The Real Estate Espresso Podcast

Latest Episodes:

Brand Affinity in Investments Mar 13, 2024

Show notes

On today’s show we are talking about the power of a platform. Amazon is one of the most widely used sites on the internet. In fact, they also have 1.5M employees. We will come back to that later.

Jeff Bezos and Marc Benioff recently entered the real estate game in a big way.

Marc Benioff is well known for being a founder at salesforce.com and he has a personal net worth of about 10.5B. Together, Bezos and Benioff seeded Arrived Investments with funding.

Arrived invests in single family homes and in short term vacation rentals.

The company has avoided some of the hottest primary markets like Atlanta, Nashville, Austin. Instead they have focused on up and coming markets like Augusta Georgia, Savannah Georgia and Knoxville Tennessee.

To date, they count over 551,000 registered investors totalling $128M in real estate and so far have paid out $4.5M in dividends to investors. They have raised $135M and have purchased 368 properties and counting. Clearly they’ve designed an organization with the intention of scaling much larger. Their website shows a pretty complete team with about 20 people and the role descriptions I would expect for a company of this type.

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Host: Victor Menasce

email: podcast@victorjm.com

Optimizing Energy Code Compliance Mar 12, 2024

Show notes

On today’s show we are looking at the most cost effective ways to value engineer a new build and still comply with the increasingly stringent energy codes that are permeating the building code across North America.

These building codes are local. That is to say, they can vary from one place to the next.

When it comes to energy codes, there are two approaches that are used.

The prescriptive method
Comprehensive energy model

Under the prescriptive method, the building department says that if you use this type of construction, with this specific insulation in the wall and attic cavity, and continuous insulation on the outside, and heat pumps having these specs, and these types of windows having no more than a prescribed percentage of window area, then you will comply with the code.

It should come as no surprise that this kind of paint by numbers approach is going to give you an energy efficient building. But it’s also going to cost you a lot more than it needs to.

The second method is using a comprehensive energy model.

This is where the energy consulting engineer will create a thermal model for your building based on your local climate. It will take into account the temperature averages throughout the year and determine how much heating is going to be required in the winter and how much cooling is going to be required in the summer.

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Host: Victor Menasce

email: podcast@victorjm.com

Why Storage Is So Sticky Mar 11, 2024

Show notes

On today’s show we are taking a look at pricing practices in the storage industry. Storage is a product that is fairly sticky.

That is to say, moving a lot of personal belongings into a storage locker is time intensive. It often involves renting a truck and taking a Saturday afternoon to make a few trips. The decision to rent a storage unit is often event driven. The storage company might even have a truck that they will rent you for “Free” to move your belongings on the way in.

But renting a truck is a hassle. It’s more expensive than renting a car. Even U-Haul has an inexpensive daily rate, but a high mileage rate. So while you might rent the truck for $29, you’re looking at a few hundred dollars when you take all of the extras into account.

Moving belongings has friction. The more friction, the more people will delay moving their belongings out of the storage.

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Host: Victor Menasce

email: podcast@victorjm.com

Spec Home Design with Matias Daroch Mar 10, 2024

Show notes

Matias Daroch is based in Miami Florida where he specializes in both design and development of luxury spec homes. On today's show we are talking about some of the design considerations in that part of the world. To learn more and to connect with Matias, visit http://mikarchitecture.com

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Host: Victor Menasce

email: podcast@victorjm.com

Deep Due Diligence with Marc Halpern Mar 09, 2024

Show notes

Marc is a very "active" passive investor in the sense that he performs deep due diligence on potential investments. But deep due diligence is often beyond the capacity of a single investor. On today's show we are talking about a unique approach to due diligence. To connect with Marc, visit PartTimeInvestors.com or email him directly at Marc@PartTimeInvestors.com

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Host: Victor Menasce

email: podcast@victorjm.com

AMA - Different types of RV Parks Mar 08, 2024

Show notes

Today's question comes from Rob who asks:

What is the economic difference, and the difference in investment thesis, between the different types of RV parks?

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Host: Victor Menasce

email: podcast@victorjm.com

National Real Estate Inventory Is Rising Mar 07, 2024

Show notes

The statistics are clear. Inventory is rising. But what does it mean? On today's show we are looking past the numbers alone.

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Host: Victor Menasce

email: podcast@victorjm.com

Don't Just Read The Headline Mar 06, 2024

Show notes

On today’s show we are talking about the danger of reading headlines and making decisions based on those headlines.

A few months ago I reported on the podcast about the Corporate Transparency Act. This is that new regulation that requires millions of companies across the USA to disclose additional beneficial ownership information to the government.

In a new ruling from last week, the Corporate Transparency Act was ruled unconstitutional. But the ruling was very narrow and only applies to the plaintiff who brought the case, and the roughly 60,000 members of the National Small Business Association.

It would be a mistake to think you don't need to comply with the Act, just because a narrow decision deemed the Act to be unconstitutional.

I'm not here to offer any form of legal advice. You need to ask good questions of your own legal counsel.

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Host: Victor Menasce

email: podcast@victorjm.com

Do Exchange Traded Funds Distort Value? Mar 05, 2024

Show notes

A number of high profile commentators have demonstrated that very few professionally managed equity funds have outperformed the market average. Fund managers are active investors. They analyze each company. The interview the CFO and the management team. They perform due diligence on the company and determine whether shares in that company fit within the fund mandate and they then make an investment decision for the fund’s investors. This is what is considered the active component of the stock market.

The second form of investing is what is called passive investing. This is where you put funds into an index fund and there is absolutely no intelligence being applied to the purchase. The index is computed according to a formula and if there are 500 companies in the index as in the case of the S&P 500, you’re buying a tiny sliver of 500 companies simply by investing in the index fund.

There’s a lot of evidence that passive index funds have outperformed the active over the longer term. Now passive funds have not been around that long, but over the history passive funds have outperformed active funds.

So if that’s true, then why take the risk, pay the premium fees associated with a stock mutual fund, and the still end up with inferior performance.

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Host: Victor Menasce

email: podcast@victorjm.com

Silver Lining To A Slower Market Mar 04, 2024

Show notes

There is no doubt that the lock in effect has reduced the amount of mobility in most forms of real estate. The higher interest rate environment has dramatically reduced the number of people who are willing to give up their low interest rate mortgage and move to another property where their cost of borrowing is going to be much higher.

Some have chosen to move and put the house that they own on the rental market and in turn to rent at their new location. In these cases people are often moving for work and the decision to move is entirely based on financial considerations.

So we know that fewer people are selling. But what about in the rental market? Is absorption and mobility up or down in the past year?

Well all of the data that I have seen suggests that rental moves are down as well in most markets.

For landlords of existing stabilized properties, the lower unit turnover can translate into higher profit margins. While rents are not increasing as they did in 2021 and 2022 and to a lesser extent in 2023, the lower turnover means lower turnover costs.

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Host: Victor Menasce

email: podcast@victorjm.com

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