The Real Estate Espresso Podcast

On today’s show we’re talking about what’s happening in the RV industry. We’ve seen white hot demand for RVs over the past two years. The requirement to social distance and limit contact to those in your immediate household during the pandemic made camping vacations an ideal choice for many families. The industry has struggled to keep pace with demand during the pandemic. The combination of material shortages and labor shortages has left many manufacturers unable to keep up with demand. Some customers were left waiting for more than a year to take delivery of their new RV. So why are we talking about RV’s on a real estate podcast? If you buy an RV, chances are you’re going to need a place to store it. It won’t fit in your driveway, and even if it did, then your home owners association or your local bylaw probably has a restriction on keeping large vehicles in your driveway. If you’re in the storage business, then boat and RV storage is probably a component of your business. -------------------- Host: Victor Menasce email: podcast@victorjm.com

On today show we were talking about whether we are about to experience another repeat of the 2010 and 2012 sovereign debt crisis having a ripple effect through global financial markets. There are clues of an impending crisis when you listen to the words of Christine Lagarde head of the European central bank. This next crisis will also precipitate a change in foreign exchange markets. When countries experience a crisis of confidence, the release valve is the value of the currency in international markets. Some currencies are free floating. Some currencies are pegged to specific assets. Still others are pegged to other currencies. For example, we have 66 countries pegging their currencies to the US dollar. There are 25 countries pegged to the Euro. This is designed to stabilize exchange rates between trading partners. We have some very powerful lessons in the 2008 financial crisis. But we are doomed to repeat those lessons if we don’t actually pay attention to what those lessons have to teach us and look at the root causes of what precipitated the financial crisis back in 2008. Many people think that you thousand and eight was only about subprime mortgages. But there had to have been much more to 2008 than just subprime mortgages. Why were banks in Ireland failing? Europe is a funny collection of individual countries each being held together for a common monetary and economic system. But each of these countries are not created equal. It makes sense if you look through out history that bonds issued by one country are not necessarily of the same credit quality as the bonds issued in another country. We often hear about the north south divide in Europe. Italian credit is not of the same quality as German credit. Yet somehow we see that a very large percentage of the collateral being used in the repo market at the European central bank is comprised of Italian sovereign debt. In recent months this has peaked at 45% of all repo transactions. Christine Lagarde recently went on record stating that she has anti-fragmentation tools at her disposal and she intends to use them. At the same time the head of Germany’s going to spank, the German central bank has publicly stated that he is not on board with the use of the anti-fragmentation tools. -------------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about conservation easements. These are a poorly understood and rarely used asset type. My friend Tom Wheelwright is fond of saying that the tax code should be viewed as a series of incentives. The portion of that tax code that extracts money from business, employees and the population at large can be described in a very small number of pages. The thousands of other pages enshrined in the legislation can be thought of as a series of incentives. Conservation easements are one such incentive. The idea is that governments like to see land protected in its natural form. This can sometimes be done through zoning. But zoning is not perpetual, and zoning can be changed. If you truly want to preserve land for ecological purposes in perpetuity, then you need a land use mechanism that is even stronger than zoning. Enter the conservation easement. With a conservation easement, land is donated in perpetuity to conservation through a land trust. --------------- Host: Victor Menasce email: podcast@victorjm.com

On today show we are looking at whether the most recent economic figures are an indication of a trend, or a false flag? We are going to be looking at the inflation metrics and looking at the constituent elements to determine whether inflation has peaked. Will the Fed succeed in breaking the back of inflation or is inflation systemic at this point? Finally we are going to look at Europe and ask whether we are experiencing a global phenomenon and can the USA separate itself from the rest of the world in this regard? The latest inflation numbers suggest that inflation in the US cooled from 9.1% in June to 8.5% in July according to the latest statistics from the commerce department. There are two variables that the government will be able to influence. The first is energy prices. The second is cooling the real estate market which accounts for a 40% weighting of the consumer price index. It’s been said that you can print money, but you can’t print food and you can’t print oil. Or can you? ----------------- Host: Victor Menasce email: podcast@victorjm.com

