Real Estate Espresso

Robert asks - “Most successful people have mentors. Who are your mentors?” This is such a great question. In fact I'm struck by the fact that in five and a half years producing a daily show, this topic has not come up before now. I've had a number of mentors over the years. They date back to my days when I was in the tech industry.  I believe it is so important to have people to learn from in your life. Overwhelmingly, the people I look to for guidance are much older, and I have a few who are younger. For example, I have a mentor who is 21 years of age. More on that later.  Before I answer who my mentors are, I think it's important to define what we mean by a mentor.  Mentors are those who provide you guidance 

On today's show we are examining the latest Federal Reserve announcement and trying to make sense out of it for real estate investors.  We're looking at what was said, the underlying assumptions, and what the likely decision points will be.  When asked if a soft landing was now a baseline expectation, Powell said “No, No” he wouldn't go that far. At this point he was off script. A soft landing is his hope, but not his base case. So he was clearly acknowledging that a soft landing is unlikely. So here is my interpretation of what was said in totality. There are clear contradictions. The economic forecast says soft landing, and Powell was clear that he doesn't believe the soft landing as the most likely outcome. He used the word “carefully” on numerous occasions to describe the Fed's stance. He said that word more than I've heard him use it before. To me, that signals a recognition that conditions could change that would warrant a change in policy.  --------------- Host: Victor Menasce email: podcast@victorjm.com

On today's show we are looking at a new report on The Evolution of Work from Home published by three authors: Jose Maria Barrero, from the Instituto Tecnológico Autónomo de México Nicholas Bloom University of Chicago Booth School of Business and Hoover Institution & Steven J. Davis from Stanford University This 29 page paper has been in circulation since July as a working paper and was finally published yesterday by the Bureau of Economic Research. This piece of research shows us how work from home has changed not just since the pandemic, but over a longer time period.  Working from home has been rising in the United States for many decades, driven by the continuing improvements in technology that enables remote working. ------------- Host: Victor Menasce email: podcast@victorjm.com  

On today's show we are talking about a new development project in Spokane. We believe it's important to design products that are differentiated in the market. We will be hosting a webinar on September 19 and would invite you to attend. To register for the webinar, click on the link below. If you can't attend at the specific time, we will send you a recording of the webinar. https://event.webinarjam.com/register/11/8y93rf9 ------------ Host: Victor Menasce email: podcast@victorjm.com

On today's show we are talking about buildings that are built so fast that they cannot possibly be structurally sound.  Guess what? They're not. These buildings have been called Tofu Dreg buildings.  It's not unusual in China to see 30 story buildings being erected in a fraction of the time we see in North America. Sometimes in only a couple of months. That's incredibly fast. These buildings are clearly visible during construction. There is a concrete slab being poured on top of a grid of concrete columns. Many of them don't have proper shear walls.  Observing virtually anything in China is very impressive. They throw armies of people at solving virtually any problem. I've witnessed this first hand on visits to China. Many of the projects are built by very low paid migrant workers.  The problem with using this approach in construction is that these buildings are structurally unsound. Concrete requires time to cure and harden. Concrete buildings have forces to contend with apart from just gravity. The lateral loads on a building due to the wind can cause them to collapse like a house of cards.  The number of high rise building failures in China is alarming. We are talking about buildings that are less than 20 years old. These buildings should not be failing, not even after 50 or 100 years.  ------------- Host: Victor Menasce email: podcast@victorjm.com

Kent Ritter is based in Indianapolis where he has built a portfolio of multifamily apartments. His firm Hudson investing is undertaking its first development project in a suburb or Indianapolis and on today's show we are talking about the transition to new development and some of the nuances of making that shift. You can connect with Kent at kentritter.com ----------------- Host: Victor Menasce email: podcast@victorjm.com

Ben Fraser is based in Kansas City and is involved in multiple asset classes. On today's show we're talking about industrial and understanding some of the nuances of that segment. To connect with Ben and to learn more, visit aspenfunds.us ----------------- Host: Victor Menasce email: podcast@victorjm.com

