The Real Estate Espresso Podcast

Latest Episodes:

Market Sentiment Surveys Oct 04, 2023

Show notes

On today’s show we are going to look at some soft data. A few days ago we explored the difference between hard data and soft data when it comes to economic indicators. Hard data includes things like the unemployment rate, the CPI, GDP, GDI and so on.

Soft data consists of market sentiment information. On today’s show we are looking at the market data produced by research firm Pulsenomics. The company was in the headlines yesterday with an announcement of a Partnership between Pulsenomics and Fannie Mae to Produce Home Price Expectations Survey

The company has been conducting home surveys for years. They publish the widely read U.S. Housing Confidence Survey every quarter.

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Host: Victor Menasce

email: podcast@victorjm.com

Keeping Your Contractor In Line Oct 03, 2023

Show notes

On today’s show we are talking about the elements of negotiating a construction contract, specifically using the industry standard AIA contract forms.

I’ve heard a number of people insist on using the industry standard AIA contracts. These industry standard contracts are supposed to be a fair contract that is not one-sided favouring neither the owner nor the general contractor.

I compare the AIA contract to the standard real estate board purchase and sale agreement template. Nobody would ever use the standard real estate board contracts without alteration. They are, after all, just a blank template.

The benefit and the problem with these templates is that they are very easy to customize. Unless you are familiar with the contract in detail, it’s going to take a lot of work to close down all of the potential landmines that exist in these standard contracts.

It starts with having a clear understanding of what your goals are as a property owner.

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Host: Victor Menasce

email: podcast@victorjm.com

Economic Distinctions Oct 02, 2023

Show notes

On today show, we are going to look at two different words that are used to describe macro economic factors, and in each case we’re going to look at an important distinction in the nature of these anomic indicators. We’re going to start by looking at economic data generally. Economic data breaks down into two major categories. There is what is called soft data and hard data. hard data consist of the consumer price index, gross domestic product, gross, domestic income, the producer, price index, the unemployment rate, and labor, force, participation, there’s a long list of data, that is compiled and reported by the Bureau of Labour Statistics in United States, Statistics Canada in Canada, and Eurostat in Europe.

These numbers tend to be lagging indicator’s.

In addition to the hard data, there is a rich array of soft data about the economy. These are things like indices of consumer confidence the purchasing manager index. These numerous measures communicate the sentiment of consumers and business owners about how they feel in the current market conditions in addition to their outlook for the coming months. These are, however, just opinions. They are surveys. Opinions are influenced by factual information to be sure. but opinions are also influenced by other factors. The second reason why consumer confidence might provide useful early information is if consumers’ responses to the survey questions provide good forecasts of future economic activity. This would occur if consumer confidence has a causal influence on economic activity, but this influence takes several months before it is fully realized.

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Host: Victor Menasce

BOM - Buy Back Your Time by Dan Martell Oct 01, 2023

Show notes

On the first day of each month we review the book of the month. Our book this month is "Buy Back Your Time" by Dan Martell. In the book, he offers a refreshing perspective on time management and productivity, focusing not just on doing more but on reclaiming our most valuable asset – time itself.

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Host: Victor Menasce

email: podcast@victorjm.com

Multi Family Lessons with Chris Balzaretti Sep 30, 2023

Show notes

Chris Balzaretti is based in NY and invests both in NY and Texas. On today's show we are talking about the lessons from Texas investments made during the past few years. To connect with Chris and to learn more, you can email Chris@takeflytecapital.com

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Host: Victor Menasce

email: podcast@victorjm.com

The Commodity Super Cycle Sep 29, 2023

Show notes

On today’s show we are talking about the commodities super cycle. We often hear those words, but what do they actually mean? What does this mean for real estate investors?

I’ve witnessed the shocking price increase of copper wire. Six gauge wire is used in high load applications like stoves and clothes dryers, AC units, hot tubs and EV chargers. I’m seeing that wire pricing at over $5 per linear foot. That’s much higher than I ever remember. As we transition to using more electricity and away from gas based appliances, the demand for copper is going up.

But the biggest issue is that the mines needed to produce these minerals take years to bring online. There is the entire regulatory process to get a mine approved which takes years. Then you need to make the capital investment and then develop the mine into a producing going concern.

