The Real Estate Espresso Podcast

Sanchoy Das is a processor of Industrial Engineering at the New Jersey Institute of Technology. On today's show we're talking about global supply chains and how to manage the impact of disruptions. You can connect with Sanjoy at das@njit.adu.  -------------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are taking a close look at one of the most insane ideas to hit the market this year. In a bull market, everyone looks like a genius. But there is a cautionary tale here. Don’t ever mistake intelligence for luck in a bull market situation and that seems to be what Zillow has done over the past year with its Zillow Offers business. Let’s recap how Zillow offers was supposed to work. Zillow was using their really sophisticated software algorithm that produces the Z-Estimate to find value in the market. Zillow got into the house flipping business with Z-offers. The idea was that Zillow would buy properties in the open market, conduct a very light rehab, and then sell them in the open market for a profit. They were not going to be creating much in the way of real value, as a stated objective of the program. So the only way for them to generate a profit would rely upon buying properties at a discount to the market value. What Zillow would do is they would look at comparable properties in the market and then buy those it considered to be a bargain based on its algorithm. What could go wrong? Listen to find out. --------------------- Host: Victor Menasce email: podcastg@victorjm.com

On today’s show we’re talking about artificial deadlines. These types of manipulations exist all over. They’re designed to create a sense of urgency to cause people to act. One of the sources of competition for someone’s action is simply doing nothing. Often doing nothing is the default. The world of sales and marketing is full of techniques designed to cause a buyer to act now. You have no doubt seen the call to action on the website. It says, “Call now” or Act now, or Order Now. The most common technique is called FOMO, and acronym that is short for fear of missing out. That’s why Black Friday Sales are effective. Black Friday only comes around once a year. Why could there not be a Monday sale, or a December 12th sale? Because if they made the reason truly arbitrary with no plausible excuse, then the manipulation would be exposed for what it is. ------------------ Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re taking a look at what’s happening in the travel sector. Many real estate investors, even large commercial real estate investors own portfolios of rental properties and portfolios of short term rental properties. This can mean short term rentals in the core of business district, or it can mean a ski chalet in the mountains or a cottage on the lake. All three of these are going to be affected by the dynamics of global travel. Travel is starting to rebound on a global basis. It is a nuisance to spend a few hundred dollars on covid tests in order to board an aircraft. Airfares were low in the summer in an effort to bring people back into air travel. But rising fuel prices and the financial pain of the past 18 months means that airlines have to charge more in order to survive. Hotels have struggled with incredibly low occupancy throughout the pandemic. But here too the numbers are improving. Several of the largest hotel brands Marriott, Hilton and Hyatt reported their numbers for Q3. Occupancy rose 23.4 percentage points from 34.8% in Q3 of 2020 to 58.2% in the third quarter of this year. While occupancy may be up, nightly rates are still low as hotels try to compete for too few travelers. The folks at Hyatt reported their financials yesterday. Their revenue per available room is down 31.8% compared with 2019, which is slightly better than the industry average which is still down 35.5% compared with 2019. ----------------- Host: Victor Menasce email: podcast@victorjm.com

Today's question comes from Ken in Idaho.  I have a property that is zoned rural and I’m considering developing for residential and I understand that I need a zoning change in order to build what I want. But I’m confused about terms like the official plan and the neighborhood plan and how they affect the zoning. The property needs to be annexed into the city to get the residential zoning. I’m also told that even though I’m in the county, the county road at the front of the property will also need to be annexed into the city and affect the development. Hoping you can clarify what I need to do? This is a great question. This is a complex area. It’s made complex only by the layers upon layers that can come into play. ------------------ Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about what’s happening in the world of industrial real estate. In the past week, the brokerage firm Marcus & Millichap published 44 market reports on industrial real estate for Q4. This is one of the largest and most comprehensive segment analyses I have seen. On today’s show we’re going to dive into a few of those markets to contrast what is happening.

Our book this month is "The Goal" by Eli Goldratt. This book was originally published in 1984 and was the groundbreaking book on the Theory of Constraints.  The book is written as a narrative surrounding a manufacturing plant manager named Alex who moves to a small town to take over the management of the plant. But the plant is struggling. Deliveries are late, the plant is losing money, and customers are unhappy. Senior management is threatening to shut it all down in less than 3 months if things don’t improve. Along the way, our hero encounters a scientist named Jonah who leads our protagonist through the thinking process to discover the principles that lead him to solving the problems that are plaguing his organization. In the story, Jonah clearly sees through all the talk of efficiency and correctly identifies the business is in trouble. The problem is that the business is being measured against the wrong goals. By focusing on efficiency and lowest cost per component, inventories were building in virtually all areas. Work in process inventory was growing, finished goods inventory was growing, but still shipments of some products were continually late. The theory of constraints centers around practical methods for identifying solutions to business problems by deciding: What to change What to change it to How to cause the change The specific book I’m recommending today is the first in a series of books that apply to theory of constraints to specific business problems. This first one is a manufacturing plant. But the method can be applied to project management, and to sales, and retail management. The theory of constraints is a universal way of thinking that can be applied to virtually any business problem. ----------------- Host: Victor Menasce email: podcast@victorjm.com

Arjan Erkel is based in Rotterdam. His story is one of the most powerful stories of overcoming adversity. While on a mission with Doctors without Borders, he was taken hostage and held in captivity for nearly two years.  He is an extraordinary person who has truly embraced life and is making things happen.  He is also a founder of an organization combatting human trafficking called Free A Girl. So far, they have liberated more than 5,000 from sexual slavery. To learn more or to contribute, visit freeagirl.org. ------------------ Host: Victor Menasce email: podcast@victorjm.com

On today's show George and I are talking about current events and the impact to real estate investors. -------------------- Host: Victor Menasce email: podcast@victorjm.com

There is always something, some constraint, holding back progress. On today's show we're talking about how the Theory of Constraints can be game changing. Today's show is also a prelude to the book of the month coming up on November 1.  ----------------- Host: Victor Menasce email: podcast@victorjm.com