The Real Estate Espresso Podcast

Latest Episodes:

The Return to Live In-Person Events Nov 23, 2021

Show notes

On today’s show we’re talking about how the pandemic is affecting business development. Business development relies heavily on personal interaction. Markets don’t buy, only people buy. Relationship building is a key component of business development in any industry. That’s particularly true in the world of real estate investing.

We recently conducted a survey of approximately 400 members of our local Ottawa Real Estate Investors Organization. The basic question was whether people feel ready to return to live in person events?

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Host: Victor Menasce

email: podcast@victorjm.com

When To Fire A Consultant Nov 22, 2021

Show notes

On today’s show we are talking about when to fire a consultant.

You hire consultants for specific expertise in a narrow domain. These folks are supposed to be subject matter experts in their area. There can be upwards of twenty of these consultants involved in a major project.

The consultants we most often associate with a project include

Architectural
Environmental
Geotechnical
Civil
Wind
Noise
Mechanical
Structural
Elevator
Electrical
Planning consultant
Window washing design
Building envelope
Mature tree consultant
Appraiser
Ground water or riparian rights
Heritage
Traffic studies
Landscaping design
Energy efficiency
3D rendering artists

All of these people are subject matter experts and could have specific deliverables to your project.

That’s a lot of people to manage who ultimately don’t work for you directly. These experts are working simultaneously for multiple clients, on multiple projects. Some of their other clients have their own schedule deadlines and there is no guarantee that you will come out on top of a priority decision is made. Usually the hiring process for these consultants is based on referrals. The architect can often be a primary source of introductions to these consultants. If there is a pre existing working relationship, that can often be a strong endorsement of a particular consultant.

When there are so many specialized disciplines, the odds are that you will eventually encounter someone you will need to fire. How and when to make that decision is critical in a project.

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Host: Victor Menasce

email: podcast@victorjm.com

Special Guest Ken Gee Nov 21, 2021

Show notes

Ken Gee is based in Cleveland Ohio. But his business today is focused in Northern and Central Florida where he buys and repositions apartments. Over the past several years, he has amassed a portfolio of approximately 2,000 units. On today's show we're talking about strategies that work in today's environment.

You can connect with Ken at kripartners.com. Download a copy of his free e-book on value add investing at kripartners.com/ebook

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host: Victor Menasce

email: podcast@victorjm.com

George Ross On Rent Growth Prediction Nov 20, 2021

Show notes

On today's show, I'm speaking with George about the impact of inflation on predicting the financial performance of a multi-family apartment project over a multi-year window. This has become more difficult since we've seen inflation jump to above 6% in the past few months.

The 1970's Inflation Narrative Nov 19, 2021

Show notes

On today’s show we’re taking a deep look at the 1970’s inflation narrative and seeing if there are any history lessons for us.

This past weekend, Treasury Secretary and former Federal Reserve Chair Janet Yellen was on PBS Face The Nation.

The discussion centered around inflation.

Back in the 1970’s the politicians blamed the consumer for inflation. Politicians blamed union leaders for demanding higher pay. The White House blamed the middle eastern nations for holding back oil. In fact, the OPEC nations didn’t want to be paid in Monopoly Money. They were used to being paid in a gold backed currency. They trusted the US dollar. But when Nixon took the dollar off the gold standard and started the slippery slope of printing more money than could be accounted for, the OPEC nations quite rightly concluded that they were being cheated by being paid in a devaluing currency. We now know that the inflation was not the fault of OPEC, or the unions, or greedy businesses. It was the result of grave mistakes that were made in central bank monetary policy. That was the cause then, and it’s exactly the same cause today.

Managing Your Forward Inflation Forecast Nov 18, 2021

Show notes

On today’s show we’re talking about rent growth. There are rising rents in many submarkets. For those who own their own home, they’re probably glad that their housing costs are fixed.

We have seen near record setting price increases for single family homes in many major markets across the US. The fact is, you can’t have price increases in the housing market and then experience no effect in the rental market. The two markets are not strongly linked together, but they are not completely isolated from each other either. If the cost of owning a new single family home goes up, you will also eventually see those costs reflected in the rents.

This dynamic environment has made it difficult for apartment investors and developers to forecast their business plans. If rents increased 20% in 2021, what should they forecast in 2022? Historically, widely accepted inflation metrics used a 2% escalation for rents over the past decade. What should you put in your numbers for 2022? Would you use the 6.1% CPI that we have experienced so far in 2021? Should you use zero? Should you use 2%? You can make an argument for any of those choices. But they will all be incorrect.

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Host: Victor Menasce

email: podcast@victorjm.com

AMA - Natural Gas Price Fluctuations Nov 17, 2021

Show notes

Today's question comes from Vishal in Ottawa. He writes:

"As you know I am long time listener and fan of your podcast. Earlier in previous episodes you have mentioned of the growing concern of price increase of natural gas due to various changing conditions. How do you perceive this in light of the information contained in this article in Forbes Magazine entitled Could U.S. Natural Gas Prices Crash?

Published on November 9. Do you still believe we will see the price increase?"

Vish, this is a great question.

My discussion of natural gas prices was within a context. The author of the article is taking a slightly different US centric view of supply and demand. Everything the author says is accurate from a US centric perspective. Prices will fluctuate in the short term based on supply and demand, and the size of the local inventories. As I’ve said, the local price for natural gas is a function of transportation. Natural gas is incredibly inconvenient to transport. Approximately 10% of the US production is being exported in LNG form through sea ports along the Gulf Coast, principally Corpus Cristy in Texas and Lake Charles, Louisiana.

Right now, the price differential between gas on the beach in Louisiana, versus gas on a ship destined for Spain or China is at an all-time high. We’re paying about $5.50 per mmbtu in the US for natural gas, and Spain is paying over $30 per mmbtu. The cost to transport the gas from Louisiana to Spain is about $1.50. So the profit margins for those in the LNG business are astronomical.

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Host: Victor Menasce

email: podcast@victorjm.com

Abuses of Tenant Protections Nov 16, 2021

Show notes

Today's show is a look at some egregious abuses of the protections being afforded to residential occupants. All of the examples come from the State of New York. In the worst case, a homeowner who defaulted on his loan in 1998 and lost ownership of his home through the foreclosure process in 2000, was finally evicted 23 years later.

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Host: Victor Menasce

email: podcast@victorjm.com

Why Ships Are Stuck at Anchor Nov 15, 2021

Show notes

On today’s show we’re taking a closer look at the supply chain disruptions that are making headlines. The situation at the Port of Los Angeles has gotten worse, not better. There are currently approximately 110 ships waiting at anchor for a berth to unload their cargoes.

There are other sea ports in the US. Why don’t these ships divert to other locations like Houston Texas, Tampa Florida, Savannah Georgia or Newark New Jersey?

The simple answer is money.

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Host: Victor Menasce

email: podcast@victorjm.com

Special Guest Kevin Shtofman Nov 14, 2021

Show notes

Kevin Shtofman is based in Dallas Texas. On today's show we're talking about the backlash against student housing as an asset class and how that backlash may be appropriate in some cases and an over-reaction in others.

You can connect with Kevin on LinkedIn.

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Host: Victor Menasce

email: podcast@victorjm.com

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