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    Business

    The Real Estate Espresso Podcast

    Welcome to The Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. Join investor, syndicator, developer, and author Victor J. Menasce as he shares his daily real estate investment outlook. Our weekday episodes deliver 5 minutes of high-energy, high-impact content to fuel your success. Plus, don’t miss our weekend editions featuring exclusive interviews with renowned guests such as Robert Kiyosaki, Robert Helms, Peter Schiff, and more.

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    Copyright: © 424617

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    Latest Episodes:
    AMA - No Parking Feb 27, 2023
    Show notes

    Today's question comes from Martin who writes:

    I thoroughly enjoy the invaluable resource that you provide on the RE espresso podcast. I would like to get your opinion on a project that has come across my desk. Many aspects of the project are subject to the normal DD process. However, having done some research on the special permit that was approved to entitle a 6 unit commercial site to a 56 unit mixed use site, with the addition of 50 residential units (24 Studio, 20 one bed and 6 two bed units) to the existing 6 commercial. There is a restrictive covenant as it pertains to parking. There are 24 designated parking spaces on the site. The planning board approval had an allocation of 12 spaces (2 each) to the 6 commercial units. It seems the remaining 12 are to be allocated to commercial customer parking. They also incorporated a specific condition that none of the residential tenants can own a vehicle. They specifically have tied this to the excise tax bills paid to the City for all vehicles, as proof that tenants of this building do not own a car. This concerns me, as in all of our units, there is at least one vehicle per lease. There is access to the metro train system close by (walking distance) However the site is not a downtown urban development, and is actually situated within 5 miles of the main downtown of a major city. The metro would have one downtown in 12-15 mins. The proforma rents are in line with other class A building comps within a 2-5 mile radius. I have three questions:

    1. How does one account for the qualitative impact of not being able to own a vehicle.

    2. Having answered the first question, how to quantify and discount rent comps with other similar class A buildings, that are not encumbered by the aforementioned restrictive covenant.

    3. As part of an exit strategy what impact on the cap rate should one contemplate for potential buyers. Or, taking the contrarian position, are we moving in the direction of reduced carbon footprint with more people buying into 100% dependency on public transportation in conjunction with Uber /ride sharing, in which case the building valuation would suffer no undue financial degradation.

    As always, I appreciate your opinion and keep up the great work on the espresso podcast!

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    Host: Victor Menasce

    email: podcast@victorjm.com


    George Ross on Mineral Rights Feb 26, 2023
    Show notes

    On today's show I'm having a conversation with George Ross about separation of mineral rights on one of our properties located in Colorado Springs and whether the separate mineral rights could represent a risk to any activities taking place on the property.

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    Host: Victor Menasce

    email: podcast@victorjm.com


    Mike Kaeding Feb 25, 2023
    Show notes

    Mike Kaeding is based in the Twin Cities in Minnesota. On today's show we are talking about cost effective construction techniques. To connect with Mike or to learn more, visit Norhart.com.

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    Host: Victor Menasce

    email: podcast@victorjm.com


    What War is Showing Us Now Feb 24, 2023
    Show notes

    Many of you know me as the host of the Real Estate Espresso Podcast. By day, I’m the senior partner at Y Street Capital. We have several projects underway that are open to accredited investors residing in the United States. If you’d like to learn more, you can visit ystreetcapital.com/investors.

    The information is not publicly available. But you can register to join our portal and learn more about the projects we currently have underway. This is not a solicitation. Any investment would be by prospectus only in compliance with US securities regulations

    -------------

    On today’s show we are talking about seeing into the future. Having a successful business relies upon seeing into the future and solving the needs of that future before the rest of the world does. Many of the things we can see are hidden in plain sight if you choose to look. But you have to be willing to look.

    If you look at history, you will see that wars are very hard to contain. Even the current conflict in the Ukraine is not limited to two countries. We have the entire European Union involved, the US is involved, Iran is involved. It looks like China might become involved.

