Real Estate Espresso

On today's episode, we're taking a deep dive into an issue that is quickly becoming one of the most critical factors in site selection, underwriting, and property development across North America: the state of our electrical grid.If you've been reading the headlines, you've probably seen a lot of finger-pointing. The mainstream narrative goes something like this: artificial intelligence and hyperscale data centers are single-handedly overwhelming our power grid, driving up energy prices, and threatening to break our infrastructure. But if you dig just one layer beneath the surface, you realize that AI isn't the underlying cause of this crisis—it's simply the catalyst that exposed a multi-decade backlog of underinvestment.Today, we are looking at the real drivers behind grid modernization, why Public Utilities Commissions kept the system running on borrowed time, and what this means for you as a real estate investor.To understand why billions of dollars in capital expenditure are suddenly flooding into grid modernization, we have to look back at how public utilities have operated for the past forty years.-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today, we are taking a closer look at last week's executive shakeup at Fannie Mae. A lot of market commentators are treating this as a simple administrative hurdle—telling investors to prepare for extended processing times and minor closing delays.While extended processing times are annoying, that perspective misses the real danger facing real estate investors today.The major risk isn't that your loan officer takes an extra few weeks to get back to you. The major risk is abrupt policy volatility. High-level executive changes at government-sponsored enterprises don't just swap out office nameplates—they signal an imminent shift in lending policy. -------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

There has been a lot of discussion over the past few days about tariffs and the trade relationship between Canada and the United States. The events of Friday where Canada withdrew from the negotiations put the impasse in stark terms. Most of that discussion has focused on manufacturing, autos, steel, aluminum, and politics.The trade war is clearly escalating. Tariffs are just the start. What happens if the nations take the even more drastic step of withholding exports to each other? Major parts of the US are dependent on Canada for critical resources. We don't know where this will end. But underneath all of that is a much more practical question for real estate investors.What happens when a trade dispute starts changing the cost of building?Canada is an important supplier of construction materials into the United States. Lumber is probably the most obvious example, but it goes well beyond lumber. Steel, aluminum, cement, plywood, and a number of manufactured products cross the border every day. The trade dispute also puts the agreement with Mexico in uncertain territory.Higher construction costs are obviously not helpful if you're trying to build something today.But they can have a very different effect if you already own the finished product.If a new apartment building becomes more expensive to construct, some projects that were marginal simply don't get built.If fewer projects start this year, there may be fewer units delivered two or three years from now.That can reduce future competition for existing properties.So the same tariff can be negative for one real estate investor and potentially positive for another.The developer is dealing with higher replacement cost.The existing owner may eventually benefit from that same higher replacement cost.------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

