On today’s show we are talking about one of the latest proposals to come from the securities and exchange commission. The proposed new rules which are outlined in a 490 page document that was circulating for comment since last year. Somehow in the middle of the pandemic capturing headlines, this story seemed to fly below the radar. Under the new rules, registered companies, that is, public companies would be required to make climate risk disclosures as part of the regular reporting to investors. Let’s be clear. This proposal is one of the worst examples of bureaucratic overreach I’ve seen in a long time. I’m going to quote directly from the draft rule. The proposed rules would require information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks would also include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks. In addition, under the proposed rules, certain climate-related financial metrics would be required in a registrant’s audited financial statements. The SEC in their 490 page document says that companies need to disclose the climate related risks and their greenhouse gas emissions for their own company and their entire supply chain. --------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about changes in Aging Services. The senior housing category is one of the hottest areas of real estate investing. Unlike regular housing that is just bricks and mortar, senior housing is a service offering built on a real estate platform. A recent workshop hosted by Health Dimensions identified 9 areas for aging services evolution in the upcoming year. On today’s show we’re going to look at a handful of these areas. Later in the week, we will be looking at additional areas. --------------- Host: Victor Menasce email: [email protected]

Tom Staub is based in Austin Texas where he is involved in large scale land development in outskirts of the city. These master planned communities offer features that are not found very often in typical suburban neighborhoods. To learn more, visit redoakvc.com. -------------- Host: Victor Menasce email: [email protected]

Kevin May is the founder and CEO of Land Hub (www.landhub.com). His company specializes in land and only land. On today's show we are talking about how marketing land is different from other asset classes.  ---------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about inversions of all kinds. We have an interest rate inversion. That’s when short term rates are higher than long term rates. That’s the market signalling that they believe an economic slowdown is upon us and that central bankers will have little choice but to lower rates when the realization of economic contraction becomes apparent. Higher interest rates have impacted returns in the stock market. They have caused prices to fall in the bond market which has devalued virtually all of the debt that has been issued in the past decade. The real story is that the path to improved returns relies on timing a transient effect. What investors really want to happen is for good quality investments to drop precipitously in value in the short terms. Those good quality investments will do well over the medium and long term. So the drop in value represents an opportunity for an entry point that will offer outsized returns. It’s really as if the market is asking for a repeat of the GFC. The vultures can then swoop in and pick over the carcasses of these good quality, but slightly damaged assets. -------------- Host: Victor Menasce email: [email protected]

On today’s show we are dissecting the latest rate 0.5% federal funds rate increase announced Wednesday by Jerome Powell, chair of the Federal Reserve. We have become conditioned to believe that the Fed, acting as the central bank for the world’s reserve currency holds disproportionate power in the monetary system, and indeed in the global financial system. Printing of money is inflationary, and the banks themselves print a lot of money. In many ways, the private sector prints more money than the Fed. That over-supply of money is actually the cause of inflation. So the question is whether interest rates and reducing the Fed’s balance sheet will be enough to reduce inflation. Price stability is the Fed’s objective. The fact is, the US government is still spending well above its means. In fact the deficit is $250B a month. As interest rates increase, so too does the deficit, despite all the rhetoric about wanting to stamp out inflation,

Today’s show is probably going to go down in history as one of the most important shows ever published on this podcast. That sounds like a bold statement. But the more I look at our global financial system, and out global monetary system, I’m increasingly convinced that there are so many time bombs out there, another financial crisis is inevitable. The only thing I can’t tell you is which pin will actually pop the balloon. On today’s show we are talking about how the Fed, the all powerful Fed, is actually a minor player in the global financial system. In fact, the Fed is so far behind what’s happening in the financial world, that they are relegated to the role of janitor cleaning up the mess. When you’re at the grocery store and you hear the announcement calling for a cleanup in aisle 4, that’s the Fed. The jar of pickles has already smashed and the only thing to do is to clean up the mess. Last week we reported on a story that came to light in the quarterly report of the Bank of International Settlements. If you remember, the BIS reported 97T in off-balance sheet foreign exchange, currency exchange and Forward derivatives. Because these are derivatives, they represent a contingent liability that theoretically have a low probability of triggering. According to GAAP, low probability contingent liabilities are not to be disclosed in the financial statements on the balance sheet. We did experience a problem in 2007 and 2008 with another bunch of derivatives that were similarly off balance sheet. We’re going to look at off-balance sheet practices because, just like 2007, just like Enron, these practices can be used to hide liabilities. Sometimes this obfuscation is legitimate, and in other cases like Enron, it’s outright fraud. Then there is a whole bunch that are in the grey zone. I’m going to go out on a limb and state categorically that the next financial bomb to go off will come from an off-balance sheet derivative exploding. ------------- Host: Victor Menasce email: [email protected]

On today's show we're coming to you live from the 2023 annual goal setting workshop. These few minutes extracted from 2.5 days will give you a sense for the factors that enable effective goal setting. ------------------------ Host: Victor Menasce email: [email protected]

