The Real Estate Espresso Podcast

On today’s show we’re talking about interest rate fundamentals. Some people come from the school that interest rates are set by central banks. While central banks play a leadership role in rate setting, they don’t actually set the interest rates. Those rates are set by the open market, irrespective of what the central bank dictates. On today’s show we’re going to look at examples which will hopefully prove that and what that means for real estate investors going forward.

When you are in the design and development world, the challenges are daily and the rewards are infrequent. Well, today was one of those days when I got to go to sleep feeling accomplished. Yesterday, our project, The Sage Oak of Lake Charles was announced as the national winner of the 2021 Senior Housing News Architectural Design Award competition in the Memory Care category. As a developer, I’m thrilled to be part of this team effort to bring this ground breaking project to fruition. A project like this is truly a team effort. I’m going to thank a whole bunch of folks who helped bring this project to fruition. In so doing, I’m certainly going to miss some who are worthy of mention. I’ve got to start with my partner Loe Hornbuckle who developed the expertise as an operator at a very high level. It was his brainchild to create refine the values the underpin the Sage Oak product offer. I’d like to recognize the architecture firm of Greenfield Lawson in New Orleans, the general contractor of Donahue Favret also from New Orleans, Valerie Malone and her interior design firm at Quill Design in Cambridge, our partners Pam Abide and Sharon Foreman at New Orleans Equity Partners, our supportive lender at B1 Bank, Dave Zook and the whole team at the Real Asset Investor, our expert staff under the leadership of Executive director Jeremy Fruge, and the entire staff at Sage Oak. When you walk in the door, after you take a temperature test, you can really feel the positive energy in the doors. You are the reason that we’re ahead of our occupancy projections this early into the startup cycle. We don’t build these projects to win awards. We’re not out there playing the comparison game. We build these projects to create a great product in the market that solves a real need. Where design competitions are useful is in looking at what other leaders in the industry are doing and helping to calibrate what best in class looks like in the industry. We’re not going to stop innovating, improving, strengthening the product offering for the new buildings that are under construction in other locations. Even as winners, we see room for improvement. Most of the time, those improvements are small details, like better positioning of a shower head in a shower. But we’re thrilled to receive the honor and recognition that comes from being the winner of this year’s award.

Getting products from A to B has always been an issue for anyone in business. It used to be the case that you had to buy products through a channel. In the good old days, stores like Sears, Kmart, Walmart and Bloomingdales were the channels of choice. Today, businesses all over are taking advantage of new channels. Channels that didn’t exist a few years ago are dominant. For home furnishings, Direct Buy, and Wayfair are growing quickly. The Ottawa based company Shopify is also playing an important role in the transition from the bricks and mortar retail channel to the e-commerce economy. Shopify now hosts more than 1.2 million ecommerce stores on its platform. While Amazon is the largest channel for e-commerce, it charges a hefty percentage for retailers who can often double their net profit margins if items a sold and shipped through their own channel. Last week, commercial brokerage house JLL gave its updated guidance for the industrial sector for 3Q 2021. On today's show we're taking a closer look at the data.

On today’s show we’re talking about uncertainty. We can all agree that not everything in life is predictable. Life is full of surprises, some of the pleasant, and some of them not. It’s been said that a confused mind doesn’t buy. That’s particularly true in the world of investing. Investors seek clarity. Things that are too complicated, have too many variables, or have large unknowns are off the table. Investors are a special breed. Professional investors are relying upon their money working for them. Professional investors truly attempt to quantify what their money will do. Investors hate uncertainty. Anywhere you see uncertainty, you see falling prices. Who would buy real estate in the Ukraine right now? Who would buy real estate today and take a variable interest rate loan? Anyone with a brain knows that interest rates are heading higher, but how much higher? -------------- Host: Victor Menasce email: podcast@victorjm.com