John McNellis is based in Palo Alto and has been in commercial real estate for more than 40 years. He has been focused on grocery anchored shopping centers in Northern California for most of that time. On today's show we are talking about what is working today and the fundamentals that have stood the test of time. He is also the author of the book "Making it In Real Estate", now in its third edition. To connect with John visit https://mcnellis.com/ or email him at john@mcnellis.com. ------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Dani Lyn Robison is based in Orlando Florida, but operates a real estate business located in Ohio. On today's show we are talking about Senior Housing. This is one of several asset classes in their portfolio. To connect with Dani and to learn more, visit chatwithfreedom.com-----------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show, we're talking about a situation that confuses a lot of investors. How can the same property have two different underwriting models, and how can both of them be correct?The answer comes down to perspective.A lender is underwriting the property for one purpose. An investor is underwriting the property for a different purpose. Those two objectives overlap, but they are not identical.Let's use a real-world example.There are a number of state and local programs around the country that offer some form of property tax abatement for qualifying projects. Perhaps the property provides affordable housing, senior housing, or satisfies some other public policy objective.The economics can be very meaningful.Suppose the property would normally pay one million dollars a year in property taxes. Under the applicable program, the actual tax expense might be a $700,000 difference in net operating income.But there is a wrinkle.The tax abatement has to be approved each year. There is a small but non-zero risk that the property might not qualify one year. Should you assume the tax abatement in your underwriting?-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today we're going to venture outside real estate for a few minutes and talk about software. But this is really a discussion about business economics, and those principles apply to every industry.For the past twenty years, one of the most attractive business models in technology has been Software as a Service, or SaaS.Instead of buying software once, customers pay every month or every year. From the software company's perspective, this is wonderful. Revenue becomes recurring and predictable. Investors love recurring revenue, and software companies have been valued accordingly.But artificial intelligence may be starting to challenge the fundamental economics of that model.We recently conducted an audit of the software subscriptions inside our own business. Like many companies, we had accumulated numerous applications over the years. Accounting software, project management software, communication tools, document management, CRM systems, design tools, and numerous specialized applications.What became obvious was that we were paying for a tremendous amount of capability that we simply weren't using.In several cases we were subscribing to the highest tier because, at some point, somebody believed we needed one particular feature. When we looked carefully at actual usage, we discovered that the basic version accomplished virtually everything we needed.We downgraded several subscriptions and, in some cases, reduced the cost by more than fifty percent.Did productivity decline?Not at all.Suppose your company uses only ten percent of the functionality in a large project management platform.What if instead you built exactly the workflow your organization needs?Instead of changing your business process to accommodate somebody else's software, the software accommodates your business process.There is something very attractive about that.But before declaring the SaaS industry dead, we need to distinguish between development cost and lifecycle cost.----------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On August 20, I'm going to be hosting a webinar on how to use AI to validate the quotes you receive from contractors and subcontractors. To register for the webinar click HERE. Even if you can't attend live, we will send you the recording. --------------Today we're talking about an announcement from the U.S. Treasury Department that has generated a surprising amount of noise in the financial markets.The two words getting attention are Treasury buybacks.Treasury announced today, August 19, that beginning September 9 it will increase, by at least double, the size of its liquidity support buyback operations for longer-dated Treasury securities. Specifically, the maximum size for operations in the 10-to-20-year and 20-to-30-year sectors will increase from $2 billion to at least $4 billion per operation.It might be coincidence, but this happened on the same day that US debt topped $40T. The country's “total public debt outstanding” officially hit $40.047 trillion on Tuesday, the Treasury Department reported Wednesday, ticking up from $39.987 trillion a day earlier.Immediately, people started describing this as quantitative easing, QE light, yield curve control, and even a new version of Operation Twist.I think we need to separate the mechanics from the headlines.A Treasury buyback is not the same thing as Federal Reserve quantitative easing. The Treasury is already issuing enormous quantities of debt. In a buyback operation, Treasury can issue securities in one part of the market and use some of those proceeds to repurchase securities that are already outstanding.The important distinction is which securities they are buying.The liquidity support program primarily targets what are called off-the-run Treasury securities.When Treasury issues a new 10-year note, for example, that newly issued security becomes the on-the-run Treasury. It tends to trade very actively. The older 10-year securities that were issued previously become off-the-run securities.They're still Treasury obligations. Their credit quality hasn't changed. But they don't necessarily trade with the same liquidity. That becomes important during periods of market stress. If a large investor needs to sell a significant quantity of an older Treasury security, there may not be as deep a pool of buyers as there is for the newest issue.--------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today's episode is another AMA, or Ask Me Anything.Today's question comes from Charles, who asks:"What is your opinion of office-to-residential conversions? Namely, are they attractive enough to become a Class B property? I see repurposed motels as apartments, which I personally do not like, but I suppose there is a market for those properties."------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Later this week we're hosting a deep dive webinar on AI In Construction. To register, click HERE .Since the beginning, construction drawings have been one of the hardest documents for artificial intelligence to understand.That makes sense when you think about it. A construction drawing is not simply a page of text. It contains symbols, dimensions, schedules, notes, details and references to information that might appear twenty pages later. A symbol on the floor plan may tell you almost nothing until you find the corresponding detail or section.But something has changed dramatically over the past couple of months. The newest generation of reasoning models has become substantially better at reading and cross-referencing construction drawings. Testing across structural, civil, mechanical and electrical drawings is now showing surprisingly strong performance, particularly when the task involves extracting information from schedules, identifying specific elements and following references between sheets.That matters even if you're not a contractor.Suppose you're renovating an apartment building, replacing a roof, building out an office or doing a major addition to your house. The contractor hands you an estimate or a quote. Is it a fair price? How do you know? This is where AI is becoming genuinely useful.Register for the webinar. We have nothing to sell, just sharing how we are using AI in estimating.---------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Christina Kovacs is based in Fort Lauderdale, but she invests primarily in Missouri. On today's show we are talking about the pitfalls of remote management and how to set things up for success. To connect with Christina, visit https://www.christinakovacs.com/-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Andrew Cushman is based in Southern California, but invests mostly in the South Eastern states. On today's show we are talking about the distress in the market and what is driving the distress. Portfolios in secondary markets in states like Georgia and the Carolinas are seeing high occupancy and rent growth.To connect with Andrew visit https://www.vpacq.com/--------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show we're talking about Adam Neumann, the founder of WeWork.There are probably few entrepreneurs in recent memory whose rise and fall has been documented as extensively as Adam Neumann.WeWork went from being one of the most celebrated private companies in the world, valued at roughly $47 billion at its peak, to one of the most spectacular failed IPOs in recent history.The company ultimately filed for bankruptcy years later.But perhaps the more interesting story for investors isn't the collapse of WeWork.It's what happened to Adam Neumann afterward.Because somehow, after becoming the public face of one of the largest venture-capital failures of the past decade, Neumann managed to convince sophisticated investors to give him hundreds of millions of dollars to build another real estate company.There is a lesson in that.And it starts with understanding what actually went wrong at WeWork.------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show we're going to connect three things that might seem completely unrelated: the Japanese yen, United States Treasury bonds, and the interest rate on your next real estate loan.They are more closely connected than you might think.So why should a real estate investor in Dallas, Atlanta, or Phoenix care what happens to the Japanese yen?Because Japan is the largest foreign holder of United States Treasury securities. The latest Treasury data puts Japanese holdings at roughly 1.2 trillion dollars.When Japan wants to defend the yen, it needs to buy yen and sell foreign currency assets. Those reserves include an enormous portfolio of United States government securities.Now, Japan does not necessarily have to dump Treasuries into the open market. In fact, the Federal Reserve has a facility specifically designed to prevent that from happening.It's called the FIMA Repo Facility. It allows foreign monetary authorities to temporarily exchange Treasury securities for dollars rather than selling those securities outright into the market. The Federal Reserve explicitly says one purpose of the facility is to support the smooth functioning of the Treasury market by providing an alternative source of dollars. The Japanese yen has been under extraordinary pressure. It recently traded near 164 yen to the dollar, a level not seen in roughly four decades. Japan and the United States responded with a rare coordinated intervention designed to strengthen the yen. For a few days it worked. The yen strengthened to around 155. But here we are less than two weeks later, and the yen is back near 159.These interventions are not working. If the yen stabilizes, much of this concern disappears.If it doesn't, the choices become progressively more uncomfortable.Japan can intervene again. It can raise domestic interest rates more aggressively. It can access dollar liquidity against its Treasury portfolio. Or ultimately, it can sell some foreign assets.Every choice has consequences.We could see bond yields rise just because Japan can't tolerate buying oil in US dollars at 165 Yen to the dollar. -------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