On today's show we are looking at a headline article in the WSJ.  The topic is banking. Think about it. Every bank's risk management department would have stress tested the existing loan portfolio. They would have looked at the maturity dates of each loan, and forecast what would happen to those loans if they were refinanced at today's rates. We have not seen a massive wave of defaults yet. Yes, a few hotels have fallen over, and a bunch of corporate debt has caused bankruptcies. Trucking company “Yellow” is a great example of a company that fell into a debt trap. The SF Hilton is another.  By and large the banks are still showing strong balance sheets. But the signs are clear that they are not writing new loans. They want to write new loans. That's how banks make money. They just can't.  That's why Jamie Dimon, CEO of JP Morgan Chase was quoted as saying “All loans are bad”. This is not an issue of a few mid-sized banks. This is every single bank. We had more than a decade of low interest rates being “normalized”. Doubling and in some cases tripling the cost of capital in less than a year is inflicting massive pain across the entire debt based economy.  The Wall Street Journal article totally misses the essence of problem. The article is shrouded in sanitized language. ------------- Host: Victor Menasce email: podcast@victorjm.com

 On today's show, we are talking about some of the dynamics that are showing up in the small investor segment of the real estate market. We are starting to see anecdotal boots on the ground evidence of properties being offered for sale that in my opinion are experiencing negative cash flow. In many major cities a small but significant percentage of condominiums, between 20-25% of new construction condos are owned by smaller individual investors who in turn put these properties into the rental market. Overwhelmingly these smaller condo units are investor owned. You often see the smaller lower cost units in condo buildings being purchased by investors, typically in preconstruction, prior to the building even breaking ground. In my home city these smaller units were really designed to maximize the revenue per square foot. These are small units! Many are between 400SF-500SF. These studio apartments are often very difficult to furnish. ------------ Host: Victor Menasce email: podcast@victorjm.com

On today's show we are going to talk about the world of exempt market securities. But before we do, then let me make it clear. I am not a lawyer, nor am I a securities lawyer. The purpose of today's show is not to provide legal advice, but merely to arm you with perhaps enough knowledge to ask questions of your legal advisory team. The reason we are even covering this today is because I get frequent questions from both newer and seasoned investors on the various types of securities offerings, and why one might be different than another. --------------- Host: Victor Menasce email: podcast@victorjm.com

On today's show we are talking about the difference between two types of inflation. Economists have terminology for inflation that is used to describe the nature of the inflation. The first is cyclical inflation. This type of inflation is caused by a short term economic disruption, for example a supply shock. Once that supply shortage is resolved, prices tend to normalize and the inflation essentially disappears. Some economists use the term transitory to describe a cyclical inflation.  The second type of inflation is called secular. This is a deeper and more systemic type of inflation that tends to persist because it is being driven by multiple factors including the so-called wage price spiral.  Once you have secular inflation, it is much more difficult to eliminate from the economy.  It appears as though we have a cyclical inflation happening right now. The supply shock that occurred during the pandemic has subsided. Inventories are bloated and prices are falling as suppliers compete more aggressively for customer's business.  Secular inflation is when inflation expectations become anchored. The factors influencing inflation become systemic and entrenched.  On today's show I'm going to make a case that even though we are in a disinflationary period, and parts of the world are experiencing deflation, the disinflation we are experiencing is a result of a cyclical downturn against the backdrop of a longer secular cycle.  ------------- Host: Victor Menasce email: podcast@victorjm.com

On today's show we're taking a look at the big picture of the housing market in both the United States and Canada and asking the simple question. Is this a healthy housing market? If so, then why and if not, why not? -------------- Host: Victor Menasce email: podcast@victorjm.com

Ross Hamilton is the founder of Connected Investor, which was sold to First American Title a little over a year ago. On today's show we are talking about some of the technology innovations that are coming to the world of real estate transactions. To connect with Ross, you can email him directly at ross@successcap.com. His charity is savinghomes.org which is doing amazing work to help people out of distress situations. ------------- Host: Victor Menasce email: podcast@victorjm.com

