The Real Estate Espresso Podcast

On today’s show we are taking another look at energy markets. Many of you might know that my professional training is an electrical engineer. I understand physics, and energy in particular at a deep level. This is an area of such importance that I continue to study it deeply. When we look at the economy, there is a direct correlation between every unit of economic output that forms our gross domestic product, and an equivalent consumption of energy somewhere in the world. The food we eat is correlated directly with energy. Energy is required to manufacture fertilizer. Energy is required to transport food from production to your dinner table. Energy is required to manufacture the clothes we wear, the houses we live in, the trip to that sun destination. Virtually everything we do, eat, buy, consume and experience, has energy consumption at its core. Today, 85% of global energy production involves the burning of some kind of carbon based fuel. It could be wood, coal, oil, natural gas. 85% of our energy production is based on burning something. We clearly need to reduce this and replace it with more sustainable sources of energy production. On today’s show I’m here to tell you that this decade we will experience another global energy crisis that is unavoidable. That energy crisis will translate into higher energy costs for everyone which will have an inflationary impact. It will also directly impact everyone’s quality of life. So why is this important? We are after all real estate investors, not oil and gas investors. Well, since energy cost in a major input variable to anything we do, we need to perform sensitivity analysis on energy costs as we develop our real estate projects. You might perform a sensitivity analysis that says it will take 10 years to break even on an investment in solar panels on your house. But what if electricity prices double? Now your time to break even is five years instead of 10. Would that change your decision? Would you rather make that investment now so that you are ahead of the curve, rather than having to make a crisis decision? You can bet that those panels will be more expensive in the middle of a global energy crisis. There is a window, a small window in my opinion for you to take advantage of incentives and subsidies that will make an investment in solar infrastructure seem like a genius move. ------------ Host: Victor Menasce email: podcast@victorjm.com

You can't make this stuff up. On today's show we are taking a deeper look at the incredibly strong January jobs report that 517,000 jobs were created in the month of January in the US.  The report was at odds with the daily reports of layoffs in multiple industries across the nation. So why do we care about this? After all, we’re real estate investors. Well, the Federal Reserve is setting interest rate policy in large part to cool the jobs market so that we don’t experience a 1970’s style wage price spiral. Since interest costs are front and center for us real estate investors, the employment numbers could be a leading indicator of what the Fed might do with interest rate policy based on employment statistics. The press have a bad habit of only focusing on one of the two surveys that are conducted on a monthly basis. The household survey tells a very different story than the employment report. It’s a bit like selective truth. The employment report is not the whole truth. It’s a half truth. The other half of the truth is the household survey which continues to show falling work force participation. The narrative is that a strong jobs market will feed the narrative that central bankers will need to raise interest rates even further to combat inflation. A strong jobs market puts too much negotiating leverage in the hands of employees and that will ultimately fuel a wage price spiral. The question is, what could be behind this incredibly strong employment report? ------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are examining a legal case involving Nick Sirianni, head coach of the Philadelphia Eagles. Nick is best known for leading the team to this year’s Super Bowl. The Eagles did not win the Super Bowl in as a result of a field goal by the Chiefs in the final seconds of the game. But no matter what happens on the field, Sirianni has already made a huge impact in the world of real estate, winning a court case that could have national implications for sellers of property. This precedent setting case could affect disclosures of all types affecting the quality of a deed. ----------------- Host: Victor Menasce email: podcast@victorjm.com

Fernando Angelucci is focused on the world of self storage. We're talking about winning strategies in today's environment. To connect or to learn more visit  www.ssse.com  or call Fernando directly at (630) 408-8090. ---------------- Host: Victor Menasce email: podcast@victorjm.com

George Bravante is based in the Central Valley in California. After spending a career in accounting and private equity, he moved to California to complete an acquisition. The intent was to stay just a year, which quickly turned permanent. Along the way he acquired thousands of acres of prime farm land. On today's show we're talking about agricultural investing. To connect with George and to learn more, visit bravantefarmcapital.com or his vineyard at Bravantevineyards.com. -------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about construction defects that require a series of solutions to ultimately correct. ------------------ Host: Victor Menasce email: podcast@victorjm.com

Waterfront property can be some of the most sought after property in the world. This despite the added complexity and risks of owning waterfront property. The shoreline can be constantly changing, whether it is a fresh water situation or by the sea. You may have a survey for your property. But in most cases, you don’t own the shoreline. The shoreline is usually publicly accessible property, at least the first few feet. It’s tempting to landscape the shoreline in order to make the property more aesthetically pleasing. But altering the shoreline of a body of water, either naturally or through man-made engineering efforts, can cause significant problems. ---------- Host: Victor Menasce email: podcast@victorjm.com

Today is another AMA episode. Today’s question comes from Ryan in Los Angeles who is asking about whether it is better to adapt an existing building for senior housing, or whether it is better to build new? --------------- Host: Victor Menasce email: podcast@victorjm.com

National Property Management software firm Yardi is one of the premier software systems used by the majority of the large scale property management companies. The data is hosted by Yardi on their own servers. As a result, they have access to a lot of data on their servers. Yardi Matrix is their brand name for their data products. Yardi published their National Self Storage report at the end of January. This report focuses on the top 31 metro areas in the US. It mirrors what we have known for some time. Storage in the primary markets is saturated with supply. Supply has exceeded demand. Nationally, Yardi Matrix tracks a total of 4,627 self storage properties in various stages of development, including 812 under construction, 1,789 planned and 669 prospective properties. The share of projects under construction was equivalent to 3.6% of existing stock in December, unchanged from the previous month. Yardi Matrix also maintains operational profiles for 29,032 completed self storage facilities across the U.S., bringing the total data set to 33,659. The average national street rate for all unit sizes dropped again on a year-over-year basis, down 2.8% in December. However, average rates remain above pre-pandemic levels. Rates for standard-size 10x10 units decreased 2.3% for non-climate-controlled (NON CC) units and 3.4% for climate-controlled (CC) units. Meanwhile, rates for larger units outperformed those for smaller units on an annual basis, with rates for 10x30 units down 2.4% over the year and rates for 5x5 units down 3.4% over the same period. So how do you invest in self storage? You pursue secondary markets that are under-supplied.  ------------ Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are doing a deep dive on a new report from Real Estate brokerage and consulting firm Cushman & Wakefield. They recently published a new study on construction costs for industrial facilities based on a survey of construction costs in 43 markets across North America. We keep hearing about how construction prices have been volatile in the past couple of years. The truth is, some line items are way up in cost and others have fallen dramatically as well. If you’re looking to build an industrial facility, how do you get a realistic budgetary estimate of what it will cost? This 34 page report does a good job of summarizing the findings of their research. -------------- Host: Victor Menasce email: podcast@victorjm.com