The Real Estate Espresso Podcast

Latest Episodes:

Investor Reviews with Pat Zingarella Jan 13, 2024

Show notes

Pasquale (Pat) Zingarella is based in Clinton Connecticut where he is a principal at Invest Clearly. The company specializes in providing verified reviews of real estate sponsors from verified investors. To connect and to learn more visit https://goinvestclearly.com/

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Host: Victor Menasce

email: podcast@victorjm.com

The Approval Filibuster Jan 12, 2024

Show notes

On today’s show we are talking about anti-development movements that are becoming increasingly organized in communities across North America.

The objection of these groups seems centred around the additional noise, traffic, and congestion that can result from additional people moving into an area.

Some have become so militant that they use all legal means available to object to development applications and even building permits.

That’s right, in some jurisdictions it is possible to object to a project that is fully compliant with zoning at the time of building permit.

We were made aware of one such case this past week where community groups are monitoring the submittal of building applications and then launching an appeal of the building permit on the last day that an appeal is legally permissible under the statute. This is a tactic that is designed to inflict maximum pain on a property owner who has spent 100% of the funds required to invest in the pre-construction phase. The goal of the appeal is not necessarily to cause the project to be disqualified on the merits of the actual development proposal. The goal is to use the legal process to frustrate the developer and inflict financial pain on the developer with the hopes that they will voluntarily abandon the project as a result of the delays.

The hypocrisy of these objections should be clear. The very people who enjoy living currently in a community, send their kids to school, shop at the grocery store, exercise at the local gym and ride their bike in the park are only able to do so as a result of many developers taking considerable financial risk to bring these amenities to the community.

How Does The Banking System Work? Jan 11, 2024

Show notes

You might have read headlines in the past couple of days that the Federal Reserve is planning to wind down its bank term funding program when it expires on March 11, literally two months away. Michael Barr is the Fed’s vice chairman for bank supervision and he signalled that the program would not be extended.

The purpose of the bank term funding program was to provide emergency liquidity to banks that needed cash by pledging collateral with the Fed at face value for up to a year. This program was implemented in the wake of the failure of silicon valley bank as a way for banks that were experiencing liquidity issues to access cash without having to sell assets that are in the “held to maturity” category. The Fed would hold these as collateral on the balance sheet at their face value.

So why is the use of this project growing rapidly at a time when the program is about to expire?

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Host: Victor Menasce

email: podcast@victorjm.com

Will Wall Street Buy Your House? Jan 10, 2024

Show notes

On today’s show we are talking about the recently introduced piece of legislation in the US Congress dated December 5. There is a corresponding bill that was introduced in the Senate by Democratic members of both the house and the senate.

The Congressional Bill is called the “End Hedge Fund Control of American Homes Act”.

The second bill is a Senate Bill called the American Neighborhoods Protection act.

The Senate version of the bill would limit ownership to 75 single family homes. Those owners who continue to hold these properties shall be subject to an annual tax of $10,000 per unit for each year that they hold the property. The taxes collected by the IRS shall go into a newly established fund that is designed to help create and subsidize affordable housing.

Single family homes in some markets are experiencing a large number of transactions being purchased by large corporate buyers. But still they represent a tiny fraction of the transactions in the market.

The stories being reported widely across the internet of large corporate buys purchasing a dominant share of homes in the market is simply false. Are big Wall Street investors really buying 44% of homes this year? The answer is no — not even close.

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Host: Victor Menasce

email: podcast@victorjm.com

Growth In Times Of Trouble Jan 09, 2024

Show notes

On today’s show we are talking about how to size your business into the future.

Some people think that profitability in a business is something that happens. Profit is what is left over after you subtract expenses from your income. Yes, that is the math for calculating what your profit will be.

But that doesn’t mean you don’t have control over your revenue or your expenses.

What should you do when you are experiencing a downturn in business?

There are three ways to grow your business.

You can acquire more customers
You can raise your prices
You can sell additional products to your existing customers

But then there is another tactic. Some businesses lower their prices in the hopes of stimulating more sales.