    We are seeing more defence startup companies and defence incubators than ever before. You would have thought traditionally of startup incubators as being focused on technology, or blockchain or biotech. We don’t typically think of defence incubators. But I’m here to tell you that this is a growing industrial complex. If you knew that defence spending was going to increase in a specific geographic area, what would you do to help serve that need. If your philosophically opposed to the notion of defence spending, you might choose to do nothing. And that’s a perfectly acceptable answer. But at least it’s a considered response. Most people by default do nothing because they don’t even think that there might be something to do.

    We don’t know if the current war is going to erupt into a hot war on a large scale involving superpowers. Maybe it will remain confined to a proxy war. We can only hope that the conflict doesn’t escalate and that is comes to a speedy end. In war there are no real winners. But again, wars often last a lot longer than people expect them to. Thats what history tells us.

    Even if we put a hot war aside,

    What is clear is that globalization as we knew it has changed and will probably not revert to the open borders we have experienced over the past two decades.

    The huge beneficiary of this shift is Mexico. There are now 28 Chinese companies who have opened large scale manufacturing plants in Mexico to serve North American customers. The cost of labor in Mexico is higher than the cost of labor in China. But the lower cost and time for transportation offsets the higher labor costs making Mexico every bit as competitive as China.

    This means that global trade routes are about to change. They won’t change entirely. But some traffic destined for the port of Long Beach, might be coming over land through Texas. Texas may become the next transportation gateway to the rest of North America.

    If you could see into the future and imagine a few dozen more major manufacturing facilities in Mexico, how would that change the demand for transportation and for warehousing in Texas? If you could see into the future and fulfill the needs of those supply chains, what would you do as a real estate investor?

    ---------------

    Host: Victor Menasce

    email: podcast@victorjm.com


    Turkey's Crumbled Buildings Feb 23, 2023
    Show notes

    On today’s show we are taking a closer look at the impact of the earthquake in Turkey and Syria. We’ve all seen the images of collapsed buildings, of piles of rubble. The impact on those whose lives were lost and those whose lives were disrupted is staggering.

    We’re now hearing reports of developers being arrested. Let’s be clear, this was a powerful earthquake. A 7.8 magnitude quake is 10x more powerful than the 6.9 magnitude earthquake that hit San Francisco in 1989. I remember that quake very well. 63 people died in that quake, many related to the collapse of the Bay Bridge.

    In Turkey and Syria, the death toll continues to rise and is expected to top the 47,000 already estimated to have died.

    The investigations will take months to complete. Some collapsed buildings that are missing structural elements will be easier to investigate.

    But the problems appear to be more systemic.

    In 2007, the government passed new regulations aimed at cleaning up the construction sector, seeking to make new buildings earthquake-proof and shore up the old ones.

    Planning rules have been further tightened since, most recently in 2018, requiring more steel columns and beams to absorb the impact of earthquakes.

    But during the same year, the government issued an amnesty for existing buildings that had broken the rules - for a fee.

    More than 10 million people applied, netting the state more than $3 billion in registration fees.

    More than half of Turkey's 13 million buildings contravene regulations, according to official data, making amnesties popular among property owners, as well as a lucrative source of government revenue.

    Another amnesty was proposed last year and was making its way through parliament, despite criticism, even before the latest quake.

    At the end of the day, the laws of physics don’t care whether you had paid a fee to the government to gain an exemption from structural violations. The building will either stand or fall.

    Turkey is one of the most active seismic zones in the world and has a history of severe earthquakes. Buildings need to be designed to handle these severe events.

    -------------

    Host: Victor Menasce

    email: podcast@victorjm.com


    Makeup Air Surprise Feb 22, 2023
    Show notes

    On today’s show we are taking a look at how some changes to the building code are driving significant new costs.

    Buildings are becoming healthier than they once were. It’s desirable to insulate a property in order to maximize efficiency. However, these highly sealed homes and offices can also build up toxins or behave in unexpected ways.

    If you like to cook, then chances are you want to have an effective exhaust fan above your stove in order to prevent both grease and smells from permeating all over your home. A high capacity range hood is key. But if the range hood is going to pull kitchen smells effectively out of your home, you need a high capacity fan and a large duct to the outside. In the old days, homes were leaky enough that the range hood did not pull enough air to cause a fall in air pressure inside the home. The numerous gaps and leaks around windows, doors, electrical outlets and so on enabled fresh air to seep into the house without creating a problem.