Scott Carson is based in Austin Texas where he specializes in purchasing and repairing distressed loans from banks and commercial lenders. Scott is a real experr in the field and he shares some insights as to what is happening in the market today. To learn more or to connect with Scott, visit weclosenotes.com or talkwithscottcarson.com. ------------- Host: Victor Menasce email: podcast@victorjm.com

With tax deadlines coming up and only a few months remaining in the year, we are getting a lot of tax related questions at our development company Y Street Capital. These questions are often coming from prospective investors who are looking at our investment offerings. As always, we don't offer tax advice. Most importantly, we advise our investors to never let the tax tail wag the investment dog. What that means is that we believe investors should make investments in sound investments first and foremost. If there is a tax benefit on top of the sound investment, then that's the icing on the cake. But if the focus is entirely on the tax, then the investor runs the risk of putting icing on a mud pie. We don't want that. ------------ Host: Victor Menasce email: podcast@victorjm.com

Today's question comes from David who writes: Thank you for all the education you provide daily! It's clear and concise and relevant and much appreciated. In talking with a Canadian associate this weekend I was informed that Canada doesn't offer 30 year fixed financing like in the States. I never knew this! In talking with another Canadian today we were discussing that in his lifetime there hasn't been such a quick and continuous rise of interest rates. This appears to be new territory for Canada. With the housing stats discussed, time on market increasing, and quantity of houses on the market decreasing, this is confusing. I understand why time on market would be increasing but can't get my head around why quantity of housing on market is decreasing. Wouldn't folks with a mortgage rate that is potentially resetting  in the near future be in a position of having to get rid of these mortgages whose monthly payment is about to reset significantly higher? Seems like a big onslaught of distressed property is headed down the pike in Canada. What other factors do you see at play here that help to make sense of what appears to be conflicting numbers of time on market vs. quantity of houses on market.

On today's show, we are putting some of the global financial risks on your radar that is not getting any air play in the news. If you have been a listener to this podcast for a while, it should be clear that we are in the throes of a global economic downturn. However, the manifestation of that is not identical on every single continent. There are three different predominant themes in the economy in North America, Europe, and Asia. ---------- Host: Victor Menasce email: podcast@victorjm.com

This question comes from Ravi who writes:   I have been a long time listener of your prodcast. In fact I won a signed book a few years ago. I have a lot of respect for you and was hoping to get your opinion regarding the build to rent investment thesis. I have considered investing through a company called Southern Impression homes. I was not sure if you had any experience with them. They build single family, duplexes, and quads in the Florida area and also manage them. The concept seems compelling and appears that private equity companies are now involved. Perhaps, my question may have broad interest for your listeners. Once again thank you all of your great work. ---------- Host: Victor Menasce email: podcast@victorjm.com

Today is another AMA episode (Ask Me Anything) Jay writes: I recently bought a lot in a subdivision. Where do I find out what the developer has agreed to do exactly for the infrastructure?  I already discovered a public access walk path that is graveled and the plot said it's supposed to be paved. Where can I go to get details of what is supposed to have been done to the infrastructure including promised amenities? --------------- Host: Victor Menasce email: podcast@victorjm.com

Angie Stauffer is based in Gilbert Arizona where she is a senior executive with YRefy. The company helps student loan borrowers in distress with loan modifications. These loans cannot be forgiven through personal bankruptcy. By lowering the interest rate and extending the amortization period, the company gives the borrower a realistic and affordable plan for repayment of the loan. To learn more, visit investyrefy.com or reach out to Angie at AStauffer@yrefy.com ----------- Host: Victor Menasce email: podcast@victorjm.com

Robby Butler recently joined our real estate development team. On today's show you're going to get a chance to meet him for the first time. You can reach him directly at robby.butler@ystreetcapital.com ------------- Host: Victor Menasce email: podcast@victorjm.com