On today’s show we are repeating words that have not been heard for nearly a decade. In the wake of the GFC, short sales, underwater mortgages were pervasive in some markets and made up a significant percentage of market activity. Well according to a recent report from Black Knight, About 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth. These market conditions are being compared with 2008 very regularly. It’s been nearly a decade since we heard the phrase short sale. It’s been nearly a decade since the term underwater mortgage was used frequently in a sentence. Many of the same playbook techniques that were used in the wake of the GFC are now being dusted off. We won’t know how pervasive the damage to the housing market will be as a result of these interest rate increases. ----------------- Host: Victor Menasce email: [email protected]

Today's episode was recorded on-location at the Renault Winery in southern New Jersey. Josh and his wife Melanie rescued this storied property out of bankruptcy four years ago with a tentative mission of extracting value from a distressed asset. Fast forward four years, a pandemic, and an economic cycle and this property has been transformed into a legacy project befitting its 150 year history. On today's show we're talking about the journey that Josh has taken the organization, and the property to deliver an experience that is extraordinary.  To connect with Josh visit renaultwinery.com or the investment arm at accountableequity.com ----------------- Host: Victor Menasce email: [email protected]

Eric Weiss is a world renowned executive chef and sommelier. He has served as food and wine consultant to the white house for 15 years, trained the staff at major properties all over the world. To connect with Eric, visit servicearts-inc.com ------------- Host: Victor Menasce' email: [email protected]

On today’s show we are talking about what impacting labor markets and how that can affect real estate. In the food and beverage industry we’re seeing a massive shortage of workers. The question is, where did they all go? We saw in the most recent statistics for the past month a trend that has been underway for much of the past six months. In November, the US enterprise employment report shows that 263,000 new jobs were created and that unemployment remains at a low 3.7%. A large percentage of jobs hired were in the travel, leisure and hospitality industry. What does that mean? It means hotel staff, restaurant staff, retail staff, flight attendants have been hired in record numbers. While we have seen major job losses in the tech sector at with 10,000 google, 11,000 at Facebook, Twitter of course, and major layoffs at Amazon. In the past week alone some of the more notable announcements have been layoffs of 400 people at reverse mortgage funding, 1500 at H&M, Doordash, 1250, Global Foundries 800, Wireless Advocate, up to 1800 inside Costco Wholesale stores, Morgan Stanley, 1600, Blue Apron Holdings, 10% of corporate workforce. Intel corporation let go 300, 100 at corporate headquarters and 200 in Santa Clara. Hewlett Packard is expected to lay off 4000-6000. I’ve only listed a handful of more notable layoff announcements in the past week. There are certainly many, many more. But frankly, having me list layoffs for five minutes will get boring. I think you get the point. So are these people showing up as unemployed? Well no, they’re not. Almost all of these will have received a severance package and they won’t appear on the unemployment rolls for months. Many of the job losses are higher paying corporate jobs. Some of the job losses are in retail with H&M and Wireless Advocate. But most are high paying white collar jobs. The hiring is also happening in ways for restaurants to stay in business. We spoke with a hotel owner this week who said that applicants for the role of dishwasher in the hotel kitchen were asking for $30 per hour. ------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about off-balance sheet financing. Increasingly, borrowers are seeking ways to hide their liabilities so as to appear financially stronger than they are in reality. This represents a growing risk to the economy and financial as our debt laden world sinks deeper into the abyss of rising interest rates. Let’s start with whether a liability needs to be disclosed on the balance sheet in the company financials or not. If not, why not? ------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about what is happening in the world of energy. There are so many moving parts right now that it’s hard to make sense of what is going to happen to energy prices, and oil prices in particular.

On today’s show we are asking the question as to whether investing in a REIT is the same as investing in real estate? In order to answer that question we first need to unpack and define what a reit is . A real estate investment trust is a publicly traded fund that is generally registered to be traded on a public exchange like the nyse or the Toronto stock exchange, and subject to a number of regulatory limits. ---------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about the money supply and whether we would be better off with a fixed money supply such as when the dollar was on the gold standard. In a fixed money supply the economy cannot grow. In fact it is possible for commerce to be inhibited by a lack of money in the system. Back in the 1970’s the Italian Lira was dropping in value. That meant that the coins in circulation were worth more than the face value of the coins. You could melt down the coins and sell the metal for more than the coins were worth. Coins virtually disappeared from circulation. In those days if you went to the grocery store and, you could expect to receive change in the form of postage stamps which had a face value. When the postal service could not keep up with the demand for stamps, the shop keeper would go to the shelf and grab a big bag of caramels or hard candies and give you a handful of candies as change. It was not very long before you could go to the store and buy a bunch of bananas and pay for it with postage stamps or caramels instead of paper currency or coins. If you think about it, you don’t want commerce to be inhibited by a lack of coins in circulation. By extension a fixed money supply can result in an inefficient distribution of monetary resources. If I start hoarding cash and keep that cash out of circulation, I can create the exact same conditions as the coin shortage in its in the 1970’s. You don’t need to melt the coins to create the problem. Just keep the coins in a jar in your kitchen cupboard and you will create the same problem. We have been programmed to think that government has a monopoly on the money supply. But as we will see, we have always had elasticity in the money supply. Let’s imagine a simple example where you or I can create money out of thin air. Let’s imagine that you are an artist and you paint a painting using about $20 in materials between the paint and canvas. You put the painting on display at the local gallery and a customer comes in and agrees to buy your painting for $1,000. It’s a lovely painting and $1,000 seems like a fair price. But the customer confesses has they are a bit short on cash so you agree to extend credit to the customer. The customer gives you $100 in cash and you write up a loan agreement for $900. Did you in fact increase the money supply by $900? That $900 now appears on your balance sheet as an asset and there is $900 as a liability on the customer’s balance sheet. Government was not a party to the transaction. The central bank had nothing to do with the creation of the $900 that funded the painting. Ok, so we have established that we don’t need government to print money. Money can be loaned into existence. --------------- Host: Victor Menasce email: [email protected]