The question is whether you want to partner with the city or not. The city can add value (or erode it) without being formally at the partnership table. How many people underwrite the city as part of their due diligence? ------------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today's show is sponsored by The Cost Segregation Guys. If you own investment real estate and are not taking advantage of accelerated depreciation, you're probably leaving money on the table. Check out the Cost Segregation Guys using the link and you will qualify for a discount on their services. ---------------Today's show is a case study of a property that is about to go to tax sale. That not the interesting part. The real question is "Why would anyone own it?" and "Who would ever buy it?"---------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today we're talking about a change in the condominium market that has received surprisingly little attention.The question is not whether your condo is worth $300,000 or $500,000.The question is whether a buyer can get a mortgage on it.We saw this problem extensively in the wake of the 2008 financial crisis. There were condominium projects all over the country where individual owners stopped paying their mortgages. Many also stopped paying their condominium fees.As delinquencies increased, the financially healthy owners had to carry more of the burden.Fannie Mae still has rules addressing precisely this issue. Under its Full Review process, no more than 15 percent of the units can be 60 days or more delinquent on regular HOA assessments. The same 15 percent test applies to delinquency on special assessments. Fannie Mae announced in March that it is increasing the minimum replacement-reserve allocation under its Full Review process from 10 percent to 15 percent of annual budgeted assessment income. That new 15 percent standard becomes mandatory for loan applications dated January 4, 2027 or later.Fannie has also tightened the rules governing reserve studies. If an association is relying on a reserve study rather than the standard budget percentage, the lender must use the highest recommended reserve allocation in that study. The old baseline funding approach, where the reserve balance could essentially approach zero without going negative, can no longer be used to justify the exception. Those reserve-study changes became mandatory for applications dated August 3, 2026 or later.Freddie Mac has moved in the same general direction, although its current numerical budget requirement remains 10 percent rather than Fannie's announced 15 percent. Freddie has likewise eliminated use of the baseline funding methodology when a reserve study is being used as an exception. It also requires lenders to use the highest funding recommendation contained in the reserve study.Your condominium is no longer being underwritten merely as an individual piece of real estate.The lender is effectively underwriting your condominium association.--------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Frank Rolfe is based in Missouri and invests in mobile home parks across the US. He is the fifth largest owner of mobile home parks in the country. On today's show we are talking about the "buy box" for mobile home parks and the which properties you should stay clear of. To connect with Frank, visit mhu.com-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Neal Bawa is based in Silicon Valley where he invests in multiple asset classes including new development in several markets across the US. On today's show we are talking about the state of the apartment market in the sunbelt. In particular, Neal makes a distinction between the syndication market and the rest of the apartment market. To connect with Neal, visit https://multifamilyu.com/club--------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show, we're continuing our look at industrial real estate across the United States.Today we're moving through the central states, starting around the Great Lakes, moving through the Midwest and Memphis, and finishing in Texas along the Gulf Coast.The Marcus & Millichap second-quarter reports reveal a pattern we've seen in several parts of the country.But there are distinct differences in each market. ------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show, we're looking at the industrial outlook across the Western United States, based on Marcus & Millichap's second-quarter 2026 market reports.We'll examine ten markets: Las Vegas, Los Angeles, Oakland, Orange County, Phoenix, Portland, the Inland Empire, Sacramento, San Diego, and Seattle-Tacoma.The broad theme is straightforward.Western industrial markets are still digesting a major wave of construction. In many locations, vacancy rose not because demand disappeared, but because new supply arrived faster than tenants could absorb it.This is similar to what we saw elsewhere in the SE and the NE. Let's begin in Las Vegas.The metro added nearly 24 million square feet of industrial space over the past three years. Even with positive absorption, vacancy increased by more than 10 points.That is a supply problem.Construction is now falling sharply. Deliveries are expected to reach an 11-year low, expanding inventory by only 1 percent. Roughly 80 percent of the space scheduled for completion was already committed as of April.In the Inland Empire, roughly 107 million square feet of industrial space was delivered over the past five years. That's a massive amount of new construction.That pushed vacancy near a 15-year high.The pipeline is now contracting sharply. About 10 million square feet is expected to be completed this year, the smallest total since 2012.For several years, Phoenix experienced one of the country's most aggressive industrial construction cycles. Deliveries exceeded demand, and vacancy rose.Now, large tenants are beginning to absorb that inventory.