The Real Estate Espresso Podcast

I’m continually presented with projects that propose density that is close to or just at the threshold of the allowable density for a particular property use type. But in the real world, these levels of density are rarely achieved. When you layer the real constraints on a project, the density achieved is often much less. The promise of high density creates unrealistic expectations in the eyes of the land owner. They think their property is worth far more than its true development value. On today’s show we are going to talk about the top 5 constraints that chip away at density. Parking Green Space Amenities Roads, fire department access and multiple points of entry Height Restrictions Storm Water management ------------------ Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about inflation and the hidden tax that can impact investors. If you have been listening to this podcast for a while, you will know that we don’t adhere to the typical mainstream media definition of inflation. The correct definition of inflation is the inflation of the money supply. All the extra currency in circulation has the effect of pushing up prices as businesses and individuals bid up the price of goods and services. Inflation is often compared with a hidden tax. Governments prefer this hidden tax because when you go to the grocery store and pay $6 for a head of lettuce, most people blame the grocery store and not the government for the high price of lettuce. It’s politically more palatable. After all, if the government wrote you a check you would probably celebrate, rather than criticize the government for printing more money. But apart from the hidden tax, there is a very real tax. The real tax is capital gains tax on the sale of assets. When the value of your property goes up because of inflation, and then you are subsequently taxed on the capital gain, there is a double taxation of sorts happening. A discussion of investment returns cannot be complete unless you take tax consequences into account. ------------------- Host: Victor Menasce Email: podcast@victorjm.com

In many cases, the news is not new enough to be news, and it’s not old enough to be history. It falls into a no-mans land of random useless data. I’m struck by how often the news media are out of step with what is happening in the world of real estate investing. The front page report is simply out of step with what is actually happening in the market. Unless there is an ambulance chase involved, the news media are not up to the minute. In fact, they're often weeks behind.  ------------------------ Host: Victor Menasce email: podcast@victorjm.com

Justine Picard comes to us from Gatineau, Quebec. She joined our development team a few months ago in an internship role. On today's show we're talking about what it means to intern in a business, and what types of engagements work and those that don't. ------------------- Host: Victor Menasce Email: podcast@victorjm.com

On today's show we have repeat guest George Ross. George has been a real estate lawyer at the highest levels. We are talking about whether to take the gamble and acquire in today's market, versus being patient and waiting for better pricing. -------------------- Host: Victor Menasce  email: podcast@victorjm.com

When you look at demand for housing, you often hear the statement “Everyone needs a place to live “. That’s true. But if we go back to the financial crisis and look at the counties in the US that had large numbers of foreclosures, a disproportionate number of those foreclosures were in fact on second homes. The outsized number of foreclosures in Miami Dade county and Broward county were among the highest in the country. Maricopa county which comprises the municipalities of Phoenix, Scottsdale, Mesa, Tempe, Glendale, over 20 municipalities in all had some of the highest foreclosure rates in the country. What distinguishes these locations is that a large proportion of these residences are in fact second homes. In moments of financial distress, people will sacrifice their second homes to protect the family homestead. That makes perfect sense. Most rational people would do the same thing. On average, prices fell about 33% as a result of the financial crisis.  But prices in Maricopa county fell an average of 56%. A disproportionate number of these properties were second homes. There was a similar phenomenon in Las Vegas and in south Florida and Orlando. We are not accustomed to managing price volatility. In the moment, the heat of the current market conditions, the price today seems to make sense. At least it’s possible to explain why the price is what it is.  But with the wisdom of hindsight, it’s easy to see how distorted the perspective can become for periods of time. ----------------------- Host: Victor Menasce email: podcast@victorjm.com episode # 1279

Back in the day, houses were built to last hundreds of years. My family owned a 13 century farm house in Tuscany. It is still standing. The house that my father grew up in on the island of Rhodes dates back to the time of the Knights of St John. We estimate that the house he grew up in was built in the late 1400’s. It’s hard to wrap your mind around a house that old. If the useful lifespan of a modern building is 70 years, you can expect that many of the buildings constructed in the 1950’s will be need to be redeveloped in the near future. Some of those buildings built in the 1960’s will need major retrofits or will need to be demolished. It all depends on how the buildings have been maintained. Even some 1970’s buildings are looking pretty tired at this point. Building obsolescence does not appear in any of the analysis that I’m seeing reported in statistics. It's almost impossible to get statistics on demolition permits. How much new product will be needed to replace existing buildings that are ready for retirement? -------------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we’re talking about a mistake we made in a site plan development. It’s an opportunity to learn from our mistake. We thought we had done everything correctly. We had designed a subdivision that we thought complied perfectly with the zoning requirements with zero variances. I can tell you that it is pretty rare to have a project of any size that has zero variances. But our goal was and still is to have zero variances. When you are complying 100% with the stated rules, then you eliminate reasons for a politician or a bureaucrat from saying no to your proposed development plan. It happens that you sometimes get an answer to a question from a public official that can lead you down an incorrect path. I’m not blaming that public official. Maybe we misunderstood the guidance. I actually don’t think we misunderstood. But I have to assume full responsibility for the project. I can blame them for telling me something incorrect. But it doesn’t help.

Today's question is another listener question. We're talking about investing in the self storage asset class.  --------------------------- Host: Victor Menasce Email: podcast@victorjm.com

On today’s show we are talking about businesses with no exit plan. I’m not talking about weak businesses. I’m talking about businesses that are vibrant thriving businesses. But they are closing. No, it wasn’t because of the pandemic. It wasn’t because the business was going bankrupt. It’s because the owner wants to retire and they had no succession plan. On today’s show we are going to take a look at two of these businesses. Both are healthy businesses. But they don’t know how to exit. In the end, they will probably just quietly close their doors if they can’t find a buyer. --------------------- Host: Victor Menasce Email: podcast@victorjm.com