In his book "Building an Elite Organization", Don Wenner, the CEO of DLP Real Estate Capital, documents some of the principles that he has used to grow his company and has earned the honor of being on the Inc 5000 fastest growing company list for 8 years consecutively. Many of the ideas in the book are echo's from other works. Jim Collins, the author of Good to Great is quoted frequently throughout the book. I met the author at an institutional investment conference. His company is well along the path of growth that our own organization shares. For that reason, I felt that it makes sense to learn from those who have paved the road before you. The folks at DLP also use ideas from the book “Traction” by Gino Wickman. We have reviewed that book on this show in the past. We too use the systems from Traction in our company. I consumed the book almost like a practical users' guide to these other books that I have previously read and implemented in our business. What I learned from this book is that our implementation of these systems has flaws. I already knew that our implementation had flaws, but I didn't necessarily know what the flaws were. ------------------- Host: Victor Menasce email: podcast@victorjm.com

Today is another AMA episide (Ask Me Anything). Michael writes: "Hey Victor, I have been investing in multifamily properties for over a decade, mostly in smaller deals but a few in the $1M to $2M range.  I've been encouraged to do cost seg studies many times over the years and cannot get the math to pencil out.  As an actuary by trade, I have a high degree of confidence in my analysis, but am wondering if I'm missing something or if this works in some cases.  Have you had any deals where completing a study made sense?  If so, can you explain why it made sense?"

Today's question comes from Robert who askes: What is your criteria for selecting guests who appear on the weekend edition?  How do you vet podcast guests for your show? ------------------ Host: Victor Menasce email: podcast@victorjm.com

On today's show we are talking about what is happening in the economy. There is a narrative of bumpy landing, to a soft landing, and now more recently, no landing. It seems as if the market is convinced that the US economy is strong and is going to emerge from this deceleration into recovery. The stock market is booming which quite frankly is delusional optimism. We have seen a rapid increase in long term interest rates for both the 10 year and the 30 year US Treasury. The question is “Why”? ----------- Host: Victor Menasce email: podcast@victorjm.com

Today's question comes from Tracy who writes: I am a developer/builder in Eastern Washington State. I have been in talks for months with a regional bank for a new apartment building. We have satisfied all the preliminary requirements to be pre-approved. Recently, we went for final loan approval for the project and the bank came back with the determination that they did not have the liquidity to fund the 7.5M loan and they could not find another bank that was willing to participate in the deal. I am not completely surprised by this given the information you have imparted in your hugely informational podcast. However, I have several commercial loans with this bank, and it made me start thinking that I should probably check the health of the bank so I could determine if there is additional risk to my portfolio. So, my question is: What information should I gather and how do I gather it, to determine the stability of a bank? A secondary question is if a bank fails what happens to those that have debt with that bank? Everyone talks about the deposits, but how does a bank failure affect those who have loans in place with the failing bank? ----------- Host: Victor Menasce email: podcast@victorjm.com

Scott Choppin is based in Southern California. His company specializes in purpose built urban townhouses for rent. On today's show we are talking about the challenges and merits of building in California. He publishes a weekly article on Substack called "The Real Signal". You can also connect with Scott on Twitter @ScottChoppin. ----------------- Host: Victor Menasce email: podcast@victorjm.com

Tom Milazzo is based in New Smyrna Beach, Florida where he is the founder and CEO of StackSource. The company focuses on driving transparency into the borrowing process for commercial real estate borrowers. To find out more, visit stacksource.com --------------- Host: Victor Menasce email: podcast@victorjm.com

Today is another AMA episode (Ask Me Anything). Rueben asks: Can you suggest a good program for helping me build out my budget for a new single family 1500 sq. ft. construction? ------------ Host: Victor Menasce email: podcast@victorjm.com

