The Real Estate Espresso Podcast

US Federal politics might be appropriately described as legislative gridlock.  You can’t seem to get a single piece of legislation through the house and the senate on its own merits. These omnibus bills seem to get loaded up with dozens and sometimes hundreds of provisions, each one designed to amass the number of votes needed to get a majority vote in the House and the Senate. The move to restore 100 percent depreciation took a step forward with the U.S. House's approval of the Tax Relief for American Families and Workers Act of 2024 last Friday.  For real estate investors, what the bill essentially says is that the 100% bonus depreciation is extended. Under the 2017 tax code, the bonus depreciation would have been calculated as 100% bonus depreciation in 2022, 80% in 2023, 60% in 2024 and so on down to zero.  Under the amendment, the 100% depreciation is extended until 2027. Not only that, the bonus depreciation is retroactively calculated at 100% for the year 2023 which just ended. I recently did an interview with CPA Mike Pine from Pine & Co in Dallas. It’s an incredibly useful session on how to effectively use depreciation as part of your investment strategy. I’ve included a link to the video replay of that session with CPA Mike Pine HERE. So if you want to save a bucket load on your taxes, using the benefits of depreciation this particular session should help make the power of this tool pretty clear.  This piece of legislation is something that almost all real estate investors are going to want to follow closely over the next 30 days or so.  ------------ Host: Victor Menasce email: podcast@victorjm.com

A Shun of the bank is not the same as a run on the bank. But the effect can sometimes be the same.  The latest bank to suffer from the banking crisis that erupted last year is a name that most people might not remember. NY Community Bancorp announced their year end financial results and their 4th quarter results.  The bank was the winning bidder in the auction to take over the assets of Signature Bank when it failed in the Spring of 2023. Signature was the second bank to fail after Silicon Valley Bank.  NY Community Bancorp completed two acquisitions in less than a year. They bought Flagstar Bank in December of 2022 and Signature in the Spring of 23. They took on nearly 40 branches that belonged to Signature Bank and  $38B in Assets from the FDIC. At the time they trumpeted how good a deal they got on the assets. Well, they made a surprise announcement last week as part of their Q4 financials.  ------------ Host: Victor Menasce email: podcast@victorjm.com

Paul Moore is the principal at Wellings Capital who are now on their sixth fund. Their latest fund is focused on preferred equity and on today's show we're talking about one company's take on how to use preferred equity effectively in deals. To connect with Paul, visit wellingscapital.com where they have some useful resources on their resource page. -------------- Host: Victor Menasce email: podcast@victorjm.com

Dave Foster is a specialist in tax deferred exchanges. You can connect with him at https://the1031investor.com. On today's show we are taking about where is the fuzzy line between capital gains treatment and ordinary business income treatment when in comes to land investing. ------------- Host: Victor Menasce email: podcast@victorjm.com

We often get questions from clients and even listeners to the podcast about the merits of a legal case. To be clear, we are not lawyers and the purpose of today’s show is not to provide legal advice in any way.  The purpose of today’s show is to illustrate the uncertainty of the legal process. I’m going to report on a case of a commercial lease in the province of Ontario. Commercial leases really are fully described by the contract and are usually not subject to being torn apart by a tenant board in the way that a residential lease might be. The interpretation is going to rely largely on the wording of the lease and much less on outside legislation that might trump the lease.  ------------- Host: Victor Menasce email: podcast@victorjm.com

Our book this month is a brand new book that was just released two weeks ago called “How to Make a few Billion Dollars “ by Brad Jacobs. Brad is a serial entrepreneur at the highest level having built multiple multi-billion dollar companies in succession. When I heard his story it became obvious that he had something to teach me. Throughout the book he takes the reader through his thought process. He talks about how he had to rewire his brain to reject the social conditioning. ------------ Host: Victor Menasce email: podcast@victorjm.com

Today’s question comes from Ramon who writes: Dropping a quick note to thank you again for all that you do to make the RE Espresso amazing. I can’t imagine how much work it must be for you to consistently create such high-quality content. I hope you know how much value I and many others get from it. Specifically, your recent mini-series on business planning has been phenomenal, amazing insight into how to keep an organization aligned in working towards the right goals. Wondering if you would have any interest in doing a similar mini-series (or even single episode) on how you built Y Street Capital in the early days. How did you balance the financial commitment of expanding the team, building-out office space, etc, given the difficulty for a RE developer to accurately forecast the timing to generate revenue/liquidity events - especially in the early days before you had a solid base of cash flow from existing stabilized projects and consulting clients - vs the need for high quality help to sheppard projects and evaluate new opportunities? I think many people struggle with this chicken and egg problem and would be interested to hear how you approached it. -------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about commercial real estate and office in particular.  The main stream media remain fixated on reporting the averages. They are focused on the bigger macro picture. For example last week the Wall Street Journal published a story all about the commercial debt that is scheduled to mature over the next few years.  More than $2.2 trillion in debt is maturing before 2028, and much of that will have to be refinanced at higher rates. But it’s actually missing the larger underlying problem. When you layer the two problems together, its hard to see a path to success for most office buildings.  Last week I was in NYC and met with some senior folks from JLL. NYC has now over 100M square feet of vacant office space.  There are only 7 cities in the US having more than 100M square feet of office. NYC has more than 100M SF of vacant office space. ------------ Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are taking another look at the world of energy and some of the disruptions that could result in major economic and geopolitical disruption far beyond the turbulence our world is currently facing.  Today’s show is about unintended consequences. ------------- Host: Victor Menasce email: podcast@victorjm.com

Peter Roisman is based in Puerto Rico where he is the principal at revmlc.com. The company specializes in rating leasing performance for multi-family properties and then training property managers to improve their performance when it comes to leasing. Most property managers don't treat leasing as a core excellence. The scores across most multi-family properties confirm this. To connect and to learn more, visit revmlc.com. ------------ Host: Victor Menasce email: podcast@victorjm.com