Tim 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: [email protected]

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: [email protected]

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: [email protected]

 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: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

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 [email protected] ------------------ Host: Victor Menasce email: [email protected]

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: [email protected]

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: [email protected]

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: [email protected]

On today’s show we are talking about industrial and what can happen when investors move en masse toward the same target. The folks at Marcus & Millichap issued a wave of mid year updates on the industrial sector for almost all of the major markets across the US.  The thesis is that with the growth of e-commerce and with supply chain constraints during the pandemic and with geopolitical risk, there would be need for more warehousing in North America. We humans have a tendency to project current market conditions into the future. This is called recency bias and is not necessarily indicative of long term trends or needs.  A lot has been built and it’s not clear that the demand is there to absorb all of this new supply. It’s likely that the vacancy is migrating to some of the older product in the market. Asking rents are up in all markets. Asking rents are up 19% in Dallas, 31.9% in Charlotte, 5.6% in NYC and 12.3% in Austin. These rent increases are impressive, but remember these are asking rents. They are not backed by leases. I’m sounding a tiny alarm bell that this sector is showing signs of being overheated and I’m expecting a softening in the coming year. Investing in industrial right now could have elevated risk.  ------------- Host: Victor Menasce email: [email protected]

In his groundbreaking book "Influence: The Psychology of Persuasion," renowned social psychologist and marketing expert Robert Cialdini. He delves into the world of human behavior and unravels the secrets behind the art of persuasion. Cialdini came from the world of academia that had long resisted publishing works in the popular press instead of strictly academic publications. It was with concern about ridicule from his peers and with great hesitancy that his book was written with a broad audience in mind.  First published in 1984, this timeless classic remains relevant and influential, serving as an essential guide for anyone seeking to understand the subtle forces that drive human decision-making and influence. ------------ Host: Victor Menasce email: [email protected]

Today’s question comes from Chris who writes.  What are your thoughts on diversification? I keep hearing about how diversification is important to mitigate risk. How would you diversify your real estate investments? I’m not even clear on what would be considered to be truly diversified versus scattered.  -------------- Host: Victor Menasce email: [email protected]

Kenny Rose is based in Chicago Illinois where he is the principal at Franshares a company that specializes in fractionalizing share ownership in franchises across the USA. Franchises come in all shapes and sizes. They range from food and beverage, to fitness, to waste management to property management. On today's show we are looking deeper at franchising and the opportunity to own fractional shares in frachises. To connect with Kenny, visit franshares.com. ---------------- Host: Victor Menasce email: [email protected]

Travis Godon is based in Ely Nevada where he specializes in land development for large utility scale solar farms. On today's show we are talking about the criteria that make for a suitable solar farm. To learn more or to connect with Travis, seek him out on LinkedIn at https://www.linkedin.com/in/travis-godon-b4a772ba/ ----------------- Host: Victor Menasce email: [email protected]

On today’s show we are taking a snapshot look at how one state is trying to address housing affordability.  Home pricing follows the laws of supply and demand. Sellers put their home on the market and buyers place an offer. That price might be low than asking price, higher than asking price, or at the asking price. It’s a full contact negotiation. There is nothing compelling a buyer to pay a particular price. If the buyer and seller can’t come to terms, then no deal gets done. This is the classic process of price discovery.  Some jurisdictions have been addressing affordability by applying downward pressure on landlords and developers. Those greedy landlords are to blame for the lack of affordability. I’m thinking of places like California that have imposed state level and even municipal level price controls on rental housing.  The effect of these measures is to discourage landlords from entering the market. The net result is fewer landlords, fewer rental properties and therefore higher rental rates.  The state of Utah on the other hand has been growing rapidly and has experienced net migration growth for 31 out of the last 32 years. Utah also has the highest birth rate in the nation and is one of a very states that is growing organically.  The state has also taken a very enlightened approach to encouraging new product to enter the market. The first step to encouraging growth is to remove the bureaucratic obstacles to growth.  The legislature has implemented 10 initiatives aimed at reducing bureaucracy and encouraging development. ---------- Host: Victor Menasce email: [email protected]