Today is a part 2 response to last Friday’s AMA episode. Last Friday Joseph from Boulder Colorado asked a question about systems and software for his company that almost accidentally got into the excavation business. For a complete context, you may want to listen to that episode first before listening to this one. I was thinking some more about your question related to how you got into the excavation business. This episode is a bonus. It’s not answering your question at all, but is the result of thinking about how a simple business like excavation could become a sought after service, rather than just a low value subcontract. Joseph, if you want to be in the excavation business, I would recommend that you consider having a differentiated offering. There is a concept in business called intentional congruence. Intentional congruence means offering products and services that are clearly distinct, but actually go together. It’s like cereal and milk, hamburgers and buns, popcorn and butter. People who do excavation are merely digging holes. Digging holes is a commodity. Commodities are interchangeable and the winning bid always goes to the lowest bidder. That’s the preverbal race to the bottom. You calculate the machine time and multiply by the hourly rate. But you want your offering to be differentiated in the market. ---------------- Host: Victor Menasce email: podcast@victorjm.com

Mark Pattison is based in San Diego where he is engaged in development projects and a growing portfolio of multi-family apartments. On today's show we're talking about opportunity zones that can be a diamond in the rough.  Mark also hosts a podcast called the "Mark Pattison Show" which can be found on Youtube. ---------------- Host: Victor Menasce email: podcast@victorjm.com

Brett is based in Sacramento California where he helps investors nationwide with tax deferral strategies using the Deferred Sales Trust. To connect with Brett or to learn more, visit capitalgainstaxsolutions.com ----------------- Host: Victor Menasce email: pocast@victorjm.com

Joseph in Boulder Colorado writes: Thank you for all you do.  Your podcast is a real treat and we get so much from it. At the beginning of the year, I wrote you an AMA about how to best serve our community, as an investor, after the devastating fires near Boulder Colorado. The advice you gave in that podcast really spark my efforts towards helping the most amount of people and becoming a solution for the bigger problem.  Instead of worrying about the market and rents etc.  I decided to go out and create a private fire cleanup company using excavation equipment my partner and I had. From this, we helped clean over 65 home lots and made a direct impact on getting our neighborhood back on its feet. Now that the fire cleanup efforts are over, this company, created basically from thin air is in a unique position to transition into digging and building foundations for the residential builders in the area. Out of this sad event we are experiencing massive growth and booking several foundations already.  My question is as we are growing our organizational capacity is being strained, what kinds of software do you as a developer use to keep it all together? Particularly, around CRM, Project Management, Vendor and Supply Management, and Scheduling. Our current systems are clunky and often leave us wanting more integration and streamlining. Thanks again for your advice and how much you put out for the real estate investment community. ------------------ Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about the most recent employment report that was published on Friday of last week. You’ve no doubt heard the saying that you can use statistics selectively to make just about any argument. On today’s show we are going to take a more wholistic view of the US employment report and hopefully construct a more complete view of what we think is happening. Is the government lying? No, I don’t think so. But the conclusions being drawn are definitely the result of spin being put on the numbers. In the July report it was reported that the economy added 528,000 job and 372,000 jobs in June. These are impressive numbers. The White House proudly claimed that all of the job losses from the pandemic had been officially erased from history. The unemployment rate was down to 3.5% and the economy is strong. It turns out that the Bureau of Labor and Statistics actually publishes two different employment survey reports at the same time and they have significantly different methodologies and therefore different results. --------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about one of the patterns that has emerged with new home buyers. The typical scenario with a new home or condo purchase involves signing a purchase agreement, several months, sometimes a year in advance of the actual delivery date of the finished product. There are a number of real estate closings scheduled for August and September this year when the actual agreement was made in the fall of last year. In some cases, the agreement was signed over a year ago. So fast forward to today. Interest rates have increased. Appraisers are taking a much more conservative approach on the valuation under direction of the lenders. When they got to the closing and many buyers did not have a rate lock on their financing. They also didn’t have a bank appraisal to accompany the loan request at the time of purchase. While the borrower may have qualified with the bank when they signed the deal, they didn’t have a commitment letter from the lender with which to close the deal. ------------------ Host: Victor Menasce email: podcast@victorjm.com