Alexandria Ali hails from the Pacific NW where she is a real estate investor and a practicing nurse. Not only is she a practicing nurse, she is a traveling nurse who provides relief to hospitals that are searching for staff to manage staffing shortfalls. Today's show is a follow-on to last week's show where we were talking about the crisis in healthcare staffing.  To connect with Alex and to learn more you can reach her directly at alexandriaroseali AT gmail.com. 

To infinity and beyond. That’s the line from the famous Pixar movie “Toy Story”. Here in the West we are concerned with climate change and the impact that our relentless consumption is having on the planet. We’re talking about some finite resources on our planet. But we have a moral dilemma. Those countries who are living with first world luxuries are consuming more than their fair share of energy. In fact, we have 40% of the world’s energy being consumed by 15% of the world’s population. So why are we talking about energy? After all, this is a real estate podcast. Well it turns out that energy and a few other critical resources are the underpinning of the entire economy. For every unit of GDP, there is a corresponding unit of energy consumed somewhere in the world to product that economic output. It’s everywhere. Energy affects the production of food. Without burning of fossil fuels, you can’t manufacture synthetic fertilizer. Without fertilizer, agriculture yields would be 50% or less than they are today. We can expect to see the linkage between energy security, cascading to food prices, and eventually food insecurity in many parts of the world. One of the principal inputs to fertilizer is ammonia. Back in 2020, the European spot price for ammonia was around 200 Euros per tonne. Today, that same metric ton of ammonia is pricing at 1450 Euros. Ammonia and lots of energy is critical to the nitrogen component of synthetic fertilizer. Brazil is getting its last wave of much-needed fertilizer from Russia before supplies plunge due to the Ukraine war, potentially hurting harvests in the biggest grower of crops from coffee to sugar to soybeans. A fertilizer shortage in Brazil could result in smaller harvests and higher food costs globally, given the importance of the South American nation to world crop supplies. When you look throughout history, every time there has been a spike in energy prices, it leads to price increases in food, which leads to food insecurity, which ultimately leads to social unrest. The armed conflict is making headlines. Interest rates are making headlines. What’s not making headlines is the impact to global food security from the conflict. The reality of globalization is that the world is far more interdependent than it has been at any time in history. The impact of these disruptions will be far greater than ever before. -------------- Host: Victor Menasce email: [email protected]

A Bay Area startup just received a $300M funding round at a $3B valuation, triple its value from eight months ago.  San Francisco-based Remote Technologies Inc. helps businesses manage onboarding, payroll, benefits and other services for foreign workers that they hire, whether they are contractors or full-time employees. Remote solves those problems by becoming the employer of record for its customers' employees in every country where it operates. This is a real estate podcast. You might be wondering what a tech startup in Silicon Valley has to do with real estate. Real estate is hyper local. Employment is generally hyper local, at least for certain types of work. But as the pandemic has shown, there is a large percentage of the economy that can be conducted remotely. The company has customers in serving customers in 70 countries today and has a goal to be operating in 100 countries by the end of the year. ---------------- Host: Victor Menasce email: [email protected]

On today’s show we’re taking a closer look at what’s happening in the world of senior housing. The folks at Fannie Mae recently published a market update on the sector which we look closely at. We also follow the daily updates at Senior Housing News which report both trends and news in the sector. We saw a rapid deterioration in senior housing occupancy since the start of the COVID-19 pandemic. Senior housing fundamentals began to improve in the middle of 2021, with the industry experiencing a strong occupancy rebound, according to multiple sources that we track. Back in 2015 senior housing occupancy averaged about 90% nationwide. Developers started building more supply in anticipating of growing demand from the aging baby boomer population. At the start of the pandemic, occupancy had fallen to 87% on average with a 90% occupancy in independent living and 85% in assisted living. Along came the pandemic and occupancies fell to 75% in assisted living and 82% in independent living. But that’s just an average. --------------------- Host: Victor Menasce email: [email protected]

On today’s show we’re talking about market psychology. There are two principal emotions that drive investment decisions, fear and greed. Fear and greed usually sit at opposite ends of the spectrum when it comes to decision making. Greed propels people forward. Fear usually holds people back when making investment decisions. If you’ve been listening to this show for a while, you’ll know that I’m a proponent of buying hard assets. Top of the list of hard assets is real estate. We’re talking income producing real estate. But there are other hard assets that are also worth investing in. That can include commodity metals like copper, and precious metals like platinum, silver and gold. Gold has typically been considered a safe haven in times of uncertainty, and a hedge against inflation. Examination of commodities as hard asset investments should not be limited to gold. If we look at other commodities that have industrial applications like copper, we see rising global demand for the product and finite supply. -------------------- Host: Victor Menasce email: [email protected]