Today is another AMA episode (Ask Me Anything). Today's question comes from Matthew. Victor! Your podcast provides a wealth of knowledge. I really appreciate your honesty and insight into this industry. I was curious if you had any episodes about your opinion of the type of real estate investment, other than REITs, that allows the least maintenance involved to keep the business operating/most passive income. I know there is no completely passive business out there but was just curious your thoughts of what will produce the most juice for the least amount of squeeze. I am looking to become an active investor in some type of real estate, and I have educated myself in various types of real estate including single-family, multi family, leasing farmland, self storage, short term rentals, etc. but would like to know what season investors such as yourself think about those investments that are easiest to operate for the long haul with less chance of burnout. I realize that hiring a team to help support the investor is going to be essential but are there investments that you feel have the least amount of moving parts/least complex? I know this is a vague question and probably provokes you to ask me multiple questions but was just curious your thoughts. Any insight you have would be much appreciated! Blessings, Matthew Well Matthew, this is a great question. As you correctly mentioned, all types of real estate investing have an active component. You’re describing the style of investing that most closely aligns with your lifestyle design. Money comes in one of three different methods. 1) Earned income – this is active income 2) Residual income 3) Capital Gains Your question is really centered around minimizing that first type of income, the earned income and maximizing the residual income or the capital gains.  

On today's show we're coming Live from Banff in the Rocky Mountains and we're talking about the dynamics of short term rentals. 

Scott Carson is an expert in buying distressed loans and engineering value improvements to these loans.  You can connect with Scott at WeCloseNotes.com. Or you can sign up for a complimentary seat at their weekend note closing workshop at noteweekend.com where you can attend the workshop for free with the promo code "victor".  ------------------------ Host: Victor Menasce email: podcast@Victorjm.com

On today’s show we’re talking about underwriting multi-family apartment deals. Earlier this week I attended a presentation from the CEO of a software development company that had developed tools for real estate investors to analyze the investment quality for multi-family apartment deals. The software seemed fairly sophisticated and capable of analyzing a number of scenarios. But if you remember last week I spoke about software tools on December 2. The episode was called Wasted Software. In that episode I spoke about the software making assumptions about your business process. Well, this particular software was making an assumption that I fundamentally disagree with, to the point where I would outright refuse to use the software. ----------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show, we’re talking about a topic that is near and dear to my heart. This week and all week, my company is offsite working on goal setting. This is a process of values clarification and values alignment. Once you’re clear on your values, then setting goals is much easier. But along the way, you might discover that you’re not living your life in alignment with your values. This is a deep introspective process that requires heavy lifting. In that process you can learn things about yourself that sometimes it’s difficult and painful to confront. Anytime we confront something that fundamentally challenges core beliefs, there is a natural human process. The first step is denial. No way! That can’t be true about me. You don’t understand. Then when the truth is inescapable, the next step in the process usually involves anger. Some people stay stuck in a loop of anger and denial and never move past that step. The third step in the process is moving to acceptance. Once you are at acceptance, you have a chance at growth or transformation which is the final step. But moving from acceptance to transformation involves work. It requires an inherent desire to grow, to become aware of blind spots and eliminate those blind spots. We all have them. By definition, you can’t see yourself the way others see you, because we don’t spend our entire lives looking in the mirror. Those rare people who do spend all their time looking in the mirror are self absorbed and hopelessly ineffective at much else. If you’ve been listening to this podcast for a while, you’ll have heard me say that you require three things to accomplish anything in life. 1) Knowledge. There are many people who focus all their energies on taking courses and getting more information. If more information was the differentiator, then everyone with a smartphone in their pocket with instant access to virtually all the world’s information would be excelling. So clearly that’s not the ticket 2) Emotional fortitude. You often hear people talk about mindset. Not to downplay this aspect. Mindset is important. Having the emotional drive and the emotional fortitude to overcome the difficult moments you will encounter along the way is absolutely important. But it’s not enough. You need a third element, 3) You need to be in the right environment. Its that third element which is the game changer, the secret to superior performance. Environment is the game changer. I often get questions from aspiring developers, and from listeners to this podcast. How do I find the right environment? I’m here to tell you that you might find the right environment. The perfect environment for you definitely exists out there. But no one environment will fulfill all your needs in every dimension of your life. You might find an existing mastermind group full of people who are smart, driven, generous, uplifting, and encouraging. But if you don’t, then go create one.

Central governments have become experts at coming up with good excuses for doing the wrong thing. On today’s show, we’re talking about the impact of a changing world order and how this will feed further inflation and the possibility of economic collapse. The global geopolitical landscape is changing as China’s ambition to become the dominant global empire will change global trade, Russia’s ambitions to regain the Ukraine as subject territory, and more instability is brewing in the middle-east. I’m not talking about any of this to dive into politics, but to highlight the impact of these forces on Investors. Wars are inflationary. If you look back through history, governments have the world over have used armed conflict as a justification for emergency spending. But these days any emergency is sufficient justification to print money. ----------------- Host: Victor Menasce email: podcast@victorjm.com