On today's show, I'm coming to you live on location at the Norris Ranch on the outskirts of Colorado Springs. This is an extraordinary property that formed part of a much larger cattle ranch, originally close to 20,000 acres.  --------------- Host: Victor Menasce email: [email protected]

On today's show we are speaking with Joel Freidland. Joel is based in Chicago where he specializes in industrial space in the Chicago. Today's show is packed with statistics on the market and how to helps if you have multiple sources for capital. You can connect with Joel at britproperties.com. -------------- Host: Victor Menasce email: [email protected]

Today is another AMA episode. Tony asks “I love your show and I wake up to your voice every morning. So much quality in a few minutes. My question is, given the changing market conditions, have you had to change your investment criteria? If so, how have you changed them? Are you willing to accept a lower rate of return?” ---------------- Host: Victor Menasce email: [email protected]

Our book this month is called “Iceland’s Secret “ by Jared Bibler. Jared is an American who worked on Wall Street as an analyst and trader. In 2004 after several trips to Iceland, he fell in love with the country and eventually sought employment in finance. His first role in Iceland was developing software that was used for asset management. He was finding the software development role to be a back room effort with little human interaction. After this, Jared took a role at one of the three large banks in Iceland on their trading desk. It was a role for which he was well suited. His Wall Street experience had prepared him well. Never mind the fact that almost everything was being done in excel spreadsheets when proper databases simply did not exist. Along the way Jared observed financial irregularities which he dutifully reported to his superiors and was given assurances that they were being handled. But the evidence showed that they were being swept under the rug. These days in Iceland were heady days. Private jets flew in and out of the island on a regular basis. Construction cranes were everywhere. The number of new units far exceeded any reasonable demand from the local population. Jared quit his job at the bank days before the entire financial system collapsed. The Icelandic crisis of 2008 was an earthquake that levelled the financial fortunes of a whole country. Jared found a job at the regulator and was put to work investigating what happened. In a temporary cubicle erected in the old lunch room at the regulator, he set about trying to find out what happened, who did it, and who needed to pay for it. Six months into his new job, trading patterns for one of the banks on a single day showed what appeared to be unlimited buying from a single trader who bought all the shares that day in one of Iceland’s banks. It was a market with only one buyer. Further investigation showed the same pattern the day before and the week before and then the month before that. The pattern of unlimited buying had been going on for years and it involved not one bank, but all three of Iceland’s largest banks. --------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about what an inverted yield curve means for real estate investors. The yield curve is making headlines. The Wall Street Journal reports that the yield curve has not been this inverted since 1981 and 1981’s recession pushed unemployment rates even higher than the 2008 financial crisis. A yield curve inversion happens when short term rates are higher than long term rates. This is a bit like an atmospheric inversion. In an atmospheric inversion, the temperature at the ground is lower than the temperature up in the clouds. It can happen, just not very often. It’s not natural. Just like the atmospheric inversion, interest rates will normalize eventually. One of two things will happen. Long term rates will rise to match short term rates, or short term rates will fall to match long term rates. We don’t know what the future will bring. -------------- Host: Victor Menasce email: [email protected]

