The Real Estate Espresso Podcast

Jim Pfeifer is based in Columbus, Ohio. He has transitioned from being an active investor to being a passive investor. Today's show is a lesson in self awareness and how to design your own personal investing philosophy around your own strengths and weaknesses.  To learn more, connect with Jim at leftfieldinvestors.com. 

On today’s show we’re going to take a look at a day in the life of Victor. A number of you have asked questions about how I spend my day. So I’m going to outline my day, chosen at random. Today was not a fully typical day because it was US Thanksgiving which meant that our US team was out of the office and our Canadian team was still hard at work. But in essence, today was like any other day, filled with communication with team members and suppliers. -------------- Host: Victor Menasce email: podcast@victorjm.com

Happy Thanksgiving to our US listeners. On today’s show we’re preparing for 2022. I find that towards the end of the year people often get an uneasy feeling that there are only a few weeks remaining in the year. Many of the goals that were set at the beginning of 2021 remain incomplete. You might be traveling home to visit family, unsure of how to answer the question – How has your year been? This is a time when you might be thinking about the upcoming year, wondering when you will find the time to set goals for the upcoming year. If you’re like most people, you won’t set any goals at all. After all, if you don’t set goals, you can’t fail. I take the time to set goals every year. In fact, most years I host a transformational goals retreat which we hold on the beach in Mexico on the Mayan Riviera. But this year we decided instead to host a corporate retreat where we will spend four full days on goal setting and planning for our organization. This will set us up extremely well for next year. In preparation for those four days, there is a bunch of work that we will be doing. You can’t go into goal setting, at least you can’t do it effectively with no preparation. On today’s show we’re going to talk about the first step in preparing for goal setting for 2022. The first step is to run a retrospective. If you're serious about achieving your goals, I can recommend two different programs.  1) The Real Estate Guys host a live event in Lake Las Vegas in the first week of January. I've attended personally and it's excellent.  2) Michael Hyatt has an excellent online program called "Best Year Ever".  Both these programs are excellent and I highly recommend them.  ------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about  the evolution of many cities. You will find pockets of development outside the urban core. These pockets are disconnected from each other in one very important respect. They don’t have city supplied utilities. The cost of extending roads, water, sewer, electricity, internet, gas can be incredibly high. You might have two similar sized properties with the same entitlements. One has utilities at the property line. The second has the utilities a mile away. The cost of ripping up the streets and laying the new infrastructure can be prohibitive. I recently went through a costing exercise for one of our projects. The real cost of each foot of roadway is not the expensive part. Bringing the utilities to your property from far away is by far the most expensive. In the language of developers, we call these “offsite improvements”. Offsite improvements are among the most painful expenses for a developer. They ultimately are donated to the city. If the city is sympathetic, they will give you a credit against property taxes or a credit against development impact fees for any offsite improvements that you make. But in a lot of cases, you end up making those improvements at your own cost for the benefit of the city and other developers that come behind you. Just how much can those costs add up to? On today’s show we’re going to construction a budget per linear foot of roadway that you can use to estimate the cost of those offsite improvements.

On today’s show we’re talking about how the pandemic is affecting business development. Business development relies heavily on personal interaction. Markets don’t buy, only people buy. Relationship building is a key component of business development in any industry. That’s particularly true in the world of real estate investing. We recently conducted a survey of approximately 400 members of our local Ottawa Real Estate Investors Organization. The basic question was whether people feel ready to return to live in person events? ------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about when to fire a consultant. You hire consultants for specific expertise in a narrow domain. These folks are supposed to be subject matter experts in their area. There can be upwards of twenty of these consultants involved in a major project. The consultants we most often associate with a project include Architectural Environmental Geotechnical Civil Wind Noise Mechanical Structural Elevator Electrical Planning consultant Window washing design Building envelope Mature tree consultant Appraiser Ground water or riparian rights Heritage Traffic studies Landscaping design Energy efficiency 3D rendering artists All of these people are subject matter experts and could have specific deliverables to your project. That’s a lot of people to manage who ultimately don’t work for you directly. These experts are working simultaneously for multiple clients, on multiple projects. Some of their other clients have their own schedule deadlines and there is no guarantee that you will come out on top of a priority decision is made. Usually the hiring process for these consultants is based on referrals. The architect can often be a primary source of introductions to these consultants. If there is a pre existing working relationship, that can often be a strong endorsement of a particular consultant. When there are so many specialized disciplines, the odds are that you will eventually encounter someone you will need to fire. How and when to make that decision is critical in a project.  ----------------- Host: Victor Menasce email: podcast@victorjm.com

Ken Gee is based in Cleveland Ohio. But his business today is focused in Northern and Central Florida where he buys and repositions apartments. Over the past several years, he has amassed a portfolio of approximately 2,000 units. On today's show we're talking about strategies that work in today's environment.  You can connect with Ken at kripartners.com. Download a copy of his free e-book on value add investing at kripartners.com/ebook -------------- host: Victor Menasce email: podcast@victorjm.com

On today's show, I'm speaking with George about the impact of inflation on predicting the financial performance of a multi-family apartment project over a multi-year window. This has become more difficult since we've seen inflation jump to above 6% in the past few months. 

On today’s show we’re taking a deep look at the 1970’s inflation narrative and seeing if there are any history lessons for us. This past weekend, Treasury Secretary and former Federal Reserve Chair Janet Yellen was on PBS Face The Nation. The discussion centered around inflation.  Back in the 1970’s the politicians blamed the consumer for inflation. Politicians blamed union leaders for demanding higher pay. The White House blamed the middle eastern nations for holding back oil. In fact, the OPEC nations didn’t want to be paid in Monopoly Money. They were used to being paid in a gold backed currency. They trusted the US dollar. But when Nixon took the dollar off the gold standard and started the slippery slope of printing more money than could be accounted for, the OPEC nations quite rightly concluded that they were being cheated by being paid in a devaluing currency.  We now know that the inflation was not the fault of OPEC, or the unions, or greedy businesses. It was the result of grave mistakes that were made in central bank monetary policy. That was the cause then, and it’s exactly the same cause today.

On today’s show we’re talking about rent growth. There are rising rents in many submarkets. For those who own their own home, they’re probably glad that their housing costs are fixed. We have seen near record setting price increases for single family homes in many major markets across the US. The fact is, you can’t have price increases in the housing market and then experience no effect in the rental market. The two markets are not strongly linked together, but they are not completely isolated from each other either. If the cost of owning a new single family home goes up, you will also eventually see those costs reflected in the rents. This dynamic environment has made it difficult for apartment investors and developers to forecast their business plans. If rents increased 20% in 2021, what should they forecast in 2022? Historically, widely accepted inflation metrics used a 2% escalation for rents over the past decade. What should you put in your numbers for 2022? Would you use the 6.1% CPI that we have experienced so far in 2021? Should you use zero? Should you use 2%? You can make an argument for any of those choices. But they will all be incorrect. -------------- Host: Victor Menasce email: podcast@victorjm.com