Russia took a clever step last week to evade global sanctions, by attempting to peg its currency to gold.  Starting this week, the Russian central bank will pay a fixed price of 5,000 roubles ($52) per gram between March 28 and June 30, the bank said on Friday. This is below the current market value of around $68.  Economic sanctions have rarely worked in changing behaviour of governments. Sanctions have made things difficult for the population in Cuba, Iran, Venezuela, North Korea and countless others. But those governments are still in power. Economic sanctions will not topple the Putin regime either. But Russia is rich in resources, resources that first world countries are dependent on. In response to escalating sanctions from the West for Russia’s invasion of Ukraine, Moscow said that "unfriendly" countries could be required to pay for Russian gas in rubles or gold. ----------------- Host: Victor Menasce email: [email protected]

Bascal Korkis hails from Tampa Florida where he specializes in in-fill redevelopment. On today's show we're talking about the application of Web 3.0 technologies to real estate. To connect with Bascal, you can find him on social media and at korcf.com ------------------- Host: Victor Menasce email: [email protected]

Josh is based in Fort Lauderdale where he is part of the investor relations team for legacy-group.co. The company has invested heavily in Columbia where they are currently the #2 producer of specialty coffee in the nation with over 5,000 acres of coffee plantation under management. To connect with Josh, visit their website at legacy-group.co or email directly at [email protected] ----------------- Host: Victor Menasce email: [email protected]

Our book this month is by famed hedge fund manager Ray Dalio. His observation is that every major surprise in market conditions had not been witnessed in his career as a trader on the floor of the NY Stock Exchange, nor had it been witnessed at any time before in his career. But that doesn’t mean it was a first time event. If you bother to look back through history, these same events have occurred numerous times. . In his research, Ray researched the cycle of 10 cycles of world dominance involving the rise and fall of a great power. These transitions usually last about 150-200 years with transition period that last between 10-20 years. These transition periods are usually marked with a lot of conflict. The outgoing powers don’t go down without a fight. ------------------ Host: Victor Menasce email: [email protected]

On today’s show we’re talking about a new report from commercial brokerage house CBRE on the state of cap rates across the United States. It comes as no surprise that cap rates have been compressing. Everyone knows that there is too much money in the system chasing yield. ---------------- Host: Victor Menasce email: [email protected]

Today’s question comes from Gonzalo in NYC First I’d like to thank you for all your insight and knowledge you share on your podcast and in your book. It’s both informative and inspiring. I exited a bridge loan 2 years ago in the middle of the pandemic. Because of the pandemic, one of the banks requirements was to hold a cash reserve of $110k. I agreed with the understanding that the funds would be released after 12 months or once the pandemic was over. Although there hasn’t been any late or missed payments the bank requested to see income/expense report for the last 3 months. I shared the info with them which included several of the units being on Airbnb. I have abided NYC rent guidelines and have been doing 30 day minimum ONLY. The bank now refuses to release the funds stating that I am in default because I am Airbnb’in. I was totally unaware of how the Bank would scrutinize my loan. Ideally I would like to continue to use Airbnb as it yields higher income. Some useful facts 16 unit rent stabilized building 10 year fixed rate Prepayment penalty on the loan Can you offer any advice on what course of action would be best to take! Thank you in advance for your help. ----------------- Host: Victor Menasce email: [email protected]

Today’s question comes from Wayne in Mississippi I’m observing that the share prices for national home builders like DR Horton and Lennar are both down 29% and 28.5% respectively from their highs in December. Both companies are competitors and their stock prices seem to be tracking one another. They’re both well managed companies with a strong pipeline. What is behind the share price drop? What does it tell us about the housing market going forward? How will this impact us as real estate investors? ----------------- Host: Victor Menasce email: [email protected]

On today’s show we are taking a look at what might be a looming crisis in health care. For years, many states have been facing a nursing shortage and it is only expected to get worse. It is predicted that the United States will need another 203,700 new RNs every year until 2026 to fill openings over the next few years.  According to a new study, fully one third of nurses plan to quit their jobs by end of 2022. There are a lot of reasons for this. Later This week we will also speak with a nurse who forms part of the army of people who have heroically put themselves in harms way during the pandemic. As real estate investors we can play a role in helping solve some of the issues that are affecting nursing shortages, including the lack of affordable housing. ------------------ Host: Victor Menasce email: [email protected]

On today's show we're discussing the parallels with the expansionist violence the world witnessed from 1939-1945. George was a teenager at that time and joined the army at the end of the war. Some investors have used the recent invasion of the Ukraine to pause their investment strategy as a result of the elevated uncertainty caused by the war. George offers his perspective.  ------------------ Host: Victor Menasce email: [email protected]

Our guest this weekend is Arleen Garza from San Antonio. On today's show we're talking about the evolution from C-Class to B-Class to A-Class and most recently development. Love hearing about this journey to connect with Arleen, visit ReepEquity.com -------------------- Host: Victor Menasce email: [email protected]

