Today's show is a very special segment with Dallas based CPA Mike Pine. We're talking about depreciation and how it can be advantageous for investors of all types. ------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about staffing. We’re reading daily headlines of staffing cuts at companies across the economy. Just in the past week we’ve seen headlines of 1500 people let go at Spotify, 3000 at TD Bank, 1000 Track maintenance workers at Union Pacific Rail, 1200 at Broadcom in the SF Bay Area just to name a few.  The question is, how does a business owner know when is the right time to hire, and when is the right time to reduce the workforce? Money comes into a business in one of three ways: Earned income Residual income Capital gains Workforce reductions are among the hardest decisions for a business owner or a manager to make. But in truth, the hiring decision is almost equally difficult. Both decisions involve solving a problem.  In the case of hiring, chances are that the organization is stretched and having a hard time keeping up with the workload. Hiring can bring some relief to overworked people and both customer and employee satisfaction can improve with the right hires. 

Derek Vickers is based in Orlando, Florida where he invests in mobile home parks in Florida and the Carolinas. On today's show, we're talking about how to create value in mobile home parks. New parks are not being permitted in many communities and a turn-around on existing parks can be a good affordable solution in the market. You can connect with Derek at derekvickers885 on all of the social media platforms and check out his webinar on MHP investing at go.parkinvestingpro.com. ----------- Host: Victor Menasce email: [email protected]

Greg Mohr is based in Lincoln Nebraska where he is a national franchising consultant, helping potential franchisees find the right business to undertake. To learn more and to connect with Greg, visit franchisemaven.com ------------- Host: Victor Menasce email: [email protected]

“Never Split the Difference: Negotiating As If Your Life Depended On It" by Chris Voss is an insightful and practical guide to negotiation, drawing on the author's extensive experience as a former FBI hostage negotiator.  ----------- Host: Victor Menasce email: [email protected]

The COP28 summit just got underway in Dubai, a region known for oil production. On today’s show we’re going to look at a recently published paper  coauthored by Kelly Shue of Yale SOM and Samuel Hartzmark of the Carroll School of Management at Boston College. This paper shows categorically that the penalties imposed on high polluting firms actually don’t have the desired effect and in many cases can be counter productive to the stated goal.  --------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about how a $40 tool can save you thousands or even tens of thousands of dollars in energy costs. As real estate investors we often spend the bulk of our time in the relative sanitized environment of the office and spreadsheets. Your buildings are literally throwing money out the window. Energy costs are a primary line item in your expenses for any investment property. Now some of you might be thinking that the cost of heating and cooling is being paid by the tenants and you don’t need to worry about the budget for your tenants. Your focus as an investor should be on the bottom for your property, not getting caught up in the weeds of your tenants finances. Now you could go out and hire an energy consultant who will come to your property with thousands of dollars of high priced thermal imaging equipment that will show you exactly where you are losing energy from your building. That is certainly one option. You need to know where your building is losing energy. That means creating a map of where your building is leaking. You don’t need five decimal points of precision in those measurements. ----------- host: Victor Menasce email: [email protected]

On today’s show, we are talking about one of the implications of artificial intelligence that is not being widely discussed in the main stream media. There are billions of people in the world. Designing and tailoring products for individuals has been largely ignored as even a remote possibility. It takes far too much effort. To develop custom products for each individual on the planet. We have lived much of the past century with products that are designed for the masses. If you think about a standard bell curve, what in statistics is called a normal distribution, product developers, and product marketing have been aiming at the average, and try to remain within one standard deviation from the average. When marketers send messages to their target demographic, they tend to put them into buckets. This is also true when it comes to trends in voting. What matters to the Christian voter, to the hispanic voter, the indigenous voter, the immigrant voter, the African American voter, and so on.  Increasingly AI can be used to create messages that are not tailored to a group, but tailored to an individual. The question is, could AI be used to influence an election result? 

On today’s show we are looking at the result of a lawsuit that has been decades in the making. I’ve wondered for a long time why real estate commissions in the US have remained solidly anchored at 6% when in other markets real estate commissions seem to fluctuate much more widely. For example, where I live in Canada, it’s much more common in high priced markets like Toronto to see commission structures where the selling agent is charging 1%-1.5%, and the buyer agent who has a lot more work to do in many cases charging 2.5% for a total of 4% or 4.5%.  In most professions there are two separate industry bodies. The first is a professional association that acts on behalf of the members. The second is a quasi government body that serves to regulate the industry and to enforce the licensing requirements. They also serve to protect the public. You see this dual structure in most professions whether we are talking about doctors, lawyers, psychologists, and also real estate agents.  The body that represents real estate agents is an industry body in the US called the National Association of Realtors.  A Kansas City jury last month delivered a $1.8 billion verdict to home sellers in Missouri against the National Association of Realtors and several major brokerages, finding they had conspired to keep commission rates high.

