The Real Estate Espresso Podcast

Latest Episodes:

A Cautionary Tale Dec 23, 2021

Show notes

On today’s show, we are talking about buying in a fringe area. Today’s show is cautionary tale. As you know, I’m a proponent of the buy on the line, move the line strategy. That line exists in nearly every city in North America. On one side of the line is a hot neighborhood. There are expensive properties, desirable amenities like coffee shops and art galleries. On the other side of that line, you’re in the hood. You’re in an area where people on social assistance reside. The property values between these two areas can vary dramatically, even though they’re only a short distance apart.

This strategy is based on the notion that you can redevelop just on the wrong side of the line. When you do, now the line is on the other side of your property. Which means you can go do it again and again and again. You can literally move the line. But for a line to move, the line needs to be arbitrary. If the line is a school district, or a municipal boundary or a railway line, that boundary is going to be a lot more difficult to move.

If you go too deep into the hood, then you will probably fail. You won’t get people to bridge the gap to the hot neighbourhood.

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Host: Victor Menasce

email: podcast@victorjm.com

When People Don't Want To Work Dec 22, 2021

Show notes

On today’s show we’re talking about how the current labor shortage is affecting the world of employment, and therefore by extension the world of real estate.

We’re still in the middle of a pandemic. But despite the historically low unemployment rate, we have a labor participation rate of 61,8% that is is down sharply from pre-pandemic levels.

If you go back to the 1960’s we had labor participation rates below 60%. But at that time, many women were not in the workforce and stayed at home as homemakers. Labor participation peaked around 2000 – 2001 at 67%. Participation has fallen over the past 20 years to about 63.5%, and before plunging below 60% in the height of the pandemic.

The people who are no longer in the workforce still need income to live, and a place to call home.

You’ve seen the help wanted signs all over. You see the recruiting signs at big box stores, restaurants, grocery stores, retail shops. The signs are everywhere.

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Host: Victor Menasce

email: podcast@victorjm.com

Why Are Lumber Prices Rising Again? Dec 21, 2021

Show notes

On today’s show we’re talking about another spike in lumber prices that will affect housing starts and renovations all over North America.

Anyone who has built anything in the past year has suffered the sticker shock of high lumber prices. Prices back in May of 2021 peaked at over $1,700 per thousand board foot. That measurement is the commodity price for softwood lumber on the futures exchange.

Much of that price increase was driven by the pandemic and the labour shortages caused by the pandemic. Sawmill capacity was reduced during the pandemic which contributed to the shortage in the Spring of 2021. Capacity utilization of the sawmills peaked at 90% in the US in May of this year and at 88% in Canada. As demand and prices dropped in the summer, sawmill utilization fell to 80% in the US and 70% in Canada as builders used up their inventories of materials.

About 30% of the softwood lumber used in US construction comes from Canada. Almost half of that amount or 14% of the US total supply comes from British Columbia.

The month of November saw torrential rains in the interior of British Columbia. These storms exceeded previous rainfall records and created severe local flooding. That flooding washed out roads and disrupted transportation across the entire province of British Columbia.

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Host: Victor Menasce

email: podcast@victorjm.com

More Supply Chain Disruptions Dec 20, 2021

Show notes

On today's show we're taking a close look at why the supply chain disruptions are not being solved.

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Host: Victor Menasce

email: podcast@victorjm.com

George Ross on Even Higher Inflation Dec 19, 2021

Show notes

George is a repeat guest on the show. He's spending time in Delray Beach to get some warm weather instead of being hunkered down in NYC. On today's show we're talking about how to underwrite in the current environment.

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Host: Victor Menasce

email: podcast@victorjm.com

Galen Hair Dec 18, 2021

Show notes

Galen Hair is based in New Orleans, Louisiana where he specializes as an insurance litigator. On today's show we're talking about how to figure out if your insurance policy is worth the paper it's written on. To connect with Galen or to learn more, visit InsuranceClaimHQ.com.

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Host: Victor Menasce

email: podcast@victorjm.com

The Market Will Set The Interest Rate Dec 17, 2021

Show notes

On today’s show we’re talking about interest rate fundamentals.