How close is the US to a debt trap? We are all accustomed to thinking in linear terms. But exponential growth is all around us. Exponential systems grow without bound until they collapse. What is an exponential? It’s anything with compound growth. The only way for the collapse to be averted is for inflation to devalue the debt faster than the interest can accumulate. That makes it possible to issue more debt as a solution to lack of funds to service the debt. On yesterday’s show we talked about the prototype of the US version of central bank digital currency. The digital dollar. What if the roll-out of the digital dollar wallets also comes with it, the “investment” in US government treasuries? It’s almost the perfect solution to the liquidity shortage. If there are not enough buyers for US Treasuries, why not offer those who have a digital wallet an incentive to keep their assets in a higher yielding account at the Fed? That higher yielding account to be backed by US Treasuries. How perfect. Instead of treasuries being purchased exclusively by rich investors, and a small number of institutional buyer, why not eliminate the friction? ---------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about central bank digital currency. This is the so-called digital dollar. Crypto currency started as a way to get transaction costs down to zero to enable micro-transactions online without the clearing costs of a Visa or Mastercard transaction. Now governments want to get into the game. There is a lot of opposition to digital currency from a privacy standpoint and rightly so. On today’s show we are going to examine some of the issues with programmable currency. There is no question that governments have to respond to crypto currency or risk losing control of the money system. China has already implemented their system and the UK prime minister came out and declared his goal of making the UK the leading clearing house for settlement of digital transactions on a global basis. The US is now playing catch-up instead of leading the world. With the US dollar as the world reserve currency, the US cannot afford to lose its lead when it comes to monetary matters. The NY Fed is currently undergoing a trial of a prototype digital currency system and the trial is involving payment processors like Visa and Mastercard along with a few hand picked financial institutions like JP Morgen Chase. Programmable money could be very powerful. That means extraordinary convenience, but also extraordinary risk. Digital programmable currency is definitely in our future. As citizens, we could experience this as a futuristic dream, or a dystopian nightmare. Now is the time to start lobbying politicians for a privacy bill of rights surrounding financial transactions. Without those protections in place, governments the world over will use digital currency as a way to monitor compliance with preferred behaviours and ultimately to engineer society, culture, and politics. ---------------- Host: Victor Menasce email: [email protected]

Keith is a repeat guest on the show. He hails all the way from Anchorage Alaska where he invests, and he is also the host of the Get Rich Education Podcast. He has several resources to share with you at getricheducation.com/course. --------------------- Host: Victor Menasce email: [email protected]

Derek Dombeck is based in Wisconsin where he is the principal at a private lender specializing in residential investment and small multi-family properties. His foray into lending was an accidental path that resulted from the financial crisis that started in 2007. Derek also has two books he'd like to share with you. To connect with him and to get a copy of his books, send an email to [email protected] ----------------- Host: Victor Menasce email: [email protected]

On today’s show we’re talking about affordable housing initiatives. It’s no secret that housing in many major cities like Toronto, San Francisco, Vancouver, Los Angeles is increasingly difficult to find, and highly unaffordable. In a free market, this is a function of supply and demand. Many of these cities have struggled with allowing new supply as a result of bureaucratic gridlock. Some homeowners have added supply to the market by adding secondary suites, or accessory dwelling units. These are often a basement apartment in climates where homes have basements. Sometimes, it’s an attic apartment, or a rear apartment. In each case, the accessory dwelling must share the utilities from the main house. A few years ago, a new classification of accessory dwelling unit was introduced. These coach houses, sometimes called a backyard tiny home, are separate dwellings that just like their attached counterparts must take their utilities from the main house. The province of Ontario just introduced legislation that would allow for two accessory dwelling units on each R1 residential property for a total of three. You could have a basement dwelling unit or attic apartment attached to the main house, and a separate carriage home all on the same property. This idea is that these units are among the more affordable units in the market and they would contribute supply at the affordable end of the spectrum. Allowing builders a free hand to add supply at the top end of the market does add supply, but doesn’t directly address affordability. Accessory dwellings suffer from a few problems. There are not that many of them and many lenders and appraisers have a hard time valuing them. There are countless stories of lenders undervaluing them and requiring owners to bring a lot more cash to the table when funding these improvements. The cost of these units are often disproportionately high when compared with the cost of new construction to high volume builders. Coach houses are not new. But they are new in the zoning code in many cities as they try to create incentives for affordable housing. The latest startup venture to make headlines is called Samara and was started by Joe Gebbia, co-founder of AirBnb. The Samara product is a modular build that can be assembled quickly on the site of a tiny backyard home. The focus initially is California. ---------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about how to choose a property management company. Property managers come in all shapes and sizes. There are those who have strong corporate systems and processes and are excellent at managing hundreds of units on a single property. Then there are those who specialize in managing third party properties but do not dedicate staff to a single property. A single property manager might have a dozen or more clients. There are those property managers who aim to maximize their income on the back of the property owner. These property managers charge extra for everything. You want a site visit? that’s extra. You want the property manager to call a handyman to repair a ceiling fan? There’s a fee on top of the handyman conducting the repair. You want the property manager to call for trash pickup when the bins are full, there’s a fee for that too. Then there are the class of property managers who think and act like a property owner. They realize that the path to maximizing their own revenue is by maximizing the income for the property owner. Sadly these types of property managers are in the minority. -------------- Host: Victor Menasce email: [email protected]

