The Real Estate Espresso Podcast

Latest Episodes:

Live - Land Use Case Study Mar 13, 2022

Show notes

On today's show, we're in front of a live audience at The Real Estate Guys Secrets of Successful Syndication Conference in Dallas. Today's talk is a case study on the value multiplier that can be possible with the combination of annexation and entitlement.

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Host: Victor Menasce

email: podcast@victorjm.com

Josh McCallen Mar 12, 2022

Show notes

Josh McCallen is the CEO of Accountable Equity, the owner of the Renault Winery and a new property located on Kent Island, a few minutes from Annapolis Maryland. Josh and his team specialize in renovating resort properties and transforming them. His track record includes beach front resorts, hotels, and most recently, properties that cater to weddings and special events. To learn more visit accountableequity.com.

AMA - Flight of Capital? Mar 11, 2022

Show notes

Today’s question comes from Vishal in Canada.

Can we touch on the flight of capital to US from Canada of wealthy families? If not, would you mind letting us know of what you think is happening and is it real or too far-fetched a possibility?

Are you worried that we may come to a point where investments and wealthy family offices shy away from Canada? Your thoughts are always enlightening and call for some thinking on our part, so let us know in your views in a podcast episode.

Vishal, this is a great question. The article in the Financial Post speaks about Having assets in safe jurisdictions outside your country of residence is part of the solution for long-lasting wealth. If you are a student of history, governments have a history of confiscating wealth. I don’t see this as a Canada US issue at all. From that perspective, I disagree with the article. I see the problem as more general.

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Host: Victor Menasce

email: podcast@victorjm.com

Amazon's Experiment Mar 10, 2022

Show notes

On today’s show we’re talking about using data to drive business decisions. Perhaps the best company in the world for using data driven decision making is Amazon.

But what do you do when the data exists? You’re hoping to try something new in the market that hasn’t been done before, or if it has been done, you don’t have access to the data because it’s proprietary?

Well, it would make sense to run an experiment on a small scale to collect the data and then use that data to plot their next move. Amazon announced the closure of numerous recently opened stores. Does this mean that their recent foray into physical retail was a failure? Or were they simply running a data gathering experiment?

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Host: Victor Menasce

email: info@victorjm.com

AMA - Wellness Retreat Mar 09, 2022

Show notes

On todays show we’re answering a listener question that is a very common question. On today’s show rather than answering the question directly, this is the synopsis of a conversation that I had with this developer. I’m often approached by people who own land they would like to develop, or by those who want to operate a highly specialized event space for hosting wellness retreats.

This listener is looking at developing a large acreage North of Palm Desert California. This is the place that has become famous for the massive Coachella music festival that in recent years has attracted close to 250,000 people for those few days a year.

The developer I spoke with this past weekend desires to develop a wellness retreat on the acreage. The proposed project would consist of high quality amenities and the short term rentals would be made from factory built structures and assembled onsite. Part of the concept is to have short term rentals on the property. Short term rentals are typically not branded properties. This means that you are going to likely rely upon a platform like VRBO or AirBnB to market your property on a nightly basis. As the name implies, this area is a desert. The average rainfall in Palm Desert is about 6” of rainfall per year. This can range from a low of 3” per year to 10” of rainfall per year in a record year. All of the moisture from the pacific gets deposited in the mountains before reaching the far side of the mountains, which is why we have a desert on the inland side of the mountains .

When I am presented with any concept for a new project, I always ask the same questions. It doesn’t matter whether the project is located in the core of a high demand high density city, or in a rural location. All real estate has to follow the laws of supply and demand. There are examples of properties that have been developed in remote locations that have been successful. But there are even more examples of those that have failed. I’m simply not a believer in taking those types of speculative risks. I want to see demonstrable demand. That means examples of comparable properties.