Bob Knakal is a senior executive at JLL in New York City. On today's show we are talking about some of the challenges facing real estate in the New York market. JLL is a large national commercial brokerage and the New York team is truly expert at what they do. You can connect with Bob at [email protected] -------------- Host: Victor Menasce email: [email protected]

Chris Larsen is based in Asheville, North Carolina where he runs Next Level Income. On today's show we are talking about economic super-cycles. You can learn more or you can connect with Chris at nextlevelincome.com. -------------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about measurement diligence.  People are human and they make mistakes. Often these potential mistakes are not checked, double checked or triple checked. You have no doubt heard the mantra, measure twice, cut once.  Measuring sounds easy. In some ways it is. You take out your tape measure and you just measure. Diligence requires attention to detail.  Those who make a lot of measurement errors are also prone to missing the details in a contract, or the details in a report. It requires a lot of focus and diligence to catch errors. If you think that errors are rare, you might be more prone to observer bias.  This brings me to the most overlooked role in any organization.  Quality assurance is a mandatory function in any business in my experience. The review process is a formal process that can’t be skipped. So often I work with consultants who aim to deliver their work on the deadline. They are assuming that there are no mistakes. They are assuming no review time in their schedule. If you actually do perform a review, you are guaranteed to be late. If you find an error, which is likely, then you are guaranteed to be even later than late.  I started today’s show talking about measuring. But measuring is a metaphor for any critical item. It could be a test result or a consultant report. Each time a consultant makes an error, it can result in delays in securing building permits or in redesign of the project. If people are not used to the review process, they might be inclined to charge extra for that service.   ------------- Host: Victor Menasce email: [email protected]

Happy Thanksgiving to our listeners in the United States. We have lots to be thankful for. I’m personally thankful for a long list of things. I’m thankful for my health, for my family, for having the privilege of working with great people. I’m grateful for friendship and for you the listener to the podcast. I love listener questions.  On today show, we are looking at several leading indicators that are painting a much clearer picture of what’s happening in the economy then the shortlist of lagging indicators that the federal reserve references as meaningful in their committee meetings that are held a times a year. The Federal Reserve is fixated on inflation, Gross, domestic product and unemployment. The only way to reduce wage and price increases is with a contraction in aggregate demand. However, government spending continues to grow with any contraction being disproportionately, concentrated on the private sector. The government didn’t get the memo that demand needs to shrink.

There is a new law which takes effect Jan 1, 2024. The primary purpose of the Act is to provide greater transparency of legal entities to detect and combat illegal activities. The new reporting requirements, however, will cause millions of existing legal entities to file new beneficial ownership disclosure forms with the federal government. The regulations are written so broadly, that nearly every small business in the US will be swept up in this new law. The idea here is not for you to be getting your legal advice from a podcast. That’s certainly not my role. You want to seek your own legal advice from your own law team. The purpose behind reporting this on the podcast is simply to make you aware that you likely have some work to do to understand the new rules and make sure you’re in compliance.  ---------- Host: Victor Menasce email: [email protected]

On today’s show we are looking at the results of one of the most anticipated real estate auctions this year. Signature bank failed in the Spring of this year, shortly after the failure of Silicon Valley Bank.  The loan portfolio was finally put to auction and it looks like a joint venture of two nonprofits and Related Fund Management is poised to win an auction for billions of dollars of Signature Bank loans backed by New York apartments,  Signature failed in March following a run on its deposits, the fourth largest bank failure in U.S. history. While the failure had little to do with its real-estate portfolio, it was one of the biggest commercial property lenders in the New York region. -------------- Host: Victor Menasce email: [email protected]

 On today’s show, we are talking about four ways to liquidate debt. Our entire economy is driven by access to credit. Credit facilities of all types are essentially a claim on future earnings. I don’t have the money today, but I will in the future if you lend me some of that excess money that you are not using right now, I’ll give it back to you with extra in exchange for letting me use those funds today. It doesn’t matter cause weather the borrower is an individual, corporation, charitable, organization, or the government of a sovereign nation. There are four ways to liquidate a debt obligation. 1. You can repay the debt to future earnings and rely upon your week to week months to months, cash flow to service that debt and repay both interest and principal over the life of the loan. 2. You can rely upon a capital transaction to provide a source of funds to repay the loan. 3 You can wipe out the debt through an active insolvency by seeking bankruptcy protection. 4. You can inflate away the debt.

