certified has risks. The most famous example is Chinese drywall.

We have been scouring the planet for high quality materials that can reduce the cost of construction while still meeting the requirements of the building code and materials certification standards.

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Host: Victor Menasce

email: podcast@victorjm.com

Filling The Gaps Oct 19, 2023

Show notes

On today’s show we are making a distinction between new supply and value added opportunities. Investors over the past few years have focused on two different investment theses. Thesis number one is the traditional value added project. This is where you take an existing project that was built a number of years ago. It’s getting tired and the lack of modern amenities and finishes makes the property less desirable and therefore it attracts lower rent.

The idea is to vacate enough of the units that your can improve them over a period of time.

The second involves new construction. This is where developers come in. They are adding new product to the market. These gleaming new buildings have modern amenities. They are generally very desirable properties.

What these two approaches neglect is the real needs in the market. Where are the gaps? Is there a business opportunity to fill those gaps?

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Host: Victor Menasce

email: podcast@victorjm.com

Vacation Boomerang Oct 18, 2023

Show notes

On today’s show, we are looking at a market effect that could have been easily predicted. In fact, we made precisely this prediction on the show back in 2021. When markets over-shoot the long-term averages for demand, it is reasonable to expect a bit of a boomerang effect on the tail end of that demand.

I have long maintained that second homes are a discretionary investment. People will do everything they can to protect their primary residence and ultimately sacrifice when it comes to a second home. In 2021 and 2022 we saw the surgeon demand for vacation properties whether it was a lakefront cottage Ski chalet in the mountains. There was absolute white hot demand for what seemed like scarce number of properties. Many buyers of these properties, finance their purchase by tapping into a home equity line of credit rather than getting a fixed rate financing pacifically tied to the new property. With the rapid increase in interest rates, the carrying cost associated with these vacation properties has increased dramatically.

Owners of these cottages are looking to unload them for a variety of reasons. Some have discovered the cottage. Life is not for them. Some have decided that living in a rural area, not fit their lifestyle. Install others simply cannot afford a higher caring cost at today’s interest rates.

The market averages seem to obscure what is truly happening in the market. Paradoxically, sales, volume and prices, in the luxury segment of the market appear to be largely unaffected. These buyers are more sophisticated. They are typically paying cash, and therefore they are largely unaffected by the recent spike in interest rates. we are seeing softness in demand and pricing at the lower end of the market.

Lower end properties in less desirable locations are sitting on the market with next to no activity.

Some brokers are reporting price drops of nearly 30% on these lower end properties.

What Is Gasoline Telling Us? Oct 17, 2023

Show notes

On today show we are looking at what seems like a huge paradox in the world of energy. On this show we look at energy from time to time. Why is that? Because energy is the economy. If the economy is cooking, then energy consumption will rise. If the economy is faltering, then energy consumption will fall.

There is normally a correlation between prices for gasoline at the pump and the price of crude oil. After all, gasoline is refined from crude oil so it only stands to reason that if oil goes up in price, then so too the price of gasoline should increase as well.

Gasoline prices are falling off at the pump in addition to following in the wholesale market, at the same time as we have seen an increase in the global price for crude. I’m not talking about the recent spike in prices as as result of the conflict between Hamas and Israel. Israel does not produce oil, nor does Hamas. But Iran does, and Iran is believed to be an architect of the attacks in Southern Israel. Saudi Arabia has cut back on production and so has Russia.

So what does this mean?

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Host: Victor Menasce

email: podcast@victorjm.com

Construction Material Shortages Oct 16, 2023

Show notes

On today show, we were talking about the supply chain in construction, and how certain seasonal effects are clouding the picture of what is happening in the real economy. At this time last year lead times four windows and doors were running incredibly long. Many window manufacturers were quoting delivery times of 16 weeks for specialty windows and sliding patio doors. By March of this year, those lead times had reduce to no more than 3 to 4 weeks. And by late spring manufacturing lead-times had reduced to a very respectable two weeks. It seemed like the post pandemic supply chain crunch was finally over.

In the past few weeks, we have seen lead-times extend for many different products. Standard lead-times for windows remain short at 2 to 3 weeks. Specialty windows are now five weeks. Patio doors are 16 weeks vinyl siding as a lead time of 6 to 8 weeks. Cement board siding is six weeks.

The spike in lead times are a function of a localized surge in demand to complete building envelope prior to winter setting in. Construction crews want to use the time during the colder months to complete the interior work without having to worry about the building envelope.

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Host: Victor Menasce

email: podcast@victorjm.com

East Coast Investing with Gabriel Lajeunesse Oct 15, 2023

Show notes

Gabriel Lajeunesse is a wealth advisor with UBS and is based in Burlington Vermont. On today's show we are talking about investing in the current market conditions. To connect with Gabriel, you can find him on LinkedIn and on Twitter.

https://www.linkedin.com/in/gclajeunesse/

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Host: Victor Menasce

email: podcast@victorjm.com

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