-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show, we're looking at the industrial real estate outlook across the Northeast corridor.Marcus & Millichap recently published its 2Q 2026 industrial forecasts for 36 metropolitan markets across the United States. Today, we're going to focus on six of them: Boston, New York City, Northern New Jersey, Philadelphia, Baltimore, and Washington, D.C.These markets are connected geographically by the I-95 corridor, but they are not all moving in the same direction.There is, however, one common theme.The wave of new construction that affected industrial markets over the past several years is beginning to recede.------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today is the first in a four part mini-series on Industrial Real Estate across the US. The folks at Marcus & Millichap recently published 36 submarket reports across the US focusing on Industrial Real Estate. Today we are concentrating on six markets in the Southeast. --------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show, we're examining the Japanese yen carry trade and why its possible unwinding should be of interest to real estate investors thousands of miles away from Tokyo.A carry trade sounds complicated, but the basic idea is simple. An investor borrows money in a currency with a low interest rate and invests that money in an asset offering a higher return.The carry trade has its roots in an economic stagnation that started in 1991. Their stock market crashed in 1991 and the air came out of their real estate bubble? Over the next several years, the Japanese central bank lowered interest rates to try and stimulate the economy. By 1995 rates were at 0.5% and by 1999 they were down to zero. For decades, Japan was the natural source of that cheap money. Interest rates were near zero, and at times negative. Investors could borrow yen, convert the proceeds into dollars, euros, Australian dollars, or another currency, and purchase higher-yielding assets.Carry trades depend on three conditions: cheap funding, stable exchange rates, and confidence that liquidity will remain available.All three conditions are now being questioned.The Bank of Japan has been moving away from the extraordinary monetary policies that made yen funding so attractive. At the same time, Japanese authorities have intervened in currency markets after extreme yen weakness. Even a rapid strengthening caused by intervention can force leveraged traders to reduce their positions. We saw a preview in August of 2024. A strengthening yen and changing expectations for Japanese interest rates helped trigger a rapid unwinding of leveraged positions. The result was not limited to the foreign-exchange market. Japanese equities fell sharply, volatility jumped, and investors sold assets elsewhere to meet margin calls and reduce risk. So what happens to credit markets when the carry trade ends?------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Dr. Anas Alhajji is one of the preeminent energy analysts in the world today. He is based in Dallas Texas. On today's show we are talking about the multiple factors that are affecting energy markets and global supply chains. Most of these factors are not making headlines and are largely being ignored by the markets. To connect with Dr. Alhajji you can find him on Twitter at https://x.com/anasalhajjiHis substack newsletter is widely followed and contains extraordinary behind the scenes analysis. Daily: https://afalhajji.substack.com/Weekly: https://anasalhajjieoa.substack.com/------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show, we're reviewing a new book by Andrew Ross Sorkin called 1929: Inside the Greatest Crash in Wall Street History, and How It Shattered a Nation.Sorkin is best known for Too Big to Fail, his account of the 2008 financial crisis. In this book, he goes back nearly eighty years earlier to examine the most famous market collapse in American history.Most people know the basic outline. The stock market rose dramatically during the Roaring Twenties. Speculation took hold. The market crashed in October of 1929, and the Great Depression followed.But knowing the outline is not the same as understanding what happened.Sorkin's strength is narrative. He takes a complicated financial event and tells it through the people who experienced it. Bankers, traders, politicians, regulators, journalists, and ordinary investors appear not as distant historical figures, but as human beings operating under pressure.The book's central lesson is not simply that markets can fall. Everyone already knows that.The deeper lesson is that intelligent, experienced people can see warning signs and still fail to act.Why?Because the incentives of the moment are often stronger than the consequences of the future.-------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Cost Segregation Is The Key to Bonus Depreciation. To Take advantage of bonus depreciation and lower your taxes, reach out to the Cost Segregation Guys.-------------Panama is not in the headlines, but maybe it should be. Today we're talking about water levels in the Panama Canal.When most people hear that the canal is experiencing low water, they assume the immediate result will be fewer ships passing through each day.That is not yet the principal restriction.The more immediate constraint is draft.Draft is the distance between the waterline and the bottom of the ship. The heavier the cargo, the deeper the vessel sits in the water.When water levels fall, the canal cannot safely accommodate ships that sit as deeply in the water. The canal may still allow the same number of vessels to transit, but each vessel may have to carry less cargo.That means the number of ships can remain unchanged while the actual transportation capacity of the canal declines.-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