On today’s show we’re talking about an issue that surfaced after closing on a parcel of land. What we have experienced can happen on virtually any property, anywhere. Today’s show is being shared to help you strengthen your due diligence. ---------------- Host: Victor Menasce email: [email protected]

On today's show we're talking about a generic, nondescript townhouse selling for $191,000 above asking price in multiple offers. This is not a unique property, but yet the mismatch between demand and supply. How do we as developers make sense of market valuation as we plan for future market pricing upon completion of projects? Will seller's market conditions continue? For how long? What will be the impact of higher interest rates? Is this a bubble? --------------- Host: Victor Menasce email: [email protected]

On today’s show we’re talking about the risks of community opposition in a development project. Sometimes these stories are so outlandish that I have to share them with you. The project in question is located at 450 O’Farrell Street in San Francisco. The development team behind the derailed group housing project in San Francisco’s Tenderloin district is suing the San Francisco Board of Supervisors over its decision to vote down the project in October, according to a complaint filed in the U.S. District Court of Northern California last week. The San Francisco planning commission had previously approved plans to construct a 13-story group housing on top of the site of the pre-existing church. Once completed, the building would include 316 new apartments, a new church facility, and ground-level space for a Christian Science Reading room. The project was sponsored by the Fifth Church of Christ, Scientist. This project is located less than one block from the SF Hilton located near Union Square in SF. I’ve stayed at that hotel numerous times and walked past the Church frequently, distinguished for its Roman style columns. The lawsuit, is the latest development in the 450 O’Farrell saga. The approximately half-acre site's redevelopment into housing and a new church was first conceived by the church back in the 1980s, according to the suit. It began the formal application process for a residential development in 2013, and ultimately proposed the 13-story, 316-unit iteration of the project in 2020. The project underwent three revisions and was delayed half a dozen times before ultimately receiving Planning Commission approval in June 2021. The commission’s 4-2 vote to approve the project prompted outcry from Tenderloin community groups, which argued the project failed to address the neighborhood’s need for more family housing. The insanity is that the proposal is adding more housing which is needed. The opposition seems to be discriminatory in that group housing would discriminate against people based on income. In my opinion, this is clearly in violation of federal statutes. ----------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about when to take your chips off the table. We have seen a significant run up in prices over the past two years. The upward pressure seemingly has no end in sight. Yet we know intuitively and as students of history that the party is likely to come to an end. Will there be better purchase prices in the future? It’s hard to say. There is a school of thought that says you should never sell income generating real estate. In an inflationary environment, the properties will continue to appreciate and that value increase goes to the benefit of the equity holder. Inflation always has the same effect. Inflation is the devaluation of the currency which wipes out the purchasing power of those on fixed income. It wipes out savings and it wipes out debt. So if your cash is tied up in hard assets like real estate, which is protecting your money from inflation, why would you ever sell? It turns out that there are a few reasons to sell selectively and we are going to look at those reasons on today’s show. -------------- Host: Victor Menasce email: [email protected]

Many cities are looking hard at how to regulate vacant properties. On today's show we're looking at the issues related to this type of government initiative. ------------------- Host: Victor Menasce email: [email protected]

Daniel Apke is based in Tampa Florida where he focuses on acquiring land on a large scale in multiple states. On today's show we're talking about the systems that David uses to conduct a high volume of acquisitions.  To connect with David and to learn more, visit landinvestingonline.com. ----------------- Host: Victor Menasce email: [email protected]

On today's show we're coming from a live event at the Real Estate Guys Secrets of Successful Syndication conference in Dallas.  ------------ Host: Victor Menasce email: [email protected]

On today’s show we’re talking about open banking. If you’re in the banking industry and you’re part of their software development teams, you know all about open banking. But if you’re just a bank customer, you probably have not heard about this. Open banking is a set of protocols and application programming interfaces that allow for third party financial technology companies to interface to customer data in a controlled way. This allows for partnerships with the bank to offer a wider array of product offers. There are initiatives in the UK, Europe, Canada, and Australia. Strangely, the US seems to be lagging the rest of the developed world in these initiatives. On today’s show we’re going to look at what is happening in Canada, which appears to be near the forefront of these initiatives on a global basis. You can think of new entrants in payments, banking, lending. Could we see Apple Mortgages, where you can apply for a residential mortgage directly from your iPhone? I believe the answer is yes. What is open banking? Essentially, open banking refers to the opening of internal bank customer data and processes to other parties through digital channels. Some of the people I speak with foresee Apple Mortgages in the future. I’m not sure I want Apple to be my lender, but if they make it easy enough, maybe there will be a segment of the population who would be open to getting a home loan by interacting with their phone. While FinTechs have been around for years, they played at the fringes of the banking system. If given access to the banks’ data, processes and infrastructure would help them build products and services on top of what already exists. Technology giants are also likely players in a world of open banking.  I believe the banks could be among the biggest winners of open banking if they, too, seize the opportunities it creates. There are many potential applications of Open Banking. In one example, participants could use transaction data to assess the credit worthiness of businesses and consumers beyond solely relying on traditional credit bureau checks or financial statements. This would have the benefit of providing good quality information to a potential creditor without the negative credit rating impact of a credit inquiry to a rating agency. Of course, any discussion of opening up banking records brings questions of privacy and security. The standards for access to records along with making the systems secure is of paramount importance. Ensuring that the third parties who gain access to your financial records maintain security that is equal or better to the bank’s systems becomes paramount. ----------------- Host: Victor Menasce email: [email protected]

