The Real Estate Espresso Podcast

Today's question comes from Vishal in Ottawa. He writes: "As you know I am long time listener and fan of your podcast. Earlier in previous episodes you have mentioned of the growing concern of price increase of natural gas due to various changing conditions. How do you perceive this in light of the information contained in this article in Forbes Magazine entitled Could U.S. Natural Gas Prices Crash? Published on November 9. Do you still believe we will see the price increase?" Vish, this is a great question.  My discussion of natural gas prices was within a context. The author of the article is taking a slightly different US centric view of supply and demand. Everything the author says is accurate from a US centric perspective. Prices will fluctuate in the short term based on supply and demand, and the size of the local inventories. As I’ve said, the local price for natural gas is a function of transportation. Natural gas is incredibly inconvenient to transport. Approximately 10% of the US production is being exported in LNG form through sea ports along the Gulf Coast, principally Corpus Cristy in Texas and Lake Charles, Louisiana. Right now, the price differential between gas on the beach in Louisiana, versus gas on a ship destined for Spain or China is at an all-time high. We’re paying about $5.50 per mmbtu in the US for natural gas, and Spain is paying over $30 per mmbtu. The cost to transport the gas from Louisiana to Spain is about $1.50. So the profit margins for those in the LNG business are astronomical. ----------- Host: Victor Menasce email: podcast@victorjm.com

Today's show is a look at some egregious abuses of the protections being afforded to residential occupants. All of the examples come from the State of New York. In the worst case, a homeowner who defaulted on his loan in 1998 and lost ownership of his home through the foreclosure process in 2000, was finally evicted 23 years later.  --------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re taking a closer look at the supply chain disruptions that are making headlines. The situation at the Port of Los Angeles has gotten worse, not better. There are currently approximately 110 ships waiting at anchor for a berth to unload their cargoes. There are other sea ports in the US. Why don’t these ships divert to other locations like Houston Texas, Tampa Florida, Savannah Georgia or Newark New Jersey? The simple answer is money. --------------- Host: Victor Menasce email: podcast@victorjm.com

Kevin Shtofman is based in Dallas Texas. On today's show we're talking about the backlash against student housing as an asset class and how that backlash may be appropriate in some cases and an over-reaction in others.  You can connect with Kevin on LinkedIn.  --------------------- Host: Victor Menasce email: podcast@victorjm.com

Eddie Speed is a specialist in Notes. He started buying notes in the 1980's, and today is focused on a particular segment that is largely overlooked. You will love this contrarian strategy.  To learn more, visit noteschool.com/getstarted ----------------------- Host: Victor Menasce email: podcast@victorjm.com

Today’s show starts with a disclaimer. I’m not a lawyer and today’s show should not be construed as legal advice. Always seek advice from a lawyer who is competent in that specific area of the law. On today’s show we’re talking about something that I see frequently. It’s increasingly common to see sponsors of an investment opportunity to be marketing on the Internet or in social media. Many jurisdictions have strict rules against solicitation for investment.  --------------- Host: Victor Menasce email: podcast@victorjm.com

Today's question comes from Luc in Ottawa. He asks "I've just purchased my first investment property. I'm looking to grow. What should I be focusing on?" ------------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about a twist on a strategy that we have been using for close to a decade. If you have been listening to this podcast for a while, you will have heard me talking about the buy on the line, move the line strategy. This approach is an exceptionally good way of creating value in the market. What we mean by this strategy is to exploit the many dividing lines that emerge in real estate sub markets where on on side of the line there is a hot expensive neighbourhood and on the other side is an economically depressed area. Often these lines are arbitrary. They exist for no particularly good reason. If you redevelop on the wrong side of the line, then guess what? The line has moved and is now on the other side of your property. Because there are no comparable properties on the poor side of the line, you will get a valuation similar to the hot neighborhood next door. Today I want to revise the description to include one very specific special case. If the line is a municipal boundary and the city is a growing city, you might want to consider property that is just outside the municipal boundary. If the city has a history of annexing land and growing its boundary, this can also be another opportunity to create tremendous value. ------------ Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about another constraint in the world of real estate development and construction. The labor shortage that is making headlines is being experienced across the entire construction industry. That is particularly being felt in many of the support services that assist builders. Any construction site will require some basic services including safety fencing and portable toilets. Something as simple and commodity as portable toilets has become incredibly difficult to source. As a developer, you would never even pay attention to that, or imagine that toilets would be a constraint. Well it turns out that on one of our projects, we had three companies in the past week decline to provide the service to our projects because they were not taking on any additional business from now until well into the new year. They were completely short staffed and could not handle any additional business. It took no less than 6 phone calls to find a single company that would provide a portable toilet to a construction site. This is shocking. A portable toilet is a requirement for a construction site. The building inspector will shut you down if you don’t have one. We had several other suppliers of construction equipment decline our business. They simply didn’t have the staff to take on additional work. How do you solve it? Listen and find out. ---------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about managing your supply chain. There’s no question that some suppliers are having trouble keeping up with demand. Some channels are simply fully depleted. Almost all real estate investors at some point are buying construction materials, either directly, or indirectly through a subcontractor. When buying through a subcontractor, you often pay more because the subcontractor is simply passing the cost on to the end customer. If prices are elevated, then you can feel the full impact of those higher prices, even if the various supply chains are inefficient. Subcontractors have next to no incentive to shop around for low prices. As a developer, you are faced with several difficult choices. Do you allow your subcontractors to quote and then purchase materials, or do you take on that procurement function in-house? If you decide to assume responsibility for purchasing materials, what supply chains do you want to utilize?