The progression from Alan Greenspan to Kevin Warsh is not simply a change in personality. It reflects four different views of how much the Federal Reserve should shape market expectations.At one end is the belief that ambiguity preserves flexibility. At the other is the belief that communication itself is a monetary-policy instrument. Warsh appears to be pulling the institution back toward flexibility, but in a market that has become accustomed to continuous guidance.Warsh seems to be drawing a distinction between transparency and prediction.The Fed should explain why it made today's decision. But that does not mean it should promise what it will do three or six months from now.There is also a concern that excessive guidance encourages too much risk taking.When investors believe the Fed has clearly mapped out the future, they may borrow short, lend long, buy duration, or sell volatility with too much confidence.A less predictable Fed may force investors to price risk more carefully.That may be healthier over the long term.-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

It's rare that I get wrapped up in the news cycle. I'm not a news junkie. But this week, something crossed my desk that I simply could not ignore. We all lived through the pandemic and were presented with data from the media that did not always line up with basic science. Those scientists, pathologists, and doctors who presented data that contradicted the official narrative were ostracized as quacks and conspiracy theorists.Kudos to Senator Rand Paul for getting his hands on the Dr. Anthony Fauci's diary. Dr. Fauci was the government's face of the pandemic for nearly 3 years. Dr Fauci was seen as recommending social policy to deal with what was an epidemic. His testimony before Congress seemed to be more focused on protecting his personal interests and that of a few researchers than getting to the truth. The entire document is 1141 pages in length and the diary starts on pageI'm not a cynic and I am not a conspiracy theorist. Dr. Fauci's own words clearly contradict his own public statements. The reason this is so important is that the lives of billions of people were upended for several years. The economic and social impact was severe. We are still dealing with the aftermath of the decisions that were made at that time. The unintended consequences of decisions that were probably well intentioned are still with us. Those decisions bankrupted many investors in commercial office real estate. Those decisions created short term demand for products that defied the long term trends. We saw a spike in demand for campers and RVs. We saw a spike in demand for vacation properties. We saw supply chain disruptions on a scale that we had not seen probably since the second world war. If there is one thing that the pandemic taught us is how to build more resilient supply chains that quite frankly we now in the current geopolitical climate and we will certainly need in the future. -----------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

We're building a project in Louisiana that has a lot of site work associated with it. In fact we need to import about 60,000 cubic yards of material to raise the finished grade of the property. The price per yard can vary widely depending on transportation. On today's show we are showing how AI is being used to find creative solutions to reducing the cost of the dirt work.----------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Eric Brunner is a CPA based in Milwaukee. On today's show we are talking about which types of improvements must be capitalized versus expensed. Many accountants get this wrong and create tax liability for their clients by mistake. To connect with Eric, visit him on LinkedIn------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)  

Mitchell Rice is based in Salt Lake City, Utah. He is the founder of ElkStone Capital Partners. He got his start in the investment management group at The Church of Jesus Christ of Latter Day Saints working on large commercial projects in multiple asset classes. After a few years he launched his own investment management business. On today's show we are talking about converting functionally obsolete hotels into workforce housing and how this is expanding the supply of affordable product in the market. To connect with Mitch, or to learn more visit https://www.elkstonecapitalpartners.com/------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

China is manufacturing solar panels at a scale that has transformed the economics of the global market. High-efficiency panels leaving China are currently priced at roughly eleven cents per watt. Some domestic Chinese prices are even lower.That sounds extraordinarily cheap. But the panel is only one component of a solar installation.The proper analysis begins with the building's hourly electrical load, not its annual utility bill.Two buildings can consume the same amount of electricity annually and have very different solar economics. A warehouse operating primarily during daylight hours may consume solar power as it is generated. An apartment building may experience its highest common-area loads during the evening, after solar production has declined.Electricity consumed directly inside the building is usually more valuable than electricity exported to the grid. Export compensation can be materially lower than the retail price, depending on the utility tariff.So, is a ten-year break-even compelling?Usually, not by itself.A ten-year payback represents an approximate unlevered return of ten percent before degradation, maintenance, equipment replacement and execution risk. It may still make sense for an owner with a long holding period, a newly replaced roof, strong tax benefits and confidence that the building will remain occupied.A five-year break-even is different. That implies roughly a twenty-percent simple return before considering residual value. For a durable system producing predictable savings, that can be highly attractive.------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Most people are still using artificial intelligence as though it were a slightly more sophisticated search engine. They type a question into a chat window, receive an answer, and then go back to performing their work manually. That approach can save a few minutes. But it misses the larger opportunity.Both OpenAI and Anthropic have recently introduced capabilities that allow you to teach the system a workflow by demonstrating it on the computer screen. You press record, perform the task yourself, and the software observes your mouse movements, keyboard entries, browser navigation, and sequence of decisions. You can then save that recorded process as a reusable skill.Think of this as training a new administrative employee. You don't merely tell them, “Prepare the weekly report.” You sit beside them and demonstrate where the source information is located, which files to open, what information to copy, how to name the finished document, and where to save it.Once the skill has been recorded, the computer can repeat that sequence.For a real estate investor, the possibilities are substantial.---------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