On today's show we're talking about demographics and policy. In Canada, our fertility rate is 1.48. We're not making enough babies to maintain population. Like most western economies, fertility rates are below the 2.1 required to maintain population constant.  The US is at 1.64 Italy is at 1.24 China is at 1.09 So countries with low fertility and rising populations are acquiring population through immigration. That's true in the US, Canada, and much of Western Europe. Canada is a large country in terms of land mass. But if it's built, it is full. With nearly 1M people admitted to the country in 2022, people are finding it hard to find a place to live. The vacancy rate in many cities is hovering near and in many cases below 1%.  Newcomers to the country are having a hard time finding accommodations. I've personally had conversations with parents who are struggling to find student housing for their children who are moving away to attend university in another city.  Many foreign students choose to stay in Canada after their degree and eventually become permanent residents and then naturalized citizens.  This past week, Canada's Federal government announced a plan to solve the housing problem by limiting the number of foreign student visas.  Honestly, this is one of the dumbest ideas I've seen in a long time. In an environment when you have an aging population, you want your immigration to be biased towards a younger demographic. You want people who are just entering the workforce to be the ones coming into the country. If the first few years of their stay here involves training and education that will enable a high quality of integration into the society, you can't ask for better. Those who enter the country in their later years where they will contribute less to the economy and potentially represent a strain on the health care system exact a higher cost on the country.  --------------- Host: Victor Menasce email: podcast@victorjm.com

 Today's question comes from Paul, who asks: I have a multi family apartment project that is currently up for renewal of its insurance policy. I have a quote for new insurance, but I'm having a difficult time, assessing whether the insurance being quoted is going to leave me over insured or under insured. I would like to have replacement cost insurance. How would I determine replacement cost for an apartment complex that is 40 years old. How do I determine the correct level of coverage?  --------------- HostL Victor Menasce email: podcast@victorjm.com

On today's show we are taking a look at the economy in China. China is the world's second largest economy and it is the most systemically important from a consumer perspective. China is the factory of the world, at least for now.  As China's industrial sector boomed over the past 40 years. People moved from the farms into the cities in order to work in factories. The growth in manufacturing was only possible through the availability of inexpensive labor coming from the farms.  We've seen entire cities built on speculation with the assumption that the space would be absorbed.  At this point China's problems are systemic.  There are four major structural factors that are suppressing the Chinese economy. Three out of the four structural factors were present prior to the pandemic. But the disruption caused by the pandemic was so massive cause that it masked the presence of these for structural factors. Call number one we see a drop in demand in domestic consumption. A lot of this has to do with declining consumer confidence from deflation, and a reverse in the wealth effect that comes from falling real estate values. The second factor is that the credit markets appear highly leveraged. Borrowers have taken on about as much debt as they can stomach. With falling real estate prices, there is no opportunity to refinance and the mortgages remain. The banks are worried about large scale default rates. In the US in the 2008 era, the default rate peaked at about 10% which is incredibly high. But in the early 2000's, some banks in China were reporting default rates between 22-25%. It took a large scale government bailout of the banks in order to prevent collapse of the financial system.  The fertility rate in China is currently 1.09, one of the lowest in the world.  We have heard about how the decline in China's population is going to create massive problems for the Chinese economy, much like it did in Japan after Japan's population peaked in the 1990's.  Even though China's population has peaked and is declining, that's not enough to create the residential vacancy we are observing. There is a drop in household formation which is creating a gap in demand for housing. China's urbanization trend could continue if the agricultural practices were to modernize and become less labor intensive.  Strangely, despite the falling population, the unemployment rate among young adults currently stands at 21%. The Chinese government announced that they will no longer report that statistic.  The final structural problem is the diversification of supply chains away from China. Geopolitical tensions between China and the West has cause direct foreign investment into China to plummet as companies set up second source manufacturing outside China.  --------- Host: Victor Menasce email: podcast@victorjm.com

As many of you are aware, the real estate development company that I'm a partner in is building several projects. On today's show, I'm going to give you an update on the Norris Ranch project in Colorado Springs. It's been about ten months since we closed on the purchase of this iconic property. While our investors get regular updates, we know that many of our listeners are also interested in following the story.  Let's start with a bit of background and context. The Norris Ranch is a property of 1783 acres on the Eastern edge of Colorado Springs. The property is sandwiched between Pike's Peak National Cemetery and Schriever Air Force Base. Schriever is US Space command. They are our neighbor.  The idea behind developing this property involves a major expansion of the city. It will contain 4 densities of residential, retail, commercial, office , hotel, police, fire, schools, etc. We started the annexation petition to the city in August of 2022, expecting the zoning and annexation process to take about a year. 