Some people come from the school that interest rates are set by central banks. While central banks play a leadership role in rate setting, they don’t actually set the interest rates. Those rates are set by the open market, irrespective of what the central bank dictates. On today’s show we’re going to look at examples which will hopefully prove that and what that means for real estate investors going forward.

Senior Housing News Architectural Design Award Competition Dec 16, 2021

Show notes

When you are in the design and development world, the challenges are daily and the rewards are infrequent. Well, today was one of those days when I got to go to sleep feeling accomplished.

Yesterday, our project, The Sage Oak of Lake Charles was announced as the national winner of the 2021 Senior Housing News Architectural Design Award competition in the Memory Care category. As a developer, I’m thrilled to be part of this team effort to bring this ground breaking project to fruition.

A project like this is truly a team effort. I’m going to thank a whole bunch of folks who helped bring this project to fruition. In so doing, I’m certainly going to miss some who are worthy of mention. I’ve got to start with my partner Loe Hornbuckle who developed the expertise as an operator at a very high level. It was his brainchild to create refine the values the underpin the Sage Oak product offer. I’d like to recognize the architecture firm of Greenfield Lawson in New Orleans, the general contractor of Donahue Favret also from New Orleans, Valerie Malone and her interior design firm at Quill Design in Cambridge, our partners Pam Abide and Sharon Foreman at New Orleans Equity Partners, our supportive lender at B1 Bank, Dave Zook and the whole team at the Real Asset Investor, our expert staff under the leadership of Executive director Jeremy Fruge, and the entire staff at Sage Oak. When you walk in the door, after you take a temperature test, you can really feel the positive energy in the doors. You are the reason that we’re ahead of our occupancy projections this early into the startup cycle.

We don’t build these projects to win awards. We’re not out there playing the comparison game. We build these projects to create a great product in the market that solves a real need. Where design competitions are useful is in looking at what other leaders in the industry are doing and helping to calibrate what best in class looks like in the industry. We’re not going to stop innovating, improving, strengthening the product offering for the new buildings that are under construction in other locations. Even as winners, we see room for improvement. Most of the time, those improvements are small details, like better positioning of a shower head in a shower. But we’re thrilled to receive the honor and recognition that comes from being the winner of this year’s award.

Industrial Space Update Dec 15, 2021

Show notes

Getting products from A to B has always been an issue for anyone in business. It used to be the case that you had to buy products through a channel. In the good old days, stores like Sears, Kmart, Walmart and Bloomingdales were the channels of choice. Today, businesses all over are taking advantage of new channels. Channels that didn’t exist a few years ago are dominant.

For home furnishings, Direct Buy, and Wayfair are growing quickly. The Ottawa based company Shopify is also playing an important role in the transition from the bricks and mortar retail channel to the e-commerce economy. Shopify now hosts more than 1.2 million ecommerce stores on its platform.

While Amazon is the largest channel for e-commerce, it charges a hefty percentage for retailers who can often double their net profit margins if items a sold and shipped through their own channel.

Last week, commercial brokerage house JLL gave its updated guidance for the industrial sector for 3Q 2021. On today's show we're taking a closer look at the data.

Investors Hate Uncertainty Dec 14, 2021

Show notes

On today’s show we’re talking about uncertainty. We can all agree that not everything in life is predictable. Life is full of surprises, some of the pleasant, and some of them not.

It’s been said that a confused mind doesn’t buy. That’s particularly true in the world of investing. Investors seek clarity. Things that are too complicated, have too many variables, or have large unknowns are off the table.

Investors are a special breed. Professional investors are relying upon their money working for them. Professional investors truly attempt to quantify what their money will do.

Investors hate uncertainty. Anywhere you see uncertainty, you see falling prices. Who would buy real estate in the Ukraine right now? Who would buy real estate today and take a variable interest rate loan? Anyone with a brain knows that interest rates are heading higher, but how much higher?

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Host: Victor Menasce

email: podcast@victorjm.com

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