Can the silent tax solve our national debt problem? What is this silent tax I’m referring to? It’s inflation of course. The debasement of the currency has been used for centuries as a way of creating budgetary flexibility when governments have political desires that exceed the piggy bank. The ability to tax the population is limited by the tolerance of the population. Tax too little and you have ineffective government and anarchy. Tax too much and you have social unrest, and eventually violent revolution. Let’s imagine for a moment that the government collects about 20% of GDP in tax. I’m just making up that number. The model used by economists is often too simplistic to be an accurate reflection of the real world. All of these economic models suffer from the same problem. They assume a fixed point of reference that is in reality never fixed. Is your point of reference US dollars? Is your point of reference ounces of gold? How about 1BR apartments? Maybe you count your wealth in terms of bitcoin, or tons of copper, or barrels of oil. What if your point of reference is Japanese Yen? Did your wealth grow or shrink this year? If your local economy imports almost all its food and energy, as is the case in Japan, what do international exchange rates have to say about price inflation? Some people ask how many cans of soup you can buy with your paycheck? That might be your point of reference. Can you feed your family? That would be a good point of reference, at least until the manufacturer changes the size of a can of soup and you no longer have a reliable point of reference . As real estate investors, should we measure our balance sheet in dollars? Maybe we should measure the number of two bedroom apartments we own outright? Would that be a more meaningful point of reference? At the start of WW2, the US had a debt to GDP ratio of about 40% and by end of the second world war, the US had a debt to GDP ratio of nearly 120%. All of this happened in approximately 3 years. From 1960 until 1995, the US had deficit spending every year except one. Yet somehow, the debt to GDP ratio went from 120% in 1946 to 35% in the early 1980’s. What caused that reduction in debt? That’s right. It was inflation. Inflation devalues the purchasing power of those on fixed income, it devalues cash savings and it devalues debt. So did the debt increase from 1945 until the early 1980’s, or did it decrease? I guess that all depends on your point of reference. -------------- Host: Victor Menasce email: [email protected]

A lot has been said in very general terms about the looming energy crisis in Europe. Those of us who live in North America whether it’s the US or Canada simply have a hard time comprehending the scope of what is happening in Europe. I have family who live in Europe and on today’s show I’m going to put a personal connection to an energy bill. Most large apartment buildings in Italy have centralized heating that turns on at the end of November for the season. The fuel for heating is usually natural gas. When we are talking about electricity usage, we are talking about lights, refrigeration, the hot water heater, and any small appliances like toaster and microwave. Cooking in Europe is overwhelmingly done with gas. The largest draw in the warmer summer months is air conditioning. During the rest of the year, the biggest consumers of electricity would be refrigeration and the hot water heater. Europeans don’t usually use a dryer to dry their clothes. They typically hang them to dry on racks. We are not talking about excessive electricity usage. The bill comes every two months. My cousin who lives in Rome recently received a bill for 1,400 Euros for a two month period. Rates had not even peaked yet in September although they did increase again in October. Well, Italy’s regulator approved a 59% increase in electricity rates for the 4th quarter. Some residents in Italy are making the decision to reduce their living space in their apartments and to only heat a single room for the winter. We have a hard time comprehending the lifestyle choices that virtually every citizen in Europe is going to face this year. Personal consumption and spending is going to be dramatically impacted. Discretionary spending is going to be way down this winter. That means less travel, fewer meals out in restaurants, less new clothing, and so on. The prediction of recession in Europe this winter is an easy one to make. Many businesses will experience a drop in revenue, which will mean job losses, and further economic hardship. The impact will not be isolated to Europe. In our global world it never is. --------------- Host: Victor Menasce email: [email protected]

On today’s show we’re going to ask a few questions about the spectacular collapse of FTX. A lot has been written about FTX in the past week. My goal is not to repeat what you might have already extracted from the Wall Street Journal, Bloomberg, or any of a host of outlets that have covered the story. The investigations will turn up numerous revelations in the coming weeks and months. One consequence that I see arising from this debacle could be an entirely new regulatory regime. We have heard the White House talk about the need to regulate Crypto currencies. What happened at FTX was not a failure of regulation. If the reports I’m reading are true, they committed Fraud. Fraud is fraud. It’s like saying funds need more oversight because of Madoff, and companies need more oversight because of Enron, and the US dollar can’t be trusted because many of these frauds were denominated in US dollars. Bernie Madoff conducted the largest Ponzi scheme in history with losses in the tens of billions. Theranos CEO Elizabeth Holmes was just sentenced to a bit more than 11 years in prison for her role in the fraud at the blood testing equipment company. You don’t hear the White House saying that there needs to be more oversight of blood testing equipment. That’s because blood testing was not the essential cause of the fraud. The company falsified results and misled investors. These frauds will increasingly be used as a pretext for a US government backed digital dollar where each transaction happens under the watchful eye of government. The loss of civil liberty that results from this kind of government invasion of privacy will have profound social consequences. Do you find it acceptable that every time you hire a private limousine, order a beer at a pub, or purchase birth control at the drug store, all of these transactions are on display and subject to government scrutiny? We don’t need more regulation as a result of FTX. Every time a major fraud is committed, there is this chorus of demands for more regulation, for greater government oversight. We don’t need laws on top of laws on top of laws. Enforcement of the laws we have is the key. Madoff Securities LLC was investigated at least eight times over a 16-year period by the U.S. Securities and Exchange Commission. Yet somehow they failed to catch what was a flagrant Ponzi scheme and a fraud on a massive scale.