There are between 5.7 and 6.5 million second homes in the United States. That represents a meaningful portion of the housing stock, about 5% if you consider that there are about 133 million households in the US. When people hear the phrase second home, they often picture an oceanfront mansion owned by someone in the top one percent. But when you compare several million second homes with the total number of American households, it becomes clear that ownership extends well beyond the ultrawealthy.Some are lake cottages that have been in families for generations. Some are small condominiums in warm climates. Others are hunting cabins, inherited homes, or houses purchased near children and grandchildren.This raises an interesting question. When does a second or third home become an investment rather than simply a vacation property?Ownership alone does not make something an investment.A vacation home is primarily purchased to provide a personal experience. That is consumption, even when the asset increases in value.There is nothing wrong with consumption. The problem arises when people describe a lifestyle purchase as an investment to justify spending more than they can comfortably afford.An investment property begins with a different question.Instead of asking, “Would I enjoy owning this property?” the investor asks, “What economic problem does this property solve, and what return should the capital produce?”-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today's show is sponsored by the Cost Segregation Guys. They can help accelerate depreciation and improve your property's cash flow. Click on the LINK to qualify for a discount. -------------The Gordie Howe International Bridge between Windsor and Detroit is a major infrastructure project between two nations. But beneath the politics and engineering is a financial structure that closely resembles many real estate partnerships.Canada agreed to fund the project when Michigan declined to provide upfront capital. Through the Windsor-Detroit Bridge Authority, Canada assumed the cost of design, land acquisition, construction, and supporting infrastructure on both sides of the border.The project cost is approximately 6.4 billion Canadian dollars, or about $4.5B USD.Under the original 2012 agreement, Canada would collect the toll revenue. That revenue would first pay operating and maintenance expenses. After those costs were covered, the remaining cash flow would be used to repay Canada's capital investment and financing costs.Only after Canada had recovered its investment would the remaining profits be split equally between Canada and Michigan.That structure should sound familiar to real estate investors. It follows a common waterfall.A later 15 year side agreement introduced a different revenue structure. During that period, net revenue is divided equally.Net revenue means toll collections after direct operating expenses have been paid.Canada's half is applied toward construction and financing costs. The United States' half is directed into a regional economic development fund supporting infrastructure in the border corridor.This structure also has merit. There is no right or wrong. The real question is whether the economics can support both objectives without placing the original capital at unreasonable risk.That is the same balance we seek in a well-structured real estate partnership.We need enough cash flow to operate the asset.We need sufficient reserves to manage uncertainty.We need a credible path to return investor capital.And we need a profit-sharing structure that rewards everyone who contributes to the project's success. But a waterfall cannot create money that the underlying asset does not generate. Structure matters, but economics come first.-----------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

A few days ago I reported on the structural failure at the former Pfizer headquarters at 235 East 42nd Street in Manhattan. Late last week we learned a few more details. The structural engineer on the project has now publicly stated that the reinforcing steel specified in the construction drawings was apparently never installed on the two columns that ultimately buckled.If that statement ultimately proves to be correct, then this wasn't a design failure.It was an execution failure.The columns in question are made of steel. They are made of structural steel that looks like an I beam, except it is vertical instead of horizontal. The engineer called for steel plates to be welded to the sides of each beam in order to create a box beam out of the I-beam profile. This was not done. The photos of the failed columns clearly show the original columns with no welded plates. I've looked at the detail on the structural drawings which clearly show the treatment for four different types of columns. The columns near the exterior are the ones in question. That makes me ask a different question.How did this get past everyone?Now, I want to be careful.The official investigation is still underway. The Department of Buildings, the Department of Investigation and independent forensic engineers are all examining what happened, and no final conclusions have been reached. The city has also expanded inspections to other projects involving the same developer and inspection firm while investigators determine whether broader quality-control issues exist.But regardless of where responsibility ultimately lands, this incident exposes something much larger.A gap in quality assurance.Quality assurance isn't glamorous. Nobody celebrates it. Nobody gets awards for finding problems before they become disasters. But every high-reliability industry depends on it.Software isn't shipped without testing.Aircraft aren't delivered without  every component undergoing inspection and certification.Automobiles undergo extensive inspection on the factory floor before they're ever sold.As you think about that, ask yourself one simple question.In your own business, where are you relying on assumptions instead of verification?-----------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Burt Mulwitz is based in Pataya in Thailand. He has been investing in real estate over 7 decades. On today's show he is sharing a funny story of a 68 unit property that I suspect my brother was living in. To connect with Burt call 310-922-1175 or visit his website at burtmentor.com------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Chad was one of the founding members of Left Field Investors and today coaches passive investors on how to make thorough evaluations of investment options. Not a substitute for a financial advisor. But rather an experienced passive investor in real estate who has developed process and systems around how to evaluation investment options during the each phase of the due diligence process. To connect with Chad visit https://chadackermanrealestate.com/. He also has a starter kit that could be helpful at https://chadackermanrealestate.com/start-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

The term ROAD means Renewing Opportunity in the American Dream.The act Act became law on July 11 without the President's signature. It passed with enough votes in the Congress and the Senate that there was no possibility of presidential Veto. It is a sprawling piece of legislation containing dozens of provisions covering housing supply, financing, manufactured housing, building codes, environmental review, affordable housing programs and institutional ownership of single-family homes.The Act restricts large institutional investors from purchasing additional single-family homes once they control at least 350 homes, subject to several exceptions. Existing portfolios are not required to be sold, and exceptions remain for newly constructed housing, certain build-to-rent communities, senior housing and other qualifying transactions.This could reduce competition for scattered-site acquisitions from the largest operators. But it may also redirect institutional capital toward purpose-built rental communities, multifamily apartments and financing partnerships with smaller developers.--------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