There is no question that interest rates are going to rise. If you have refinanced since the beginning of the year, you have already experienced this. The bank of Canada has raised interest rates already by 0.25% in the past month and the US federal reserve announced a 0.25% increase on Wednesday. This is the first rate increase since 2018. The question is, what is the real economic situation and more importantly, what are the geopolitical factors that will affect our business in the coming months and years. The biggest wild card is China. Days before the invasion of the Ukraine, China was seen as partners with Russia in a friendship that knows no limits. Philosophically, Russia and China see the west as an ideological adversary. Last week I spoke with a business owner who sources 100% of his product manufacturing in China. In his words, “There was no other option.” Our world is fully interconnected and that economic interdependence is supposed to bring global peace. For the past 50 years the world has seen a period of relative peace. Wars between major powers have been limited to proxy wars. Each of these wars has resulted in failure for the super power that has attempted to subject the country to their will. The US failed after 20 years in Vietnam. Russia failed after 10 years in Afghanistan. The US failed in Afghanistan. The US has largely failed in Iraq. The question is, what would happen if your primary supply chain was to be severed for the next 10-20 years. What would you do? If your business relies upon construction materials, what would you do? 90% of the hardware for doors in North America is manufactured in China. Most of the sinks, toilets, plumbing fixtures, electrical outlets and switches all come from China. We have learned that in a matter of days, the world order which we have relied upon and taken for granted for decades has been upended. The question is whether the central government in Beijing would risk their own economy by having an economic confrontation with the west. It seems too far fetched to consider. This next period is going to test policy makers and economists. The traditional theory is that an orderly economy will go through natural cycles of expansion and contraction. This is the result of the lag between reactions to changes in supply and demand. When the variables are simple, expansion of supply, versus short term demand, the economists levers of interest rates and liquidity are an effective tool for accelerating or cooling the economy. It takes an artificial disruption to create an economic contraction at the same time as a cash surplus creates inflationary pressure. We have just gone through four cycles of artificial economic disruption as a result of the pandemic. China has implemented another series of strict lockdowns in order to stem the spread of the more virulent 0micron variant. This will disrupt the supply of manufactured goods from China yet again, putting more price pressure on manufactured goods and increasing lead times. We are now going through another round of economic disruption as a result of the invasion of the Ukraine. ----------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about the world reserve currency. The USD became the world reserve currency in the wake of the Second World War with the international treaty signed in the mountains of New Hampshire called the Bretton Woods accord. This three week conference had 730 delegates from the 44 allied nations in 1944. It established the rules for international movement of money. At the time, the US had by far the largest gold reserves of any other nation, and it made sense that the US dollar was the most trusted of all the currencies in the world. By 1971, the US was printing more money than they had gold to back the currency. Richard Nixon went on national TV to announce that he was temporarily suspending the gold backing of the USD to protect the economic stability of the world financial system. The response to this move was the OPEC oil embargo where the OPEC member nations decided that they didn’t want to be paid in Monopoly money and they were accustomed to being paid in gold. Eventually, Henry Kissinger struck a deal with Saudi Arabia that if OPEC agreed to trade exclusively in USD, then the US would forever protect the political, military and personal safety of the Saudi Royal Family. That agreement meant that the USD position as the world reserve currency would be secured for at least another 50 years. It meant that if Italy buys oil from Nigeria, that transaction would be in USD, even if the US was not party to the transaction. In order for a currency to be accepted as a reserve currency, it has to be globally accepted by almost all of the world’s major players. Fast forward to the year 2022. Russia has invaded the Ukraine. Russia is now the subject of economic sanctions and the nation has been cut off from the world financial system. But clearly Russia will continue to ship oil, natural gas and wheat and other commodities around the world to whom ever will buy it. But now, it’s pretty clear that those transactions will probably not be denominated in USD. Which countries are going to be the most likely purchasers of Russian oil? Yes, that oil will probably sell at a discount to the rest of the market. But someone will eventually buy that oil. We can expect China, India, Pakistan, and a number of African countries will be buyers. Hang on a second. When you put Russia, India, China, Pakistan together, trading in oil, outside the USD, you have nearly half the world population now buying oil using something other than USD. At that point, the USD will have lost its standing as the world reserve currency. ----------------- Host: Victor Menasce email: [email protected]