Ken Gee is based in Cleveland Ohio and he invests in multi-family assets. On today's show we are talking about the merits of a fund model versus syndicating individual deals. To connect with Ken and to learn more, visit kripartners.com ------------ Host: Victor Menasce email: podast@victorjm.com

Kevin Amolsh is based in Denver Colorado where he runs The Pine Financial Group. They're a private lender with $130M in assets under management. To connect or to learn more, visit https://pinefinancialgroup.com/ or visit https://thepinereport.com/ to get a copy of their latest report on lending in the current environment.

The mainstream media continue to push the narrative that the US and Canadian economies are strong. Unemployment is low and the service sector of the economy is doing great.  This is what is driving the soft landing hypothesis.  But what is being overlooked is the economic headwind that is about to hit the US economy  The US government is low on tax revenue this year. We have reported on the fact that the US Treasury has experienced as massive fall in tax collections this year. We know that there have not been any massive tax cuts announced for this year. So there is no way that the amount of personal income tax collected in 2023 can be down and the economy is growing at the same time. Those two numbers need to track each other very closely.  Effective September 1, in less than two weeks, US student loans become due again.  The US has 45 million people with student debt. Over the past three years, about 60% of the borrowers with student loans took advantage of a pandemic forbearance offer on student loans. That comes to 25.6 million people. The Biden administration attempted to extend this forbearance even further and this executive order was struck down by the Supreme Court. The power of the purse, that is government spending and tax collection is vested with the Congress and not the executive branch of government which is the President's office.  Effective Sept 1 the interest will start accruing again on these 25.6 million loans and the average payment of $300 per month will need to start coming out of bank accounts on October 1.  For the last quarter of the year, that amounts to approximately 23B dollars that will be pulled out of the economy. Now that might not sound like a huge sum of money within the context of the entire US economy.  But the impact is larger than just 23B. Remember that when money is spent in the economy, it tends to recirculate. This is called velocity of money, the notion that money circulates in the economy. But when a loan is repaid, the velocity associated with that transaction is zero. Those funds go to money heaven. 

On today's show we are talking about the process for getting properties rezoned. The subject of today's show is a three parcel land assembly in my home city of Ottawa Canada.  At the start of the planning committee meeting there were no less than six projects being reviewed. Several that had contentious elements were held for further discussion after the procedural portion of the meeting. That front end portion of the meeting that lasted a total of 11 minutes. In that time, all of the projects were announced including our project. The committee basically uses that introductory session to set the agenda for the remainder of the meeting. We were asked if there was any public input. There being none, we asked if we wanted to make a presentation even if the committee recommended approval of the zoning application. We declined to present. The city staff on the file had been in fact notified prior to the meeting that they were not being asked to make a presentation at the meeting.  The project goes next to city council within about a week for a vote, which is then followed by a 20 day appeal period. Upon expiry of the 20 day appeal period the zoning is fully ratified.  Just like that, in about a minute, two years of work were came to a milestone. Our company has multiple projects underway. These are the moments we regularly work towards  -------------- Host: Victor Menasce email: podcast@victorjm.com

Allan Asks: Hi Victor, Thank you again for your excellent content and insight. There is so much of a “punch” packed into a small amount just like an espresso. Hopefully this isn't an obvious question and worth your time to answer but how do you stay up to date finding books that will be Books of the month? Is there any particular strategy to staying in tune with new material and content to internalize and make a part of you. Thanks again for all you do! ------------------ Host: Victor Menasce email: podcast@victorjm.com

On today's show we are taking a look at what can happen when politicians print too much money. The US, Japan, Canada, the UK, and Europe, China and many others are all at risk of becoming financially unstable.  Argentina has a history of being fiscally irresponsible. The country has debased the currency a lot over the past two centuries. The country has also defaulted on its debt 9 times in the modern history.  Argentina defaulted on its foreign debt in December 2001. Many analysts thought this would lead the country into a long period of stagnation and would make it a pariah in the world's financial markets for a long period of time. Oddly this did not occur. A sovereign debt default occurs when a country does not meet a debt payment (principal or interest), that is it fails to meet the terms of a contractual agreement. The incentives for avoiding default are not associated with the collateral damage but with the country's reputation. A country's incentive to make repayments is to preserve its future access to international credit markets and international trade. If you become known as a credit risk, then your borrowing costs go up which can have an impact for decades after a default event.  ------------- Host: Victor Menasce email: podcast@victorjm.com