Steve Rozenberg is based in Houston Texas where he flies 777 for a major airline, and he also invests in real estate. We discussed the mindset of a pilot and how it makes him a better real estate investor. You can learn more or connect with Steve at SteveRozernberg.com. ----------------- Host: Victor Menasce email: [email protected]

Folks there are about six weeks remaining in 2022. I believe goal setting is a critical component of success. If you have not started planning for next year, you are probably going to start the year without a solid plan. If you’re planning in January, then you missed the starting gun. Every year, our team takes three days to plan the upcoming year. This year, we will be doing that work from December 9-11. It will be a face to face session held over those three days in Ottawa Canada. We have only a few number seats available for those who would like to participate in our planning process. This would be a seat at the table with our team as we develop our individual and personal goals for 2023. If you would like to spend these three days with us, send an email to [email protected] and we will send you information on how you can participate and work on your own goals following what we believe is a very solid process for goal setting. Send an email to [email protected] On yesterday’s show we talked about the importance of learning from the GFC. It seems that the root causes of the financial crisis have been glossed over and not properly dealt with. Ben Bernanke who was the Fed chairman at the time has gone on record and said that the scope of the subprime mortgage loans was not sufficient to explain the magnitude of financial destruction that took place during those years. He also went on to say that the Fed lacked the tools to effectively deal with the crisis. The Fed stepped in to bail out some institutions. But the crisis did not appear first in the US. The cascade of dominoes started overseas and did not involve any US entities at first. The first inkling of a problem happened on Aug 7, 2007 when trading in three funds based in Lichtenstein virtually stopped. These were money market funds, denominated in US dollars, trading in London and securitized a basket of assets that were considered to be high quality, on par with US Treasuries in terms of quality. A credit bubble appeared in both the United States and Europe. This tells us that our primary explanation for the credit bubble should focus on factors common to both regions. Home prices in the UK, Ireland, Spain, France, Italy and Australia experienced similar effects to the United States. But as we discussed on yesterday’s show, Canadian real estate was largely unaffected by the financial crisis. So why is that? What was different? Large financial firms failed in Iceland, Spain, Germany, and the United Kingdom, among others. Not all of these firms bet solely on U.S. housing assets, and they operated in different regulatory and supervisory regimes than U.S. commercial and investment banks. In many cases these European systems have stricter regulation than the United States, and still they faced financial firm failures similar to those in the United States. Did the Financial Crisis Inquiry Commission really get to the root cause of the crisis? ----------------- Hoat: Victor Menasce email: [email protected]

I live in Ottawa Canada, and I invest primarily in the US. This fact has given me a unique perspective on markets. I started my investing career by investing in my home market. I made my first investment in 2006. After that, you might remember there was this little event that started about a year later. The Great Financial Crisis had a global impact in many ways. I saw the opportunity to deploy capital into markets that had seen a dramatic fall in price. I was still new at investing in real estate and I made a lot of mistakes in those days. Fortunately, prices were so depressed, that the market would eventually wallpaper over those mistakes. There were some powerful lessons from the GFC. What were they? Were the lessons global in nature or local? Not everywhere was impacted equally. Some markets suffered more than others. In fact, when real estate prices went down in Miami Dade County by 45.5% from 2008 to 2012, prices in Ottawa Canada went up 32.7% over that exact same five year period. In 2008 when prices in Miami fell by 28% in a single year, prices in Ottawa Canada went up 6.3%. So the question is why was Ottawa Canada so stable throughout the great financial crisis? If the GFC was all about subprime mortgages in the US, then why was the first bank to signal a problem on August 9, 2007, BNP Paribas, the second largest bank in Europe the one to come forward with a press release stating that they were having trouble valuing three funds that were on its balance sheet. The first financial institution to collapse was Northern Rock, a bank based in the UK. But wait, this was a US problem wasn’t it? What does Europe have to do with it? On tomorrow’s show we’re going to talk about what the GFC was truly about.

On today’s show we are talking about inflation and whether higher interest rates will even help. When you listen to Fed chairman Powell speak, he spends a lot of time talking about inflation expectations. In fact, he mentions inflation expectations as being anchored in virtually every speech. So what is this anchoring of expectations and does it even matter? There was a paper published in May of this year by two economists who work for the Fed. Jae Sim and David Ratner wrote a paper entitled, “Who Killed the Phillips Curve? A Murder Mystery”. In order to understand the paper we first need to describe the Phillips curve. The Phillips curve has longstanding model of inflation and employment, and perhaps the central model underpinning the Fed’s monetary policy. The experience in the last decade puts in doubt the stability and usefulness of the Phillips curve in predicting inflation and conducting monetary policy. First, the Phillips curve failed to predict the stable inflation seen in the aftermath of the Global Financial Crisis. In my opinion, there could be several explanations for this. There is real inflation happening underneath the covers which is not being captured in the CPI metrics. That’s one possibility. The model for predicting the way inflation and the economy works is fundamentally flawed and doesn’t track the real behaviour of the economy. A growing number of economists and commentators of different backgrounds have gone so far as to declare the death of the Phillips curve.