The pandemic has challenged a lot of assumptions about both markets and demographics. We used to assume that school enrollment would remain stable according to demographics, and would continue to grow if population was growing. But even as the pandemic is clearly winding down, we are seeing school enrollments fall in many parts of the country. Remote online learning has been very hard on children. It has damaged their academic development, and it has damaged their social development. The reliance of electronic learning has kept kids glued to electronics for more hours of each day, and more than ever before. It used to be the case that real estate values were often influenced by school districts. The better the rating of the schools in the area, the more desirable that district would be from a real estate perspective. We have seen falling enrollment in schools over the past two years. Part has been due to the pandemic. Parents have seen how their children have struggled. It’s been difficult monitoring online classrooms. In the end, for many it’s been simply easier and more effective to home school rather than try to oversee engagement in online learning. Of the roughly 3.5 million full- and part-time public school teachers, more than one-third, or 38%, said that working during the pandemic has made them consider changing jobs. At the college level, even more — about 55% — of faculty have seriously considered changing careers or retiring early, according to a separate report from Fidelity Investments and The Chronicle of Higher Education. We are about to experience major churn in education.

On today’s show we’re talking market distortions, inflation, and the coming recession. The headwaters of a recession can be found in a cycle of inventory hoarding. So on today’s show we’re going to look and see if the conditions exist for inventory hoarding or not. On March 7 we talked about derivative markets and the impact that they can have on the real value of the underlying assets. We talked about futures markets and how these paper derivatives can be very helpful for those who have a vested interest in commodities prices to hedge against changes in commodities prices. After all, business leaders, just like investors, want to bring predictability and certainty to their business. In a world where currency is being devalued, it makes sense to put money into hard assets. If you’re in business, then buying inventory with today’s dollars makes sense before prices rise. The commodity will be a better store of value than the cash. If you are in construction, and you have seen a nearly 25% increase in the price of paint in the past year, then stocking up on paint that you will use anyway seems like a good move. You doubt the price of paint will fall, so why not buy an entire year worth of supply? How about two years of supply? If you can borrow funds for your inventory at less than the expected price increase, buying now makes sense. If you are relying on nickel, then it makes sense to hedge futures and build inventory in nickel at prices you can handle. If you need lumber, then buy lumber as much lumber at prices you can tolerate as possible. But when the market demand peaks, and consumers no longer see the need to build inventory, they will start consuming inventory rather buying from the supply chain. At that moment, demand drops like a stone, and prices fall dramatically. This dramatic swing in demand will trigger the next recession, which will be wider, deeper and longer than anyone expects. We need to be careful during this next period to know the difference between true market demand and shadow inventory in the hands of end customers. --------------- Host: Victor Menasce email: [email protected]

On today's show, we're in front of a live audience at The Real Estate Guys Secrets of Successful Syndication Conference in Dallas. Today's talk is a case study on the value multiplier that can be possible with the combination of annexation and entitlement.  -------------- Host: Victor Menasce email: [email protected]

Josh McCallen is the CEO of Accountable Equity, the owner of the Renault Winery and a new property located on Kent Island, a few minutes from Annapolis Maryland. Josh and his team specialize in renovating resort properties and transforming them. His track record includes beach front resorts, hotels, and most recently, properties that cater to weddings and special events. To learn more visit accountableequity.com. 

Today’s question comes from Vishal in Canada. Can we touch on the  flight of capital to US from Canada of wealthy families? If not, would you mind letting us know of what you think is happening and is it real or too far-fetched a possibility? Are you worried that we may come to a point where investments and wealthy family offices shy away from Canada? Your thoughts are always enlightening and call for some thinking on our part, so let us know in your views in a podcast episode. Vishal, this is a great question. The article in the Financial Post speaks about Having assets in safe jurisdictions outside your country of residence is part of the solution for long-lasting wealth. If you are a student of history, governments have a history of confiscating wealth. I don’t see this as a Canada US issue at all. From that perspective, I disagree with the article. I see the problem as more general. ---------------- Host: Victor Menasce email: [email protected]

On today’s show we’re talking about using data to drive business decisions. Perhaps the best company in the world for using data driven decision making is Amazon. But what do you do when the data exists? You’re hoping to try something new in the market that hasn’t been done before, or if it has been done, you don’t have access to the data because it’s proprietary? Well, it would make sense to run an experiment on a small scale to collect the data and then use that data to plot their next move. Amazon announced the closure of numerous recently opened stores. Does this mean that their recent foray into physical retail was a failure? Or were they simply running a data gathering experiment? --------------------- Host: Victor Menasce email: [email protected]