The cost structure that was in place the day the mine was conceived will always be dramatically different from the cost structure when the mine actually hits production. For example, the cost of a lithium mine in Canada is now forecast to be 38% higher than estimated just 18 months ago. Lithium is the key ingredient in Li=ion batteries which make up the majority of high performance batteries. It’s possible that new battery technologies will reduce our dependence on Lithium in favour of cheaper minerals like Sodium. But for now, we’re stuck with Lithium and copper. We don’t have a replacement for copper.

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Host: Victor Menasce

email: podcast@victorjm.com

The Wage Price Spiral Sep 28, 2023

Show notes

The United Auto Workers didn’t get the memo. Jerome Powell wants to stamp out any possibility of a wage price spiral.

The auto industry is in the middle of an escalating strike as the United Auto Workers are fighting for a catch up on the concessions delivered when all of the major US auto makers were on the verge of bankruptcy in the wake of the 2008 Financial Crisis.

But the United Auto workers are demanding a 40% increase in wages over a three year period. The question is, do you think that workers all across North America are looking to the resolution of the strike with the Detroit auto makers? I don’t believe that the workers will get a 40% increase in their contract. I expect they will come closer to 25%. But even that is going to fuel a demand for higher pay across all of manufacturing.

There is no question that wages have not kept pace with inflation. That means reduced purchasing power at the cash register for employees in nearly all sectors of the economy.

What does this all mean?

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Host: Victor Menasce

email: podcast@victorjm.com

Is Insurance Changing Design Choices? Sep 27, 2023

Show notes

On today show we’re taking a look at how insurance is affecting choices in design.

Why are some insurers are exiting geographic areas entirely. What does this mean for owners of real estate in those locations? Insurance is both optional and essential depending on your circumstances. If you were ultra wealthy, then you can self in sure. However, For the rest of us and for anyone who borrows funds from a bank insurance is not optional. So what happens if you reside in California and your insurer decides to exclude California from its product offerings? What do you do if you reside in Florida and now your insurance company has removed Florida from its list of offerings? Does that mean the risk of living in Florida is simply too high? Should everybody just leave? Why don’t we empty out the state of California. The risk of wildfires is simply too high for people to live there, not to mention the risk of earthquakes. There is considerable precedent for governments to step in and provide insurance solutions. When private businesses decide that insurance is no longer profitable. There are simply some risks for which there is no insurance at all. For example, you will not find an insurance policy that will cover you for the risk of a landslide anywhere in the United States, that is simply not an insurable risk. If you happen to live in California, and other parts of the country that have experienced landslides.

There are very few insurance companies offering flood insurance. When you buy flood insurance in the US, this policy is typically underwritten by the Federal Government and administered through your insurance broker.

Would you spend extra in construction if you knew it would reduce your insurance cost?

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Host: Victor Menasce

email: podcast@victorjm.com

Rising 10 Year US Treasury Yields Sep 26, 2023

Show notes

Real estate investors generally don’t care about short-term interest rates. The short term rates affect the cost of capital for bridge financing where those loans are indexed to the secure overnight funds rate. Short term debt can be replaced with permanent financing. I really painful increase in borrowing costs is tied to long-term interest rates.

We have experienced an inverted yield curve for much of the past two years.

This past week, yields on the 10 year Treasury hit 4.5%, a 16 year high. When you read the mainstream media, it’s as if the pricing for the 10 year Treasury is linked to inflation expectations and to some forecast of the Fed’s higher for longer narrative.

The question is why have the yields on US government debt increased in particular over the last 60 days? The United States has issued $1 trillion of new debt over the last three months. They have literally flooded the market. When you flood the market with any commodity, prices will fall which means yields will rise.

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Host: Victor Menasce

email: podcast@victorjm.com

The Ant And The Grasshopper Sep 25, 2023

Show notes

Aesops Fables are classics credited to Aesop, a slave in ancient Greece. The stories date back to a time between 620 and 540 BCE with each story containing a life lesson.

We are starting today’s episode with a fable called "The Ant and the Grasshopper.”

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Host: Victor Menasce

email: podcast@victorjm.com

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