Today's question is actually two listener questions, both of whom have described very similar situations.  JR got plat approval and paid a contractor called straight edge for the horizontal development.  That work consists of the road paving, and the infrastructure that is buried in the ground. Straight edge went bankrupt and never paid the paving bill.  So the Paving company files liens on all lots that aren't owned by home owners.  That's a total of building 20 lots at $6500 a lot. The total  paving bill was $130,000.  Fortunately JR is eating the loss and reimbursing the cost to the paving company.  At the end of the day, it matters the people you're doing business with. What should JR have done differently?  The second question comes from Mark who had a very similar situation involving a contractor whose business partner disappeared and emptied the company's bank account. The contractor had been paid for steel and concrete work, but the subcontractors were not paid. The original contractor was forced out of business. The subcontractors wanted to be paid and put a lien on the property. Mark now faced the prospect of paying twice for the same scope of work. Not only that, but the original contractor had low bid the job in order to get the business. After interviewing several contractors to complete the construction, it was clear that the project could not be completed for anywhere near the original construction quote. How could Mark have prevented this from happening?  These are both excellent questions. The very fact that we have virtually the same question being asked twice within a relatively short time period suggests that this is a shockingly common occurrence.

Susan King is based in Chicago where she works with HED, a major national architectural design firm. On today's show we are talking about architecture and how it applies to design of affordable housing. To connect with Susan, visit HED.design or connect with her on LinkedIn at https://www.linkedin.com/in/susan-king-faia-leed-ap-bd-c-lfa-0057b45/ ----------------- Host: Victor Menasce email: podcast@victorjm.com

We hear about all of the risks in the current market environment. But we rarely hear ideas on what you can do to find opportunity in the current conditions. Today's talk was recorded at the 2023 Investor Summit. ---------------- Host: Victor Menasce email: podcast@victorjm.com

One of the goals of this show is to help you connect the dots on what is happening in the economy. Today's show is not strictly about real estate. However, we have seen central banks in the US, Canada, Europe, and the UK all raising interest rates to combat inflation. On today's show I'm going to share some data with you that hopefully will convince you that we are already in a global downturn which will cause central bankers to flip from restrictive monetary policy to stimulative monetary policy. There is no soft landing in this story. It's a hard landing and there is no question in my mind that we are already there.  We are talking about how the result of globalization is a global economy.  ------------ Host: Victor Menasce email: podcast@victorjm.com

Last week Fitch downgraded the sovereign debt rating for the United States. And late Monday, Moody's downgraded the ratings of several US banks. Moody's took action on 27 banks, including downgrading the credit ratings of 10 and putting others under review or giving their ratings a negative outlook.  Many of the reasons for the actions will be familiar: Rising deposit costs and risks to commercial property and construction loans posed by the shift to remote work. ------------- Host: Victor Menasce email: podcast@victorjm.com

If you're currently an accredited investor, then you definitely want to pay attention because I believe that in a year from now you may not be accredited any longer. And if you are not an accredited investor, then I've got some good news for you, because there's actually a non-financial path that you can take to becoming accredited. Currently, the SEC is looking into increase in the accredited investor qualification threshold from its current $1 million net worth requirement to as high as $10 million as reported by Bloomberg. One of the byproducts of inflation is that what once seemed like a really big number is now not so large after all. When a number is hard coded in the legislation, it will eventually become meaningless. There was a time when $1M was a really huge number. Today, it's just a big number.  So they're going to contemplate resetting the threshold to qualify as an accredited investor.  At the same time, the SEC has already passed a rule that would allow non-accredited investors to qualify as an accredited investor. You might be able to qualify by taking an test for financial literacy. -------------- Host: Victor Menasce email: podcast@victorjm.com

