The Real Estate Espresso Podcast

Today's show is a live talk on how to prepare for the upcoming downturn.  --------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about the mental game of handling sticker shock. It doesn’t matter how often I remind myself that a high quote from a subcontractor is nothing more than a high quote. I still experience an emotional reaction. It takes some time to work through all of the second guessing that happens when you experience sticker shock. Am I out of touch? Is my budget at risk? Did I make a budgeting mistake? All of those self doubts are normal. Dealing with the uncertainty can be stressful and anxiety provoking. Do I work through the budgeting problem, or share it as a risk with the project stakeholders? Through the process of value engineering, you will discover the true cost of the most efficient solution. These high quotes happen with alarming regularity. I’m not talking about the quote that is 5-10% higher than expected. I’m talking quotes that are 70%-100% higher than expected. ------------------ Host: Victor Menasce email: podcast@victorjm.com

I listened to Jerome Powell’s entire remarks yesterday after the end of the two FOMC meetings which ended on Wednesday. Chairman Powell said some things in his press conference that were astounding. But the most stunning statement from Jerome Powell was the flat statement the he does not believe the US is in a recession. The official GDP numbers for the second quarter will be released today. We don’t know what those number will be. But J Powell also went on to say that GDP numbers are complex and they take a long time to get right because the US economy is so huge. They have a history of being revised a lot, and therefore we should take the initial numbers announced today with a grain of salt. To help us all make sense out of this complexity, the White House put out a new blog post a week ago. The timing was excellent. It was entitled: “How Do Economists Determine Whether the Economy Is in a Recession?” Let's look deeper at what they're trying to say. ----------------- Host: Victor Menasce email: podcast@victorjm.com

The Wall Street Journal published an article this week in collaboration with realtor.com where they ranked 300 communities across the United States based on a set of criteria. The purpose of the ranking is somehow tied to their prediction of those communities offering the best rate of return on investment using a set of criteria that they applied to their methodology. The Wall Street Journal is widely read, and I have no doubt that this piece is going to be widely referenced by other reporter and perhaps your own investors as well. On today’s show we’re going to take a deep look at this report so that you are able to answer questions about the report. To identify the top emerging housing markets, The Wall Street Journal and Realtor.com reviewed data for the 300 most populous core-based statistical areas, as measured by the U.S. Census Bureau. The overall methodology explores two main areas: real-estate markets (50%) and economic health (50%). Those two areas comprise eight key indicators and the Wall Street Journal applied a weighting to each of the 8 indicators to come up with a metric and therefore a ranking. We're looking at whether this ranking makes any sense.  ---------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about factors that could signal global instability and a crisis of confidence in our financial system. What happens if the Fed was to loosen monetary policy before actually beating inflation? This is a realistic scenario that many investors have been predicting. The hope of many investors, those who are addicted to the loose monetary policy of the last decade, is that we return to the way things were. Asset bubbles feel good on the way up, and they feel terrible on the way down. The past decade has represented a market distortion that has been promoted by central banks in Europe, the US, Canada, Japan. The list goes on and on. If the central bankers decide to pivot and lower interest rates, the likelihood is that investors in the bond market will not accept to lower interest rates. You see interest rates are based on one principal factor and that is risk. When the market yields on Turkish sovereign debt are higher than, say, German sovereign debt, it’s a reflection of the higher risk associated with Turkish government debt than German debt. When the yield on Netflix bonds are higher than the yield for IBM bonds it’s a reflection that the market perceives higher risk with Netflix than IBM. The bond market ultimately determines the yields in the market. If the Fed was to slow down their rate of interest rate increases before actually beating inflation, the bond market is likely to respond with a loss of confidence in the Fed. ------------------ Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about emotional investing. We are emotional creatures who often make emotional decisions. The old adage is to buy low and sell high. But left to our own emotional devices unchecked, humans are inclined to buy high and sell low. Humans are motivated by both fear and greed when it comes to investing. These two emotions are naturally designed to protect us in the wild. But these two emotions are rather ineffective in protecting us against what happens in the market. If you look at the statistics of what is actually happening in the market, the majority of investors buy high and sell low. It doesn’t matter what the asset. It takes discipline to be counter cyclical. --------------- Host: Victor Menasce email: podcast@victorjm.com

Today’s show is not what I was expecting to publish today. I’m here in the heart of Rome Italy. I’m one block from piazza del Popolo with its ancient Egyptian obelisk at the center of public square. It’s two blocks from Villa Borghese the gardens that were transformed by Cardinal Borghese in 1605 from a vineyard into a 200 acre park. The Spanish steps lead up to the entrance of the park. I came to visit my aunt of 97 years of age whose health was failing. She didn’t have a specific life threatening ailment. But she was simply getting old and the body’s systems were not working like they used to. The last family members to see my aunt were myself and her granddaughter. Nobody else got to see her in her final days. We grabbed a few slices of take-out pizza on Friday and ate in her formal dining room while she slept. That formal dining room was host to so many dinner parties over the years. Family dinners around the holidays, Friday night dinners with friends, dinners with some of Rome’s most notable people. Those slices of pizza seemed insignificant at the time. In the scheme of things, those slices of pizza are still insignificant. Any significance to be attached to them are purely a story that I’m fabricating on my own. Those slices of pizza will hold a special place in my memory forever, or for however long I have left on this planet. I’m walking around her apartment. I sat down at the keys of her Steinway Grand Piano which she loved to play. I made a video recording of the last time she played the piano about six months ago. Even then, I had no idea of the significance of that recording. Today will only happen once. So make sure to take the time and do what’s most important. Take care of your health, hug your loved ones and tell them how important that are to you. ------------------ Host: Victor Menasce email: podcast@victorjm.com

Garrett Moore is the founder and CEO of Agorus in San Diego where they have developed new technology to focus on new home design integration and new home construction automation. Today's show addresses the obstacles and the opportunities to improving the efficiency of the home construction process. To connect with Garrett and to learn more visit agorus.com -------------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about managing projects. In particular, there is a disease in project management which I call one week itis. This is where a project is delayed by one week every week. Today’s show is a cautionary tale in which I’m going to describe a project management failure that happened in our company. Now we did correct it, but not nearly fast enough for my liking. I’m sharing this failure so that you can learn from our mistake and hopefully you don’t repeat the same mistake. It happens that in some cases a project manager takes a high initiative role in managing a project. That’s often what you want as long as they are doing a good job of communicating what is happening in the project. But we had a situation recently when the project manager was in fact using that posture to protect their ego. In truth, we don’t fully know why they were acting this way. Here is the story. --------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about why you might want investor relations management software in your company. Whenever you have a relationship with investors, there is a lot of information to manage and to distribute. You have a fiduciary duty to protect your investors and to keep them informed over the life of the project. If you are using an exemption under securities laws, then there are probably a number of regulations to comply with the particular exemption. If you have a lot of investors, then you can multiply all of those requirements by the number of investors. If you have multiple projects then you can multiply the burden by the number of projects. That means project reports, financial reports, tax information slips, original signed syndication documents for each investor and all of the due diligence items that investors would want in their data room. We implemented our investor portal more than one year ago. Up until that time we had been using a disintegrated set of tools consisting of docusign, Dropbox and a mailing list manager for sending investor reports. After a year of using our investor portal, I can’t imagine going back to the way we did things before. ----------------- Host: Victor Menasce email: podcast@victorjm.com