The problem with property in this location is the lack of municipal services. Specifically we’re talking about water and sewer. The lack of services is probably enough to kill any opportunity of developing anything of substance in this location. The area doesn’t get enough annual rainfall to develop a sustainable reliance on an underground aquifer. In recent years, the sustainability calculations for using groundwater have become much more conservative. Calculations that were commonplace 30-40 years ago have been shows to deplete the water table and many locations have run dry.

AMA - Bridge Financing A Renovation Mar 08, 2022

Show notes

Today’s question comes from Adam. I’m looking to reposition a four unit apartment building. The construction budget is $60,000 and we have a quote from a contractor. Construction material and labor prices seem to be changing regularly. The building is currently vacant and the longer I wait, the larger the negative cashflow will eat into the viability of the project. The property is a C-Class property and I’m trying to figure out how to finance the construction with a bridge loan of some kind. The property has an existing mortgage on it, and the after repair value should be high enough to support the increased loan amount.

The building is 110 years old and we will be replacing kitchens, bathrooms, and a total of 60 windows. We will be redoing the electrical panels, but re-using the existing aluminum wiring.

I’m concerned about a hard money lender wanting to charge too much for being in second lien position, and the bank financing has several years left on the loan with a pre-payment penalty which I don’t want to pay. The pre-payment penalty would increase the cost of the project and impact its viability. How would you suggest that I finance this project?

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Host: Victor Menasce

email: podcast@victorjm.com

Derivative Markets Mar 07, 2022

Show notes

On today’s show we’re taking a look at markets that operate purely like their functioning primary markets, and comparing them with the secondary markets. Primary markets are essentially what it sounds like. If you want to buy tomatoes, you go to the farmer’s market and you buy tomatoes for dinner, and the price for tomatoes is the price you pay. This is a simple primary market.

Many markets operate this way, including real estate. There is a primary market, and that’s all.

But when we are dealing with commodities that are used in the supply and manufacture of other derivative products, there are often secondary paper markets that can often be larger in dollar volume than the primary market.

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Host: Victor Menasce

email: podcast@victorjm.com

Special Guest Adam Hooper Mar 06, 2022

Show notes

Addam Hooper is the CEO and founder of RealCrowd.com. On today's show we're talking about multiple product offers being managed before you have a failure of complexity.

To connect with Adam, reach out at info@realcrowd.com or visit realcrowd.com

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Host: Victor Menasce

email: podcast@victorjm.com

Ryan Webster Mar 05, 2022

Show notes

Ryan Webster is based in Iowa, but invests in several stable markets of the South East. You can connect with Ryan at EquityYieldGroup.com

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Podcast: Victor Menasce

email: info@victorjm.com

Pragmatism Over Purity Mar 04, 2022

Show notes

On today’s show we’re talking about pragmatism.

It’s easy as real estate investors to be idealistic and come up with solutions that are innovative and best in class. On today’s show we’re talking about a number of examples where complexity, or cost often force a simpler solution.

For our first example, we are talking about a commercial property that will house a restaurant. In commercial applications, we know that garbage containers that are recessed into the ground have several advantages. #1, they are barely visible at the surface. #2, they control smells much better. #3, can hold more than an above ground solution. Today we learned that if we need to dig a hole to semi-submerge these trash bins, we will need an environmental assessment, and an archeologist to oversee the excavation. But if we use surface containers and a wooden fence around it, we don’t require any such approvals. Since trash handling is not truly a first order value added component to the commercial product, the added bureaucracy is preventing the better solution from being implemented.

In our second example, we’re talking about a design that was completed with input from the client, but with no input from someone who understands cost effective construction. We had to spend a few hours value engineering features out of a property that did not need to be introduced.

These are the types of tradeoffs we are examining on a daily basis. We’re not a general contractor. We hire general contractors. But unless you are willing to immerse yourself in the decisions that are being made, you will become the victim of decisions that are made for you. Sometimes those decisions will get you a finished product, but at a high cost and often with high complexity.

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