The Strait of Hormuz is capturing headlines again as conflict between the United States and Iran escalates. Some commercial operators are reportedly refusing passage even with military escorts because crews and shipowners do not believe the risk can be managed. But viewing Hormuz as an isolated crisis misses the larger trend. Commercial shipping is increasingly becoming a weapon of war, economic coercion, and political leverage across multiple regions.We have seen attacks and interference in the Gulf of Aden, the Black Sea, the Sea of Azov, the Baltic Sea, and around strategic infrastructure in Central America. Ships are large, slow, visible, expensive targets. A relatively inexpensive drone or guided munition can damage a vessel worth tens of millions of dollars, disrupt its cargo, increase insurance costs, and discourage every other shipowner from entering the area.The ship does not need to sink for the attack to succeed.--------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Yesterday's inflation report delivered a surprise. Headline prices fell sharply, but the important story was beneath the headline. This was not a gasoline story. Core inflation was unchanged for the month, and several categories that have kept inflation stubbornly high moved lower. For investors, that distinction matters because it changes the conversation around interest rates today.The new report is the Consumer Price Index, not the Personal Consumption Expenditures index that the Federal Reserve prefers. The PCE report still showed elevated inflation. But the CPI components give us a preview of where price pressure may be heading. Core CPI came in flat, compared with expectations for an increase. Core goods declined. Medical services, transportation services, used vehicles, and automobile insurance showed softness. Those are signs of broader disinflation, not merely cheaper oil.------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

S2 Capital failed last week with the loss of nearly $400 million of investor capital. On today's show we are looking at some of the macro factors that contributed to this failure.-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

The Real Estate Espresso Podcast is sponsored by the Cost Segregation Guys. Cost Segregation is the key to accelerating depreciation and improving cash flow for your real estate assets. Click HERE to connect with them and get a discount on their services. ------------Today we are talking about what may be the beginning of a nuclear renaissance. I realize that this is a real estate podcast. But occasionally I come across something that has the potential to have global impact.Over the July Fourth weekend, nuclear startup company Aalo Atomics brought a reactor to criticality at Idaho National Laboratory. The reactor was manufactured in roughly forty days. That is an extraordinary achievement, but the real story is not the stopwatch. The real story is the system behind it.The first enabling technology is the coolant. Conventional reactors use water under high pressure. High pressure demands thick reactor vessels, specialized forgings, heavy components, and a supply chain with very few qualified manufacturers. These reactor vessels are hugely expensive and take an extraordinary amount of time to manufacture. Aalo uses liquid sodium, which transfers heat at low pressure and has a high boiling point. Lower pressure allows thinner steel vessels that can be made from plate, rolled, welded, inspected, and moved through an industrial process. That changes the manufacturing problem from one of heroic craftsmanship to one of repeatable production.Instead of building one plant as a unique civil project, the design is broken into truckable modules. A module can be built indoors, where tools remain in place, workers repeat tasks, and quality is measured at every station. That sounds ordinary because it is how automobiles, aircraft, and industrial equipment are manufactured. The building was completed in thirty six days, the reactor was fabricated in less than a month, and hundreds of fuel rods were assembled in 2.5 days.------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

David Pelusio is based in Rochester NY where he specializes in converting abandoned department stores and shopping centers into drive-through, climate controlled storage. On today's show we are talking about the formula for these types of redevelopment projects. To connect with David, email him directly at davidrlc@rlcone.com.---------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Nate Astle is based in Kansas City where he is a financial therapist. On today's show we are talking about the emotional component of money and financial decision making. To reach out and connect with Nate, visit https://www.financialtherapyclinicalinstitute.com/or connect with him on LinkedIn at https://www.linkedin.com/in/nathanastle/------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today's podcast continues our discussion of the structural failure at the former Pfizer headquarters in Midtown Manhattan, where a massive office-to-residential conversion suffered localized structural distress during construction.The investigation has only begun. Engineers have not yet reached any conclusions about the root cause, and it would be inappropriate to speculate. The building may ultimately be repaired, strengthened, and safely completed. Or investigators may determine that more extensive reconstruction is required. We simply don't know.But even before the engineering investigation is complete, another consequence has already begun to unfold.Reputation.Real estate is built on confidence. Lenders finance confidence. Investors buy confidence. Insurance companies price confidence. Residents lease confidence.When confidence disappears, value disappears.We saw this after the collapse of Champlain Towers South in Surfside, Florida. The tragedy permanently changed how buyers viewed aging condominium buildings. Reserve studies became front-page news. Deferred maintenance became a deal breaker. Insurance premiums exploded. Financing became more difficult. Thousands of condominium owners across Florida found themselves facing six-figure special assessments simply because the market had fundamentally re-priced structural risk.Whether fair or not, that event changed public perception.------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