On todays show we’re answering a listener question that is a very common question. On today’s show rather than answering the question directly, this is the synopsis of a conversation that I had with this developer. I’m often approached by people who own land they would like to develop, or by those who want to operate a highly specialized event space for hosting wellness retreats. This listener is looking at developing a large acreage North of Palm Desert California. This is the place that has become famous for the massive Coachella music festival that in recent years has attracted close to 250,000 people for those few days a year. The developer I spoke with this past weekend desires to develop a wellness retreat on the acreage. The proposed project would consist of high quality amenities and the short term rentals would be made from factory built structures and assembled onsite.  Part of the concept is to have short term rentals on the property. Short term rentals are typically not branded properties. This means that you are going to likely rely upon a platform like VRBO or AirBnB to market your property on a nightly basis. As the name implies, this area is a desert. The average rainfall in Palm Desert is about 6” of rainfall per year. This can range from a low of 3” per year to 10” of rainfall per year in a record year. All of the moisture from the pacific gets deposited in the mountains before reaching the far side of the mountains, which is why we have a desert on the inland side of the mountains . When I am presented with any concept for a new project, I always ask the same questions. It doesn’t matter whether the project is located in the core of a high demand high density city, or in a rural location. All real estate has to follow the laws of supply and demand. There are examples of properties that have been developed in remote locations that have been successful. But there are even more examples of those that have failed. I’m simply not a believer in taking those types of speculative risks. I want to see demonstrable demand. That means examples of comparable properties. The problem with property in this location is the lack of municipal services. Specifically we’re talking about water and sewer. The lack of services is probably enough to kill any opportunity of developing anything of substance in this location. The area doesn’t get enough annual rainfall to develop a sustainable reliance on an underground aquifer. In recent years, the sustainability calculations for using groundwater have become much more conservative. Calculations that were commonplace 30-40 years ago have been shows to deplete the water table and many locations have run dry.

Today’s question comes from Adam. I’m looking to reposition a four unit apartment building. The construction budget is $60,000 and we have a quote from a contractor. Construction material and labor prices seem to be changing regularly. The building is currently vacant and the longer I wait, the larger the negative cashflow will eat into the viability of the project. The property is a C-Class property and I’m trying to figure out how to finance the construction with a bridge loan of some kind. The property has an existing mortgage on it, and the after repair value should be high enough to support the increased loan amount. The building is 110 years old and we will be replacing kitchens, bathrooms, and a total of 60 windows. We will be redoing the electrical panels, but re-using the existing aluminum wiring. I’m concerned about a hard money lender wanting to charge too much for being in second lien position, and the bank financing has several years left on the loan with a pre-payment penalty which I don’t want to pay. The pre-payment penalty would increase the cost of the project and impact its viability. How would you suggest that I finance this project? ---------------- Host: Victor Menasce email: [email protected]

On today’s show we’re taking a look at markets that operate purely like their functioning primary markets, and comparing them with the secondary markets. Primary markets are essentially what it sounds like. If you want to buy tomatoes, you go to the farmer’s market and you buy tomatoes for dinner, and the price for tomatoes is the price you pay. This is a simple primary market. Many markets operate this way, including real estate. There is a primary market, and that’s all. But when we are dealing with commodities that are used in the supply and manufacture of other derivative products, there are often secondary paper markets that can often be larger in dollar volume than the primary market. --------------- Host: Victor Menasce email: [email protected]

Addam Hooper is the CEO and founder of RealCrowd.com. On today's show we're talking about multiple product offers being managed before you have a failure of complexity.  To connect with Adam, reach out at [email protected] or visit realcrowd.com -------------------- Host: Victor Menasce email: [email protected]

Ryan Webster is based in Iowa, but invests in several stable markets of the South East. You can connect with Ryan at EquityYieldGroup.com ------------------------ Podcast: Victor Menasce email: [email protected]

On today’s show we’re talking about pragmatism. It’s easy as real estate investors to be idealistic and come up with solutions that are innovative and best in class. On today’s show we’re talking about a number of examples where complexity, or cost often force a simpler solution. For our first example, we are talking about a commercial property that will house a restaurant. In commercial applications, we know that garbage containers that are recessed into the ground have several advantages. #1, they are barely visible at the surface. #2, they control smells much better. #3, can hold more than an above ground solution. Today we learned that if we need to dig a hole to semi-submerge these trash bins, we will need an environmental assessment, and an archeologist to oversee the excavation. But if we use surface containers and a wooden fence around it, we don’t require any such approvals. Since trash handling is not truly a first order value added component to the commercial product, the added bureaucracy is preventing the better solution from being implemented. In our second example, we’re talking about a design that was completed with input from the client, but with no input from someone who understands cost effective construction. We had to spend a few hours value engineering features out of a property that did not need to be introduced. These are the types of tradeoffs we are examining on a daily basis. We’re not a general contractor. We hire general contractors. But unless you are willing to immerse yourself in the decisions that are being made, you will become the victim of decisions that are made for you. Sometimes those decisions will get you a finished product, but at a high cost and often with high complexity.