On today's show we are talking about water. Water is one of those life sustaining commodities. Water is seemingly everywhere, and scarce at the same time. 3/4 of our planet's surface is water. Our human bodies are about 65% water.  In many parts of the country if you don't have municipal water supply at your property, it is often sufficient to drill a well and you will find water.  But in arid parts of the world, water can be in short supply.  Water in most commonwealth countries follows Riparian water rights which is based on British common law.  In the Western part of the United States, water follows the doctrine of prior appropriations.  All of this means that the ownership of the water is separate from the ownership of the land. Water is treated in a manner similar to mineral rights. Just like mineral rights can be separated from the land and sold. So too the water rights can be severed and sold. The office of public record for water right ownership is the county recorder's office for the counties in which the water is diverted. Just like the county recorder maintains sequential order of priority for ownership, easements, and liens, water follows the same process.  When you buy a parcel of land, a certain amount of water is associated with the land, and this water right is recorded on title.  This is usually measured in annual usage measured in acre feet along with a peak flow rate measured in CFS.  In the Western part of the US, when you purchase land and rezone it for development, you often need to surrender your water rights to the municipality in exchange for getting access to the city water supply. If your property doesn't have enough water rights to sustain the density you are seeking, you might be forced to buy additional water in order to qualify for the density you are seeking. 

On today's show, we are looking at a human phenomenon called bias. We would like to think that the professional, economists and decision makers in government, or making objective decisions using hard data. However, we see the exact opposite and play in numerous facets of our economy. On today's show I'm going to give you two distinct examples from vastly different areas of government. Both of these examples have had severe economic impact with nothing more than recent events to skew the decision making process. Biases are often clouding the human decision making process. The most common of these is something called confirmation bias, confirmation bias of the process, whereby a thesis is formed, and then the decision maker goes looking for data to support the thesis. You would think having supporting data would be a good thing. however, when the decision-maker ignores conflicting data or fails to look for conflicting data, the result is confirmation bias. If you look at the actual data in 2019, the annual consumer price rate of increase was higher than in the most recent report in 2023.  In the face of stronger economic data, the Fed was dropping interest rates in 2019, whereby today they're increasing interest rates. When you look objectively at the data, you could argue that we should be doing the opposite. ----------------- Host: Victor Menasce email: podcast@victorjm.com

Arielle Evan comes to us from Israel where she is CEO of Compera. The company is focused on managing affiliate relationships for property managers and tenants across multiple domains. By offering preferred services to tenants, the landlord provides a valuable service and this can also translate into a supplementary revenue stream. To learn more or to connect with Arielle, visit Compera.io or email Arielle@compera.io ------------------ Host: Victor Menasce email: podcast@victorjm.com

On today's show we are talking about how to use cost segregation to take advantage of tax savings. Joseph dispels some myths around cost segregation that could result in major savings even for smaller properties. Another area of major savings is energy. There are grants and tax credits available under the inflation reduction act that can make energy improvements compelling for all types of properties. To learn more, you can connect with Joseph at ustagi.com ------------ Host: Victor Menasce email: podcast@victorjm.com

Today's question comes from Steve in Salt Lake City I have noticed living in the greater Salt Lake area that the styling of new multi family buildings has become very cold and austere it's almost like the same template is being used.    What factors do you use and what are your opinions on exterior building styling and it's importance? ------------- Host: Victor Menasce email: podcast@victorjm.com

On today's show we are talking about how the forecast bloodbath in hospitality is just getting started. Last month we saw two of San Francisco's large hotels handing the keys back to the lender. The owner of the San Francisco Hilton and the Park 55 Hotel announced in June that it will immediately stop making payments toward a $725 million loan, slated to mature November 2023. These two hotels represent about 3,000 hotel rooms. The troubles in San Francisco have been widely covered in the mainstream news media. Locals and businesses have been leaving the city in droves. The troubles in SFO seem to be spreading North of the Golden Gate Bridge into Napa and Sonoma county.  Two recently opened Wine Country hotels face a potential $80 million foreclosure this month, according to public documents in Napa and Sonoma counties. ----------------- Host: Victor Menasce email: podcast@victorjm.com