    Where problems do arise is when a home is very tightly sealed. At that moment, there are only a few remaining openings for air to enter the house.

    There are the bathroom exhaust fans which have a gravity damper that lets only a small amount of air to backdraft into the home. There is the dryer vent which would allow air to be sucked back into the house.

    But the problem is that many houses have appliances that burn fuel. Specifically, a natural gas furnace, a natural gas water heater, and a fireplace or wood stove. The exhaust vent for each of these fuel burning systems is another hole in the house. These perforations are designed to exhaust the fumes from the combustion process. But the laws of physics says that air will flow from the location of highest pressure to a lower pressure area.

    The problem is that if the fuel burning appliance is having air sucked through the chimney back into the house, you could have carbon dioxide and carbon monoxide being sucked into the house. The larger the fan, and the more sealed your house, the greater the risk.

    As a result, the building code is being amended in many communities to introduce an active solution to this problem.

    Back drafting of fuel burning appliances like furnaces water heaters and fireplaces can be amplified by the wind created areas of high pressure or low pressure on one side of the house or another depending on wind direction.

    In many parts of the US, if an exhaust fan has a capacity of more than 400 CFM, then a makeup air system is required. Some building codes require a makeup air system regardless of the exhaust fan capacity. This requires the addition of a blower of equivalent strength as the exhaust blower to restore balanced air pressure in the house. A passive system is not enough to meet the new code. The makeup air system must have several components that are all interlocked with the kitchen exhaust fan. It must have a damper, a blower, a temperature sensor and a heater. This heater is going to be pretty strong. We’re talking a 10kw heater to warm the air.

    You might be thinking that you’re going to go out and spend a few hundred dollars on a nice shiny stainless steel range hood to put above your brand new stove. Then surprise you’re now facing a bill of an additional $3,000 for the makeup air system to balance the air pressure for the range hood.

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    Host: Victor Menasce

    email: podcast@victorjm.com


    Are You An Emotional Investor? Feb 21, 2023
    Show notes

    Federal Reserve officials like to call their decisions “data dependent.” Business leaders say it a little differently, often “data driven.”

    All well and good but does anyone really say otherwise? “To say you prefer seat-of-the-pants guesswork” doesn’t typically impress investors. So of course, people claim to be data-driven, even when they aren’t.

    Even worse, you can sincerely think you are data-driven while looking at data that’s incomplete, distorted, or just plain wrong. We live in a complex world.

    So How Do You Stay Data Driven?

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    Host: Victor Menasce

    email: podcast@victorjm.com


    Diversification Feb 20, 2023
    Show notes

    On today’s show we’re talking about diversification. You’ve all heard the conventional wisdom. Diversify your investments and you’ll be safe.

    But if we look at today’s environment, the traditional diversification doesn’t seem to be delivering the safety that investors are looking for.

    If you have a percentage of your funds in the stock market, and a percentage in real estate, a percentage in bonds, some in cash, some in gold, you should be fine.

    But here we are in 2023. There is stock market volatility, there is no safety to be found in the bond market, real estate prices are falling, cash is clearly devaluing given the high rate of inflation, gold makes some occasional moves, but going sideways.

    On today’s show we’re going to examine the question as to whether diversification truly exists in the manner that was originally intended.

    ---------------

    Host: Victor Menasce

    email: podcast@victorjm.com


    Pete Reese Feb 19, 2023
    Show notes

    Pete Reese is based in San Diego California where he specializes in flipping land on a national basis. On today's show we are talking about this niche where many parcels of rural land are neglected, unwanted, inherited, and otherwise under-utilized or under-valued. To connect with Pete or to learn more, visit turningprofit.com

    ------------------

    Host: Victor Menasce

    email: podcast@victorjm.com


    Sean Caulfeild Feb 18, 2023
    Show notes

    Sean Caulfeild is a lawyer with the law firm LMSLaw where he practices real estate and corporate law. On today's show we're talking about several different types of property fraud and how to avoid them. If you have an experience with property fraud, we'd love to hear about it. Send an email to podcast@victorjm.com and share your story.

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    Host: Victor Menasce

    email: podcast@victorjm.com


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