On today’s show we are talking about how interest rates are going up. It’s pretty clear that rates need to increase, but not for the reason that the central banks are publicly stating. The window continues for you to acquire debt under favourable terms. But that will not last forever. --------------- Host: Victor Menasce email: [email protected]

On today’s show we’re talking about security. We all know that thefts can and do happen all over the country with alarming regularity. Sometimes, the thief gets caught in the act. But that’s pretty rare. A smart thief is pretty adept at doing their business when people are not looking. So we have learned to invest in security systems. Cameras can be one of the best tools in seeing what happens. But these are complex systems that you can’t just forget about and hope they will cover you when a theft does occur. There is a tradeoff in all of these systems. On today’s show we’re going to look at some of those tradeoffs. --------------- Host: Victor Menasce email: [email protected]

On the first day of each month we review the book of the month. In order to be considered for book of the month, a book has to meet a simple criteria. It has to be impactful enough to change your life or your perspective on the world.  Our book this month is "Traction" by Gino Wickman. This book is an operating system for your business. We have been using it at the core of our business for two years. I can tell you without hesitation that our business has improved in terms of clarity and execution in that time.  ---------------- Host: Victor Menasce email: [email protected]

Investors love things to be predictable. They want their investments to deliver above average returns with the safety and predictability of a government bond. But then the world experienced a pandemic, followed by a deluge of printed money, followed by supply chain shortages, followed by inflation, followed by labor shortages, followed by an unprovoked war in Europe by an imperialistic dictator. We have not even begun to understand the impact that the conflict in the Ukraine will have on global supply chains that are increasingly intertwined. The belief was that the best way to prevent war was to create economic interdependence. This doctrine has been at the center of much of Europe’s attitude toward Russia in the wake of the cold war. That now appears to have been a strategic error. The new world order has been disrupted and we are now closer to World War III than at any time since the Cuban Missile Crisis. ------------------- Host: Victor Menasce email: [email protected]

Omar Khan is based in the Toronto suburb of Mississauga where he invests in commercial real estate in Hamilton, Ontario. The greater Toronto area remains one of the fastest growing communities in North America and affordability is driving people to the extremities. To learn more, connect with Omar at [email protected]. ----------------- Host: Victor Menasce email: [email protected]

On today’s show we are putting aside the usual weekend interview to talk about world events. This is not a political show, and I don’t intend to turn it into a political show. But it’s an important moment in world history and I feel like I need to say what is on my heart. We are witnessing war on the European continent involving an imperialistic power for the first time since the 1960’s. War is hard to justify under many circumstances. Sometimes you see a war of liberation where an oppressed people rise up to find freedom. We have seen this pattern before. We witnessed the Hungarian Revolution in the 1950’s. We witnessed the Soviet army invade Czechoslovakia in 1968. This is a war of aggression and of domination. This is the kind of war that the free world needs to wake up and oppose. You cannot appease a dictator. In the eight years that have passed, Ukraine has lost the Crimean Peninsula to an illegal Russian annexation. The Kremlin has instigated a war in the east part of the country called the Donbas region, where thousands of Ukrainians have been taken captive and tortured, and some 14,000 killed in a war that serves no purpose. And now Mr. Putin has launched a full-scale invasion of Ukraine. So what can I do? What can you do? As real estate investors, we own real estate. We own space that could be used to temporarily house refugees coming from Ukraine. We could partner with organizations that are sponsoring refugees to find safe havens. ----------------- Host: Victor Menasce email: [email protected]

