The Real Estate Espresso Podcast

Latest Episodes:

What Should I Do? Jun 21, 2022

Show notes

On today’s show we’re talking about a question that is on everyone’s mind. Construction prices are rising. Interest rates are rising. Not only are rates rising, but it looks like lender liquidity is shrinking. Rents are rising, but who knows for how long? Salaries are rising for now, but could flatten or even decline if we experience an economic downturn. Will that apartment project be affordable when it’s completed in two years from now? An economic recession seems all but certain. The question is, how do you underwrite a project in these market conditions when so many of the critical variables seem to be so uncertain?

I just came back from the 20th annual Investor Summit on Sand and these questions and more were the topic of seemingly every conversation whether it was over breakfast, or dinner, or late at night. Almost all of the 282 attendees are trying to make sense out of it.

We had Danielle DiMartino Booth, who worked at the Federal Reserve Bank of Dallas for nine years provide us with an insider perspective on the most recent announcement last week from Federal Reserve Chairman Jerome Powell.

If you would like to see a replay of her talk, click the link ---> https://fb.watch/dHcuFbbHe6/

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Host: Victor Menasce

email: podcast@victorjm.com

Energy Insecurity Jun 20, 2022

Show notes

On today's show we're talking about energy insecurity and why we can expect to see continued high energy prices well into 2023.

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Host: Victor Menasce

email: podcast@victorjm.com

David Morris Jun 19, 2022

Show notes

David Morris is based in Birmingham, Alabama where he is part of the core team specializing in EQRP. They also have a construction manufacturing project that when completed will deliver high volume construction components into the home building industry. To learn more or to connect with David, email him directly at david@eqrp.co.

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Host: Victor Menasce

email: podcast@victorjm.com

Axel Monsaingeon Jun 18, 2022

Show notes

Axel Monsaingeon is based in Montreal Canada and is developing on Main Street in a small resort town North of the city. He purchased a building that burned to the ground a few weeks below closing and is dealing with the complexity of remediating what is now considered an environmentally contaminated site. Today's show is a lesson in what can happen when the unexpected happens. To learn more or to connect with Axel, visit realestateeffect.ca

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Host: Victor Menasce

email: podcast@victorjm.com

How Many Houses Are Needed? Jun 17, 2022

Show notes

On today’s show we are talking about shifts in economic data that are coming fast and furious. The economic indicators are changing faster than at any time I can remember. In fact there are so many things happening right now that it was somewhat difficult to decide what to talk about today.

We’ve just had a historic interest rate increase on Wednesday of this week. The words of Jerome Powell have been headline makers. They have been picked apart and analyzed. For me, the biggest tell in that story is that there were no questions in the question period regarding the housing market.

Sometimes these economic indicators are changing daily. But we’re not going to talk about the interest rate increase.

Instead we’re going to examine why The National Association of Realtors continues to assert that there is a shortage of nearly 6.8 million homes across the United States. In fact, this statistic has been quoted in the news for an entire year and is almost widely accepted as fact.

In fact that first report came out on June 16, 2021.

Since then, the association has continued the narrative that the nation needs another 6.8M units. However, these statistics fail to hang together when you look at the data on a local level.

The key to this story is understanding demographics.

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Host: Victor Menasce

email: podcast@victorjm.com

Rising Cap Rate Risk Jun 16, 2022

Show notes

On today’s show we are looking at the question of whether value add strategies can be effective in an environment of rising interest rates.

This realization came from a discussion with Ken McElroy, legendary investor and principal at the MC Companies.

We went through a thought experiment about a simple value add project that would be representative of a typical apartment turnaround project.

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Host: Victor Menasce

email: podcast@victorjm.com

The Mortgage Market Is Cooling Off Jun 15, 2022

Show notes

The housing market has taken a huge hit this year as mortgage interest rates have surged and homeowners scale back on purchases.

The latest casualties in the property technology world are Redfin and Compass, which both announced layoffs today that combined amounted to about 920 people.

In a letter to employees and published on the company website, the CEO Glenn Kelman wrote and I’m going to quote a portion of the letter.

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Host: Victor Menasce

email: podcast@victorjm.com

Borrowing In A Rising Interest Rate Environment Jun 14, 2022

Show notes

On today’s show we’re talking about about how to navigate construction debt in the current rising interest rate environment.

But before we talk about rising interest rates, we need to talk about the kind of debt you may want to use for your projects.

There are so many different types of debt. On today’s show we’re going to talk about the ones we like to use and which ones we use with extreme caution

We believe that in a rising interest rate environment, all borrowers need to be careful.

When people think of borrowing, the most common source is a bank.

In our experience, banks tend to have very narrow lending criteria. They are generally offering the lowest rates, but often have terms that are not a fit for your projects.

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Host: Victor Menasce

email: podcast@victorjm.com

Apartment Conversion Math Jun 13, 2022

Show notes

We’re going to look at a sale offer of a commercial office building and we’re going to dissect the viability of this offer.

The seller in this case is offering to sell a property that has an as-is appraisal for nine million dollars from a major brand name commercial brokerage house and appraisal firm.

The seller purchased the building a couple of years ago for 5 million dollars. He is willing to seller finance the building with $750,000 in secured debt and another $2.25M in forgivable debt that would be unsecured.

The offering prospectus has a plan to convert the building to residential, and the assertion is that the building would be worth $17M after the conversion is complete and leased up and stabilized.

The building is currently 50% occupied.

The question is whether this offer is a good deal?

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Host: Victor Menasce

email: podcast@victorjm.com

Isabel Guarino Smith Jun 12, 2022

Show notes

Isabel is based in Phoenix Arizona where she owns and operates a portfolio of residential assisted living homes. She also runs the RAL Academy which has trained thousands of owners and operators how to develop and run successful residential care homes across the nation. To learn more, and to connect with Isabel, visit RALAcademy.com.

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Host: Victor Menasce

email: podcast@victorjm.com

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