The structural failure on 42nd St. in Midtown Manhattan this past week made headlines all over the world. The building in question was originally an office building belonging to Pfizer and is now in the process of being converted into a residential apartment building. It is the largest office to residential conversion project in US history and will result in nearly 1600 apartments.The structural design of a building is based on several factors. The first is, of course, the weight of all of the levels of the building that are being supported above the current level. The second is the lateral forces that result from the wind, pushing the building sideways.These are usually handled with sheer walls or diagonal bracing members that prevent the building from deflecting sideways.This is where most structural engineers get it wrong. The assumption is that if the wind is blowing from one side of the building, you have a zone of high-pressure on that side in a zone of low pressure on the opposite side. intuitively this makes sense. Wind tends to flow in a straight line. But in a dense urban environment with lots of surrounding buildings, the wind can and often does go in circles as it makes its way around the neighbouring buildings. In fact, there are many examples of structural failures in New York City, where the wind can often cause a building to twist like a corkscrew rather than just trying to bend to the wind. When that happens, the structural columns in the corners are the ones that experience the most stress. They're almost always the ones that fail first. I'm going to bet that wind was a contributing factor. Now if you look at the weather on the day of the failure, the wind was light ranging from 5-7 mph out of the north west. Hardly the conditions that would damage a building. The heat an humidity on July 3 triggered powerful afternoon and evening thunderstorms across the city, bringing damaging wind gusts that caused localized power outages for over 17,000 New Yorkers before conditions calmed back down. I suspect that the damage happened on July 3 and was not noticed until Tuesday when the columns progressively moved and buckled. ------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today's show, we're talking about meetings, specifically the balance between enough structure to create accountability and so much meeting time that the work itself gets pushed into evenings, weekends, and sleep.I have been looking at my own calendar, and the conclusion is uncomfortable. Too much of the week is committed to talking about work. The consequence is not merely fatigue. When focused work has to be stolen from the margins of the day, commitments become less predictable. A calendar full of meetings can create the appearance of control while quietly making the organization less reliable.The research on meeting effectiveness does not support one universal format. It supports matching the communication method to the job. Routine information should usually be written. Coordination among a tightly connected team can justify a brief standup. A difficult decision may require a longer working session. A formal operating review can make sense when leaders must examine performance, challenge assumptions, allocate resources, and leave with consequential decisions. Meeting science makes a useful distinction. If the purpose is simply to broadcast routine, non-urgent information, there is little reason to synchronize six calendars. Good asynchronous communication requires context, clarity, ownership, and documentation. It is not the absence of management. Done properly, it is management without forcing everyone to stop at the same moment.------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today we're talking about the July 1 review of the United States Mexico Canada Agreement, better known as USMCA, and what it means for anyone developing or constructing buildings in North America.Leading up to July 1, the public conversation made the date sound like a cliff. Either the agreement would be renewed for another sixteen years, or it would somehow vanish overnight. That was never the actual mechanism. USMCA entered into force on July 1, 2020. The agreement has a sixteen-year term, which takes it to 2036. The six-year review was a decision point, not an expiration date. Because the three countries did not unanimously extend it, the agreement remains in force and now moves into annual reviews.The important point is that continuity and certainty are not the same thing. The legal framework survives. Goods that satisfy the agreement's rules of origin can continue to receive preferential treatment. But businesses no longer have a fresh sixteen-year runway. They now face a recurring political checkpoint, with the possibility of changes being negotiated every year.For the construction industry, that distinction matters. Construction is a long-cycle business. A development conceived today may not buy structural steel, electrical gear, windows, elevators, HVAC equipment, or finish materials for two or three years. A manufacturer deciding where to build a plant may be making a twenty-year decision. Annual trade reviews introduce a mismatch between short political cycles and long capital commitments.-------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

As usual the headline doesn't tell the story. The numbers often get revised for previous months.  This time revisions to April and May, combined with a falling unemployment rate, tell a much weaker story than the headline suggests.The Bureau of Labor Statistics reported that nonfarm payrolls increased by 57,000 in June. That is already a modest number for an economy of this size. But April was revised down by 31,000 jobs, from 179,000 to 148,000. May was revised down by 43,000, from 172,000 to 129,000. Together, those two prior months contained 74,000 fewer jobs than previously reported.Revisions are a normal part of survey-based data. More employers respond, seasonal factors are recalculated, and the estimate becomes more complete. The issue is not that revisions occur. The issue is that investors, lenders, and policymakers often react to the first estimate as though it were precise. In this case, the revised trend is materially softer than the original narrative.Now let us compare the payroll survey with the household survey. In June, the household survey estimated that employment fell by 507,000 people. The civilian labor force contracted by 720,000. The number of people outside the labor force increased by 832,000. At the same time, the official unemployment rate declined from 4.3 percent to 4.2 percent.To be counted as unemployed, a person must be without work and actively looking for work. When someone stops looking, that person leaves the labor force and disappears from the unemployment calculation. So the unemployment rate can fall even while employment falls, provided the labor force shrinks faster.That is exactly why the participation rate matters. It fell three tenths of a percentage point in June, to 61.5 percent. The employment-to-population ratio also fell, to 59.0 percent. Those measures are not perfect, but together they show that a smaller share of the working-age population was either employed or participating in the job market.------------**Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)