On today’s show we are taking a look at interest rates. Yesterday the Federal Reserve increased the Federal Funds rate to a range between 5.25%-5.5%.  This clearly sets the stage for short term interest rates to increase. The yield on the 10 year treasury decreased from 3.91% to 3.86% following the Fed announcement.  The yield on the 30 day Tbill is currently 5.46%. This is matching the Fed funds rate.  Back in October of 2022 the 30 day T-Bill yield was ranging between 2.85% and 3.75% as the Fed was aggressively increasing rates during that period. The yield on the 10 year Treasury at that time was 4.25%. The interest rate that most investor care about is linked to the yield on the 10 year Treasury.  Today we have an interest rate inversion where the market is clearly signalling to the Fed that they don’t believe them.  The real question is what’s next?  We are seeing deflationary prices. We have a globally synchronized  economic cycle.  The Fed says it is raising rates, and the European Central Bank says it is raising rates. But as we have discussed on this show before, we have not seen a dramatic rise in bond rates over the past 8-9 months. Since most long term lending is indexed to the yield on the 10-year or the 30 year bond, these numbers have hardly moved since October.  If you listen to the rhetoric from the Fed Chairman, you would think they have tremendous influence over the market.  The market sets the rates, not the Fed Open Market Committee.  In Europe, we are seeing demand for credit falling. This is not being driven by rate increases. The reason we know that is that rates have hardly increased. So that cannot be the reason. Businesses are not going to stop borrowing money for a couple of percentage points if they have things to do that will drive business growth. We went from 0% to 2% in Europe. That’s not enough to choke off business activity. There must be another explanation.  These are deflation and recessionary markers that are consistent with an economic cycle.  Rates rise when there is a competition for money. Rates fall when there is a lack of demand for money. When we talk about money markets, this is an accurate term in the true sense of the word “market”. Just like the price of tomatoes or gold or oil, if demand goes up and exceeds supply, the price goes up. If demand falls, then prices fall. It’s the same thing with money. If demand for money goes up, then interest rates rise. Regardless what the Fed says about rates, we see supply and demand forces are dominating the cost of money over the longer term. 

On today’s show we are not talking about real estate, but instead about a major shift that is taking place in society.  We have an unstated assumption in our world that more is better. We want more money, a bigger house, a faster car, a bigger boat.  As investors we want more units, more mobile home parks, a higher rate of return, a longer vacation.  Marketers want more content, more more more. We are literally carpet bombing people with advertising.  To what end?  That is the same impetus that drove fossil fuel extraction. It is the same impetus that drove the building of entire cities in China that remain empty with no inhabitants. It is the same impetus that created the Netflix library with more streaming content than you could ever watch in your lifetime. We are mechanizing art. We won’t have the time to absorb it all.  We are going to need AI to summarize the crap created by AI for us. ------------- Host: Victor Menasce email: [email protected]

Tenants can hardly be blamed for being confused. Many have never owned a home and they have no idea what it costs to own and maintain a property.  With the rise in interest rates, home affordability has become even more expensive. Inflation has affected many of the maintenance and repair costs. Air conditioners have gone up between 15%-25% in the past year. If your air conditioner fails, you will feel the pinch. That means your replacement budget just took a substantial hit as well.  ----------- Host: Victor Menasce email: [email protected]

On today’s show we are looking at a fundamental economic concept, called the law of supply and demand. I have been a huge believer in the law of supply and demand as one of those fundamentals that must be respected. I treat it like a law of physics similar to gravity.You can try to bend the laws of physics, but gravity will usually win that battle. Suppliers, often struggle with assessing demand, simply based on customer orders. One of the largest contributors to that confusion is the buffering of demand and supply chain inventories. The larger the buffer, the larger, the potential for confusion. Over the past several decades, businesses all over the world, have aimed to reduce inventories, in order to reduce the cost of carrying that inventory. it takes a lot of working capital to carry inventory on a large scale. The law of supply and demand is fundamentally rooted in the distinction between demand and utilization. I am making the distinction between demand and utilization. They are different. 