On today’s show we’re talking about doing business with people who are not real. We had a recent interaction with a seller who turned out to be a liar. Sadly, these situations exist with alarming regularity. The property in question was based in Houston. Since we are in Texas, we will call the Seller Bubba. I’m instantly suspicious when someone is using a gmail address or a Hotmail address. When that happens, it suggests that the person is not really serious about being in business. They can’t afford the $6 a month to go out and get a properly hosted email address with their own internet domain. When we arranged a site visit, he refused to give us the address and decided to cancel the meeting and meet the seller himself without us. It’s clear that he doesn’t have the ability to close on the purchase. So we conducted the most basic of due diligence on the internet. The wholesaler had no website. They had a linkedin profile and an Instagram account. The only indication that this wholesaler was involved in real estate was a single video on his Instagram account. Well the information in the Instagram video did not match what we were told in person. It turns out that the property doesn’t have direct access onto a public right of way. It would require an easement from the church next door, or access through another property that the seller owns. The wholesaler went on to brag about how he was going to wholesale this property and earn a six figure income for flipping the contract to a buyer. Then he also went on to say more about the buyer. He described the buyer as an 88 year old man who owned a lot of real estate, restaurants, apartments, and that frankly he was a tired landlord. The best part was that he was expecting to get the property locked up under contract very soon. But wait a minute, he had just told us before he recorded the video that he had the property under contract. When we confronted him about cancelling the site visit with our team, he proceeded to blame our team for not being trustworthy. He attacked our team members character. I wish we could do more to protect hard working people from these kind of business predators. I actually have no problem with working with professional wholesalers. The emphasis is on the word professional. They can be a source of great deals. I’ve bought two deals in the past year from wholesalers, and they have been rewarded handsomely. Fakes show up in all industries, and I suppose real estate is not immune. When you perform due diligence, make sure you perform due diligence on the people who make representations. You never know what you might find.

On today’s show we’re talking about predictions. Predictions are rare for me. I don’t make them often. When I do, it’s because the data is clearly pointing to something that I can see that may not be obvious. Earlier this year on January 4, I predicted that the pandemic as we know it would end by the end of February in North America and Western Europe. I also predicted that oil would hit $100 a barrel by the second quarter. So the question is, what was I seeing in the data a few months ago that made those predictions seemingly accurate? ------------------------ Host: Victor Menasce email: [email protected]

On today’s show we’re going through the thinking process of how to assess whether you are evaluating a viable project or not. This was a property that we got under contract because it looked like it had potential at first. In this case we were presented with the opportunity to convert an assisted living project in Utah. The facility lost its operating license and our analysis is that assisted living projects in this particular submarket have a hard time financially. The individual suites could be repurposed as apartments and an apartment conversion initially looked attractive on the surface. But the problem is that there is insufficient parking for an apartment building. People residing in AL don’t drive, so there is not much parking. In fact the parking ratio is approximately 1/3. We would need to add more than 40 parking spaces to have a viable apartment conversion. We spoke with the city and they would have been supportive of an apartment conversion. They agreed that we needed more parking and assembly with one of the neighboring parcels would be essential to creating sufficient parking. We looked at a hotel option. The suites were well suited to a hotel offering. But unless we could assemble a neighbouring parcel and build at least 40 more parking spaces, the project would not be viable as a hotel. In the end, we decided to pass on this opportunity. It was looking like it was going to be a forced fit to make the property work physically. Even if we undertook the effort to convert the building to meet the minimum criteria as apartments or a hotel, it would still be a poor quality apartment building and a poor quality hotel. Neither of these screamed that we should go forward. We get a regular flow of opportunities like this crossing our desk. Do we feel bad about spending the effort? Not at all. This is part of the process of finding that rare subset of projects that ultimately do meet our criteria. -------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about stress. The dictionary defines stress as “a state of mental or emotional strain or tension resulting from adverse or very demanding circumstances.” I personally find that definition to be rather useless. Using a related word, or a synonym to describe a word is not very helpful. So I have developed my own practical definition which I think is more useful. "Stress is that emotion we experience when there is a gap between expectation and reality." ---------------- Host: Victor Menasce email: [email protected]

Today’s show is a commentary on the highly publicized Freedom Convoy protests that have gripped my home city of Ottawa Canada for the last 23 days. What I’m reporting is my own opinion based on my own observations and from first hand conversations that I have had with people who have attended the protest. In our culture we seem to have a need to simplify and reduce issues to a binary choice. You are either good or bad, friend or enemy. You either agree or disagree. Things are black or white with no room for grey. What I have observed in the news media is an attempt to select the subset of the facts that support their desired narrative. Virtually every news outlet I have seen is guilty of the same process, irrespective of which side of the argument they are supporting. Some have said that if you support the protest then you are anti science and anti vaccine. I’m pro vaccine and anti mandate. I believe that it was in most people’s best interest to be vaccinated earlier on in the pandemic. But as we have learned, the vaccine does not prevent the spread of the disease. It reduces the severity of the symptoms in those who are vaccinated. If people choose to not be vaccinated, even though it would be in their best interest, that is their prerogative in a free society. I had a friend who chose not to get the vaccine, and sadly he is no longer with us. I believe he made a poor choice. I’m sad that he is no longer living as a result. I’m sad for his family and for all of his friends. But I defend his right to make a choice. So I reject the reductionist argument that if you are anti mandate, you are automatically anti vaccine and anti science. I’m completely pro vaccine and pro science, just anti mandate. It’s not very complicated to keep those two ideas in your head. ---------------- Host: Victor Menasce email: [email protected]