On today’s show we are asking the question “Are we in an orderly market?” Market volatility can be a function of exaggerated trading activity. In extreme cases, it can be the result of market manipulation. In the world of real estate, there are those market experts who are saying that we need to look at the long term averages. If you look far enough back you can construct a rolling average. This thinking says that over the long term, home prices cannot exceed an average price to income ratio. Things will return to normal. If a household spends more than 30% of their household income on the cost of housing, then the cost is not sustainable. It’s not normal. But if that were true, house prices in cities like San Francisco, San Diego, Toronto, Vancouver, New York should not be anywhere near the levels that have been present in those markets for decades. There must be something else in play. These experts will tell you that eventually, over time, the prices will revert to the mean. Prices might fall below the mean for a period of time, then exceed the mean for a period of time. But eventually, prices always revert to the mean. I personally take issue with mean reversion theory. The problem with averages is that very few properties actually represent the average. ------------ Host: Victor Menasce email: [email protected]

On today’s show we are talking about the importance of hiring the best engineers for your real estate development projects. Engineering is not just about technical knowhow. Engineering designs are multi-dimensional. When you fix one variable, you can often break another. When problems arise in engineering it’s almost always a result of an incorrect scope, or an incorrect assumption or understanding of the design requirements. When we hire engineers, the results are often mixed. There have been some painful lessons along the way. In all cases, we hired competent engineers. They understood the specifications and requirements of the city. At least we think they did. So how do you evaluate an engineer? It’s a little like evaluating a pilot. If the pilot still has their license, there is almost nothing to distinguish one pilot from another. Virtually any pilot who is active hasn’t crashed. One pilot won’t get you there faster than another. The aircrafts pretty much fly at the same speed. So too is the world of civil engineering. At least that’s how it appears from a distance. ------------- Host: Victor Menasce email: [email protected]

All the way from Nashville, Tennessee, Leslie Anne Morris specializes in short term rentals in the Smokey Mountains. Today's show is a deeper examination of the laws of supply and demand and how choosing the best location is vitally important when it comes to short term rentals. Her website is JoshsCabins.com or InvestInthesmokeymountains.com where you can book a short term rental or learn more about investing in the area. ---------------- Host: Victor Menasce email: [email protected]

Matt Picheny is based in NYC where he started his career as a starving actor in live theatre. His journey into real estate investing is unique and inspiring. You can learn more and connect with Matt at picheny.com. Matt is also the author of the newly released book "Backstage Guide to Real Estate Investing". ------------- Host: Victor Menasce email: [email protected]

Today is another AMA episode (Ask Me Anything). Today's question comes from Collins I’m the owner of a nice property on one of the main highways in an area of south Alabama that has sustained steady growth over the last 30 years. In fact, the city recently placed a year long moratorium on development. I saw this time as an opportunity to achieve favorable zoning and have my land packaged for any would be purchasers or developers. I am a “land dealer” in the IRS’s eyes so I’m taxed at ordinary business income levels on land sales… furthermore, a 1031 exchange is also not applicable to the circumstances on this property, and I’d rather not take the tax hit on an outright sale. The restaurant chain, Five Guys, purchased a failed Pizza Hut not far from this location and they have signed a longterm ground lease with favorable payments and escalation clauses for the landowner. Which leads me to my question…rather than going through the top 10 google results… how can I identify companies who may be inclined to enter a ground lease with me as the owner so I can create a stream of longterm recurring revenue? (LRR) Big fan of the podcast! ------------------ Host: Victor Menasce email: [email protected]

On today’s show we are talking about what’s happening in the world of construction. The supply chain shortages of the pandemic are continuing as China pursues it’s zero Covid policy. New lockdowns have been ordered in Guangzhou, one of China’s largest manufacturing hubs. So much of what we buy is sourced from manufacturing in China. Shortages are not only about materials. It’s also about labor. There is no doubt that some trades people are busy with a backlog that stretches 18 months or more. These projects were committed in 2020. But increasingly, I’m finding that lead times for both material and labour have shrunk to pre-pandemic levels. --------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about the impact of construction cost saving on rental affordability. The narrative among tenant’s rights groups is that landlords are out there just getting rich and exploiting tenants. Developers need to be building more affordable housing. In Canada, the government in the province of Ontario has finally been recognizing that the cost of housing is linked to a few inexorable facts. The cost of rental housing is partly a function of supply and demand. If there are too many impediments to increasing supply, then the price of rental housing will go up. The cost of new construction that meets the building code is determined by the cost of materials, the price of labor, the cost of land, and the fees that governments charge developers for the infrastructure to support those projects. Cities have been progressively implementing more and more bureaucracy when it comes to new development applications. My home city of Ottawa requires a long list of deliverables. They require almost the entire project to be detailed. The city requires the envelope of the building. But not only that, they require shadow studies, wind studies, noise studies, traffic studies, utilities reports, school loading, public transit impact, bicycle storage ratios, parking ratios, amenities, meeting affordability criteria. The list goes on and on. But it’s not just my home city. Many other cities with affordability issues have implemented similar hurdles. Municipal impact fees can vary widely and they directly affect affordability. These fees are designed to pay for infrastructure like roads, schools, utilities, that are forced to expand as a result of growth. Our development company recently went through a detailed analysis of the relationship between development cost and rent. The results were surprising and so I thought they would be worth sharing with you, the listening audience. ------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about a shadow market that appears in the grey zone of the real estate market. When a condo developer launches a new building, you often get speculators who make purchase commitments on newly released units. They believe these first units released into the market are the lowest price point and that all future sales for those units will be at higher prices. It is true, that many condo developers do indeed have a price escalation built into their pricing model. Buying at the very start of a project on the first of sales guarantees you the lowest price. In a world where prices only increase and never decrease, this is a great strategy. Fast forward to 2022. There are a number of properties that are newly under construction, where the buyers purchased in 2018, 2019, and 2020. The market conditions have clearly changed and interest rates are much higher than at any time in the past decade. These speculative buyers had no intention of ever having to close on the purchase of these new units. This is uncharted territory for buyers who never expected to qualify for a mortgage on these properties. ------------ Host: Victor Menasce email: [email protected]