Shawn Moore is based in Park City Utah where he specializes in short term rentals. On today's show we are talking about the state of the short term rental market and how it is changing and "growing up". To learn more or to connect with Shawn, visit https://vodyssey.com -------------- Host: Victor Menasce email: [email protected]

Sara Martin is an architect and project manager with HED specializing in design of data centers for high capacity computing installations. On today's show we are talking about the data center industry and the characteristics of a modern data center. To learn more you can visit hed.design or connect with Sara directly on LinkedIn at https://www.linkedin.com/in/sara-martin-7b61b546/ ------------ Host: Victor Menasce email: [email protected]

On today’s show, we are looking at different types of money printing to understand the impact that money supply has on consumer price inflation. Have you wondered why we don’t have hyperinflation with the tens of trillions of dollars that are loaned into existence through the banking system? There is one school of thought that says all forms of inflation are rooted in debasement of the currency. That theory says that inflation is a monetary phenomenon that is the result of inflation of the money supply. The price increase we see is a symptom of the inflation and not the inflation per se.  ------------ Host: Victor Menasce email: [email protected]

Today’s show is another AMA episode (Ask Me Anything) Allan asks: I have been listening to your show for about two years now and love the depth and variety of what you share. I’m amazed at how much you can pack into just a few minutes. My question is, what are your minimum deal standards when you consider a new development deal? I’m finding that the numbers are more difficult to make work in the current environment with the rise in interest rates? Have you altered your standards to make projects work? ---------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about how maturing cities handle growth and development.  There are two costs associated with growth. There is the initial cost, and then there is the lifecycle cost.  Buildings and neighbourhoods go through cycles of development, stagnation, decline and renewal. Cities therefore go through cycles as well.  When a city is growing it costs money to build roads and schools and infrastructure like water treatment and sewage treatment. These costs are initial costs that are often paid for by developers that are responsible for the growth.  For the first number of years, that new infrastructure is very low maintenance. It’s new and pristine and the cost of maintaining it is effectively zero. But eventually, those roads will need to be repaved, and the sidewalks repaired. Landscaping will need a refresh.  The schools that were new and filled to capacity will eventually be under-utilized as families move out of those mature neighborhoods. The cost of maintaining the roads and the schools remains constant over time. It’s much cheaper to re-use existing infrastructure through the process of urban renewal instead of letting major regions of the city decay into an urban wasteland.  Intensification is the word that best encapsulates the eco-friendly aspect of urban renewal.  The problem with infill projects is that they’re small. They’re too small for large scale home builders. You can’t mobilize an entire framing crew to move from one property to the next in an infill setting. There is simply not enough work to make the process efficient.  Just like an assembly line is more efficient at making cars than building them one at a time, a residential subdivision is the assembly line equivalent when it comes to home building.  But we’re trading one form of efficiency for another. Efficiency for the builders is coming at the expense of efficiency for the city. The life cycle cost for the cities is actually more important. Intensification in cities is environmentally friendlier than gobbling up more agricultural land and allowing cities to expand outward meanwhile land in the core lies under-utilized.  ----------- Host: Victor Menasce email: [email protected]

On today's show we are announcing the contest winners. Chris De Celle David Ortiz Emilio Tucker Emails have been sent to each of you to get your mailing details. Congratulations to our winners.   On today show, we are talking about an impending surge in unemployment.  This is not on many economists radar and certainly we don’t have government talking about it. Certainly the mainstream media has published lots of stories about how artificial intelligence could replace some jobs in the future. But I’m here to tell you that the future is now. If your tenant has a steady job in customer service, there is a 90% chance that they will lose their job within the next 3-18 months.  That’s right, 80-90% of customer service jobs will disappear.  The reason for that prediction is the Pareto principle. The Pareto principle is often called the 80/20 rule. I'm going to give a real life example where that has already happened.

