The Real Estate Espresso Podcast

Today’s question comes from Josh at Virginia Commonwealth University I’m appraising a 504-bed student apartment complex in a tertiary college market in Virginia. The property is unique, and recent comparable sales and reliable market data are scarce. I enjoyed your interview with Will Matheson a couple of weeks ago. I emailed him to discuss my property and get his thoughts on the changing market dynamics. Do you have anyone else in your network who invests in student housing who would talk to me? I appreciate your help. My students at VCU and I continue to benefit from your content. ---------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re going to ask a number of “What if” questions. I believe it’s important to stop and think strategically about what is happening in the business world that can materially affect your own business. But before you can think strategically, you need to ask a bunch of “what if” questions.  Over the past decade we have been accustomed to living in a world that has been largely moderate in response. We’ve had a decade of moderation, of broad economic prosperity, of localized problems.  We are so accustomed to calm predictable linear situations, that we can’t wait for things to return to normal.  But what if there is not going to be a return to normal? What if we will experience crisis after crisis after crisis?  --------------- Host: Victor Menasce email: podcast@victorjm.com

This past week, Marcus & Millichap published a new report on BORDER-PROXIMATE INDUSTRIAL  As we talked about a few weeks ago on the podcast, there is growing demand for local manufacturing, or manufacturing located within the continent of the North America. Global tensions with China and Russia have disrupted trade relationships that were once considered stable.  A group of domestic and international companies are planning, or in the process of, nearshoring operations to North America. This reorganization of global supply chains is increasing cross-border trading, a dynamic that will serve as a tailwind for long-term demand for domestic industrial space. Trading with Mexico and Canada was up 12 percent and 9 percent year-over-year, respectively, in January, while trading with China was down 13 percent. ------------ Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are looking at human behaviour to try and understand what is happening in the housing market.  It’s normal to associate a falling market with falling transactions, rising inventory, and falling prices. According to the laws of supply and demand, when supply increases and demand falls you will see all three of these classic effects, falling transactions, rising inventory of homes for sale and falling prices But a funny thing has happened on the way to the market.  In numerous markets all across North America we are seeing falling inventory. We saw inventory peak in October and November in many markets. Inventory in Nashville fell by 30% since the fall. Inventory has fallen by 20% in Charlotte NC.  There are plenty of new listings. But they are not sitting on the market. Inventory is still falling.  Is it possible that we are witnessing a seasonal effect? Does inventory fall during the first quarter in most years?  Well no, in fact, we usually see the opposite. Inventory often grows during the winter months.  Homes that are listing are not sitting on the market for months and months. They are moving.  So why is inventory falling? Does it mean that fewer people are moving?  There seems to be plenty of jobs activity. People are still moving for work. Layoffs are up, but the jobs market seems to be absorbing laid off workers at a reasonable rate.  I don’t have comprehensive data to back this up. I have a few localized examples. But it’s enough to form a thesis. The thesis is that people are not selling their homes unless they absolutely have to.   Many people locked in a good interest rate over the past five years. If they sell their home and buy a new one, they will rate lock at a new higher interest rate. They’re better off keeping their home and renting it out.  ---------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about a spring-time ritual. The operation of the sump pump is linked to spring showers and the spring thaw.  All that water being held in the frozen ground or on the surface lets go all at once it seems and the water table rises quickly. Add a few spring rain storms and all of a sudden you have inches of water in your basement. If you have tenants in a basement apartment, you can be facing the unpleasant task of relocating your tenants into a hotel, emergency repairs, mold remediation, possible insurance claims assuming you even have flood insurance Sump pumps require regular testing. They can go for months without turning on. Seals may get dry and brittle and the pump could fail shortly after.  But the real test comes when there are multiple failures.  ------------- Host: Victor Menasce email: podcast@victorjm.com

Franco Perez is based in Silicon Valley where he invests in mobile home parks. On today's show we are talking about the mobile home park strategies that Franco prefers in today's market conditions. To connect with Franco and to learn more visit franco.tv or check out his YouTube channel. ---------------- Host: Victor Menasce email: podcast@victorjm.com

Damion Lupo hails all the way from Birmingham Alabama where he specializes in retirement accounts. But not just any retirement accounts. He specializes in retirement accounts that maintain checkbook control with the beneficiary. On today's show we are talking about the merits of such an approach. To connect with Damion and to learn more, visit eqrp.com ------------- Host: Victor Menasce email: podcast@victorjm.com

Michael asks: I listened to your podcast about bridge loan default/buying opportunities that would hit the market.  Was this message mostly for big institutional investors or for anyone investing in real estate?  I was wondering how to find these opportunities to be ready for them when they are available. Can you give suggestions on the number one source of these deals?  Are they brokers?  With bankers?  or REITs?  I'm not really sure where to look. ---------------- Host: Victor Menasce email: podcast@victorjm.com

Today's show was delayed by a widespread power and internet outage in Ottawa as a result of an ice storm. There has been a lot written in recent weeks about the US dollar and the potential loss of the reserve currency status. Rumors of the BRICS nations forming their own crypto currency between their trading block has been making news headlines. I’ve actually held off in publishing a podcast on this topic. Merely repeating what you can read in the WSJ and on Bloomberg would not be adding value. I would need to provide an angle that would bring something new to the dialog. If the US dollar were to lose confidence on a global basis, it would be devastating to the US economy. The result would be a drop in demand for US Treasuries. But since the US government is the largest debtor of all, they will need buyers for those treasuries. In order to attract buyers, they will need to raise the interest rate relative to other offerings in the market. For the last three decades of globalization, the US has exported its inflation. The manufacturer who sells Christmas ornaments to Walmart collects US dollars from Walmart and then takes those dollars to the bank to exchange into Yuan. The bank then turns those dollars to the Chinese central bank who have an excess of dollars. Rather than sit on those dollars, the Chinese central bank used those dollars to purchase other commodities like oil which they need to fuel their economy, or they use the dollars to buy US Treasuries. In so doing, the US successfully exported it’s inflation. ---------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re going to speak about a question that I received during a live zoom meeting. The question was about whether I thought it was a good idea to raise capital in the US for large scale industrial projects in India. The thesis was that there is a large and growing logistics opportunity in India and that it could be a great opportunity for US investors. While the specifics of the question relate to industrial projects in India, you can substitute your favorite project. It would be beach front homes in Costa Rica, or hotels in Rio de Janeiro. My answer would be largely the same. The Industrial land in India thesis makes sense. But that doesn’t mean that raising money in the US will be easy. In fact, I would contend that it will be quite the opposite. ----------- Host: Victor Menasce email: podcast@victorjm.com