We are reading the headlines about layoffs that have started across corporate America. Twitter made headlines this week. But then anything involving Elon is making headlines these days. Even Facebook parent Meta is expected to lay off thousands after hiring nearly 42,000 employees since the start of the pandemic. Free cash flow at the company has fallen 98% in recent months. This is not limited to the US of course. It’s happening globally. If the economy is so strong as we are being led to believe, then why are these layoffs happening? Is it going to get worse? If so, why would it get worse? Is it falling revenues? The answer is yes, partly. But that’s not the entire story. On today’s show I’m going to show you a leading indicator that can help you anticipate layoffs. The evidence is plainly and publicly available for anyone to see, if you choose to look. There are literally thousands of proof points. But we only need to look at a couple to establish the connection. What is not making headlines are commercial bank balance sheets. These balance sheets are actually sitting on much higher risk than we can readily see. Credit is the engine of business. Almost nothing happens in business today without credit. Inventory purchases are made with lines of credit. Construction of new manufacturing capacity in order to re-shore manufacturing to protect against global geopolitical risk requires credit. With the near doubling of interest rates, the cost of that debt service will be crushing for business. Lines of credit are variable rate. Large capital projects are often funded by bond offerings. But bond offerings in a rising interest rate environment are difficult to underwrite and even more difficult to fund. -------------- Host: Victor Menasce email: [email protected]

There was a time when calling distressed home owners was a great way to find investment properties. Our guest this week runs a virtual assistant business with over 1,000 employees. On today's show we are talking about what makes for a successful hire when working with remote talent. To connect with Bob, definitely visit revaglobal.com.

Mike Ayala now calls Austin Texas home. He and his partner Andrew Lanoie own, manage and operate a sizeable portfolio of mobile home parks. To learn more and to connect with Mike, check out the Investing for Freedom podcast.  ----------------- Host: Victor Menasce [email protected]

Today is another AMA episode (Ask Me Anything). William from Northern California asks, I find myself coming across more development opportunities and I'm needing some better "back of the envelope" criteria to help separate the wheat from the chaff.  Almost every deal requires spending some amount of pre-development money to bring the project into better focus.  However, at some point you should be able to come to a  go/no-go decision based on the numbers, after which you would kick the deal or renegotiate the price. hat does your "back of the envelope" criteria look like in order for you to proceed with a development project? Do you look at the projected: - Equity Multiple? - IRR? - COC return? -------------- Host: Victor Menasce email: [email protected]

On today’s show we are looking at the casualties of the latest Fed policy moves. On Wednesday of this week, the Federal reserve announced another 75 basis point increase at the FOMC meeting. These meetings happen every 6 weeks. The next one will be in the middle of December. We continue to experience a yield curve inversion where the short term interest rates are higher than long term interest rates. That inversion is even more pronounced than it has been in recent memory. There is no question that the rates make a difference. Demand is being suppressed in numerous markets, even though the cause of inflation is the result of a decade of printing money, and most recently the showering of money across the population during the pandemic. But inflation is not a US only issue. It’s a problem in Canada, the UK, Australia, Japan, Germany. It’s a global issue and it’s the result of the combination of supply shocks with the printing of money at an unprecedented level. The question is, what are other countries doing? How are other central banks using monetary policy to combat inflation? In my mind, Fed policy is disconnected from the global perspective. We need to listen to what Chairman Powell is say. The Fed’s governors are going to continue to raise interest rates until they see sustained tangible economic slowdown in demand. The floggings will continue until morale improves.

On today’s show we are taking a look at some leading economic indicators that may give us some clues as to what is happening in our economy, ahead of the Federal Reserve’s meeting this week. I’m a huge believer in the law of supply and demand. In a world of short term business visibility, just in time manufacturing, it’s difficult to see supply gluts form until they’re upon you. Supply gluts can happen quickly, and before you know it, you have an excess of inventory. The opposite can happen too. We saw shortages appear during the pandemic. These long supply chains are fragile. --------------- Host: Victor Menasce email: [email protected]