On today’s show we are looking at one of the most convincing economic indicators in advance of next week’s Federal Reserve meeting. We hear politicians talking about how the economy is strong and how unemployment is near record lows. Inflation is coming down, but core inflation remains elevated. Maybe there will be a mild recession or a soft landing in the fourth quarter of this year. For now, we have a hot economy. The consumer is driving the economy. Airlines are reporting record profits. For the first five months of this year, the congressional budget office has been reporting falling revenue. The treasury took in 1.693T in individual income taxes  up to June 2023 compared with the same period last year which was 2.135T.  That’s a short fall of 442B in individual income tax receipts compared with the same period last year. This is a 21% reduction in income tax receipts compared with last year. How can the economy be growing with a 21% reduction in income tax receipts? ----------------- Host: Victor Menasce

Jmi Pfeifer is the founder of Left Field Investing an online investment club with about 1,800 members. On today's show we are talking about how the community operates. To connect or to learn more, visit leftfieldinvesting,com -------------------- Host: Victor Menasce email: [email protected]

Leandro and Arturo are principals at Primestor, a Culver City development company specializing in building in some difficult parts of South Los Angeles. I love what these two guys are doing. You can connect with them at primestor.com ---------------- Host: Victor Menasce [email protected]

On today’s show we are talking about how to evaluate a proposal from a consultant. We are going to look at two proposals from different geotechnical engineers. These two proposals differ significantly in both price and scope. One proposal is nearly double the price of the other. How would you evaluate which quote to accept? Which proposal is better? Let’s start with even asking the question: Why do you need a geotechnical engineer? What do they do, and why do you even need to spend money on this? The geotechnical engineer does an analysis of the soil stability on your development site. They determine what it will take for your building to stay standing over the lifecycle of the building.  --------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about some of the tricks that bureaucrats use to manipulate the inflation metrics that are being used to decide monetary policy. The cost of money affects the cost of virtually everything we buy. So the power to manipulate the economy and affect the fortunes of an entire population is in the hands of a handful of people who quite frankly have not earned the right to wield so much power.  But before we talk about the manipulations we need to define a few terms so that the incentive for the manipulation is clearly visible.  Let’s start with the gross domestic product. You calculate the GDP by adding up all of the economic activity and that gives you the gross domestic product. If the amount of economic activity has grown, by say, 2%, then the economy grew by 2%. But wait a minute, we know that there is this thing called inflation.  So in fact we need to subtract the rate of inflation from the GDP metric in order to get the real GDP metric that has been adjusted for inflation. In our example, if the economy grew in nominal terms by 2%, but inflation was running at 1%, then we would need to subtract the 1% inflation rate from the nominal GDP in order to get the real GDP.  So getting an accurate measurement of inflation is critical to getting an accurate measurement of GDP. ------------ Host: Victor Menasce email: [email protected]

On today’s show we are taking a look at a looming problem that threatens the functioning of the entire legal system in North America. Justice delayed is justice denied. The rule of law depends upon having a functioning legal system. In the absence of a working legal system, criminals will increasingly take their chances that the statute of limitations will prevail and they will get away with offences that in a different environment would result in litigation, judgements, and possibly even criminal convictions. There is a shortage of judges across both the US and Canada. The net result is that civil and criminal cases are going into a queue that is measured in years. ---------- Host: Victor Menasce email: [email protected]

This question comes from Elizabeth who asks: I’m looking at a property which borders on an environmentally protected wetland area. Of the acreage, about 80% is outside the environmentally protected zone. So I should be able to develop on the part that is not environmentally protected. What should I look out for when considering this property? ------------ Host: Victor Menasce email: [email protected]

On today’s show we are taking a look at the weeks ahead. We are expecting a number of announcements including the upcoming interest rate policy when the federal reserve meets near the end of July. The latest numbers coming out of Washington suggest a robust economy. At least that is the official narrative. Yet there are so many other metrics pointing in the opposite direction. ------------ Host: Victor Menasce

Vikas Gupta is based in Pasadena California with a software startup called Azibo. Azibo is a software company that specializes in serving smaller independent landlords with a property management system that is highly integrated, but still easy for smaller landlords to use. To learn more or to connect, visit azibo.com ------------ Host: Victor Menasce email: [email protected]