There is one more way to grow, and that is by growing inorganically. That could involve the purchase of another company, a production, a division, even a customer list. Growth through acquisition is a legitimate way to add top line revenue, and even bottom line contribution. It represents an opportunity for operational savings. You might be able to rationalize and reduce core admin functions like HR. Finance, maybe some marketing overhead and so on.

It often seems counterintuitive. In moments of stress, the natural instinct is to tap the brakes. But you know that if your car starts to skid, applying the brakes will cause you to spin out. Sometimes the proper corrective action is to hit the gas in order to get the car moving along the right trajectory.

So it is with a business.

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Host: Victor Menasce

Property Tax Surprises Jan 08, 2024

Show notes

On today’s show we are talking about property taxes.

We have experienced dramatic increases in costs for owners of multi family apartment properties over the past couple of years. The biggest contributors have been the cost of capital as a result of rising interest rates and the rising cost of insurance.

In some areas of the southern United States, insurance costs are up by 500%-700%. Insurance increases of 30%-50% are routinely being reported by property owners that I speak with.

The cost of providing government services naturally has increased as well. Local governments derive the majority of their revenue from property taxes and to a lesser degree from development impact fees.

From time to time the jurisdictions can also alter the formula they use to determine property value. For example in the wake of the 2008 crisis, property values fell widely across many parts of the United States. The net result was that the assessed value for tax purposes also fell. Many property owners appealed their tax assessments and were successful in having their property taxes reduced significantly.

Of course the cities in which the values fell did not have a corresponding fall in operating expenses. They still needed to pick up the trash, cut the grass, pay the school teachers, provide police and fire service and so on.

In response, some cities changed the formula by which the property values were assessed.

The housing market surged during the pandemic sending the value of the typical U.S. home 37% higher than in February 2020 prior to the crisis.

Cities and counties typically reassess property values every year or two, although some regions have gaps of several years between reassessments. That means homeowners are just now seeing the real estate boom reflected in their tax bills.

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Host: Victor Menasce

email: podcast@victorjm.com

What's In Store For 24 with Ken Brown Jan 07, 2024

Show notes

Ken Brown is based in Washington DC where he is a principal at Lion Chase Holdings. On today's show we are looking at the outlook for the coming year. To connect with Ken visit https://lionchase.com

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Host: Victor Menasce

email: podcast@victorjm.com

Project Execution with Scott Lewis Jan 07, 2024

Show notes

Scott Lewis is based in Golden Colorado where he is a principal with the Spartan Investment Group. Our team at Y Street Capital is also work with the Spartan Group on a couple of projects including the construction of a new storage project in Grand Junction Colorado. On today's show we are talking about project execution and scaling the business. To connect with Scott, visit spartan-investors.com

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Host: Victor Menasce

email: podcast@victorjm.com

Why Is Build To Rent Popular Right Now? Jan 05, 2024

Show notes

On today’s show we are taking a look at the build to rent trend that’s growing across many parts of the United States. This is where you build an entire community of detached single family homes or in some cases townhomes.

In fact there is a continuum of product offerings that are possible to bridge the gap between the density and cost of detached homes versus a multi story apartment complex.

The traditional thinking is that the most lucrative investment is always the highest density property. The more units you can put onto a piece of land, the more you can get in terms of income and value.

On today’s show we are going to look at the cost of construction associated with these different building styles to see how that might influence the choice of one over another.

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Host: Victor Menasce

email: podcast@victorjm.com

Many Types of Trusts Jan 05, 2024

Show notes

On today’s show we are talking about different types of trusts. Now before we begin, let me state categorically that I’m not a lawyer and I’m not an accountant and I’m not here to provide any form of tax advice or legal advice.

The purpose of today’s show is merely to discuss different types of trusts so that you are armed with enough information to conduct additional research of your own, and then in turn seek advice from your own advisors, licensed to practice in the jurisdiction where you reside.

So here we go.

A trust is a legal relationship that entails the separation of legal ownership and beneficial interest. It is created when property is transferred by a settlor, who owns it, to a trustee, who holds legal title to it for the benefit of another person or persons, known as the beneficiaries.

Most trusts have a trustee whose primary role is to enact decisions on behalf of the trust’s beneficiaries. There are many types of trusts and we’re going to briefly define a few of those today.