Shannon Robnett is based in Boise Idaho where he develops multi-family apartments. On today's show we are talking about how to navigate the current market environment with all of its challenges. There are a few nuggets in today's show that you will definitely want to pay attention to. To connect or to learn more, visit https://shannonrobnett.com/ ------------- Host: Victor Menasce email: [email protected]

On today’s show, we are taking a look at why interest rates for commercial real estate are actually falling despite the hawkish rhetoric this past week from Federal Reserve chairman Jerome Powell. Since the middle of the summer we have seen rising yields on the 10 year treasury. The rate peaked on the 19th of October at 4.99%. This benchmark rate has a much larger impact on Real Estate Investors Than the federal reserves short term, federal funds rate. Rates went up over the summer and into the early fall, because the US treasury has been printing vast sums of money and issuing new debt in addition to the rollover of existing debt that has matured. We have seen the 10 year yield fall to 4.43% since the middle of October. That’s more than 0.5% drop in less than a month, even though the Fed is holding short term rates steady. This is one of those stories where bad news is good news. The thinking is that if the economy is weak and we enter a deflationary recession, or a disinflationary recession, the Fed will pivot from their hawkish stance and lower interest rates. The mainstream media including the Wall Street Journal is pushing a narrative that the lower CPI numbers are the reason we need to celebrate that interest rates have peaked and are heading down from here. I think the story is more complex and more nuanced than that.  ------------ Host: Victor Menasce email: [email protected]

Jeff Love has been helping commercial clients with their real estate legal needs for more than 15 years. On today's show we are talking about distress in the current market. To connect with Jeff, visit gibbsgidden.com ----------- Host: Victor Menasce email: [email protected]

On today’s show we’re talking about the forecast flood of distressed deals in the marketplace. We’ve been hearing about how distress is coming and how deals will be available.  I’m here to tell you that the future is now. We are starting to see a regular flow of large assets and portfolios of projects coming to the market.  I’m getting phone calls from brokers on a nearly daily basis. Many of these so-called deals are frankly located in a areas that are far from our criteria. The team therefore needs to be incredibly selective to only allow projects into the pipeline that are truly exceptional in the context of today’s degraded market conditions. A random piece of land somewhere is not going to meet that criteria.  ------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about deal structure. Some of the financing vehicles that are increasingly common in real estate had their roots on Wall Street. Others had their roots in the tech environment of Silicon Valley.  When investors want to participate in a startup business that will certainly evolve over time, how do you decide what is fair to both the investor and the management team? What is the monetary value of the investment, pre-money, and post money? How do you know what percentage of the business to sell to investors?  The value created by the business has several elements. The seed capital is part of it. But so too is the creativity and resourcefulness of the team. You won’t achieve business success, or any investment returns without both.  ------------ Host: Victor Menasce email: [email protected]

Prices in real estate are not determined by the broad market. Instead they’re often set by transactions at the margins of the market, by a tiny percentage of properties that transact, and not the majority of the market that is just staying put.  On today’s show I’m going out on a limb to predict that we have just experienced several bellwether events that are signalling to the market the contagion of financial distress.  ------------- Host: Victor Menasce email: [email protected]

Matt Picheny is based in NYC where he acquires and manages multi-family apartment assets across the southern US. Matt is also partnered with Y Street Capital on two projects. On today's show we are talking about asset management. To connect with Matt and to learn more, visit picheny.com ------------ Host: Victor Menasce email: [email protected]

Paul Winterowd is based in Salt Lake City where he specializes in helping sponsors capitalize commercial real estate projects. On today's show we're talking about the difficulties being faced by borrowers in the current environment. To connect with Paul, visit paulwinterowd.com ------------ Host: Victor Menasce email: [email protected]

On today's show, Robby asks: "Why does Taiwan dominate the semiconductor industry?" ----------- Host: Victor Menasce email: [email protected]

On today's show we are talking about the Buy On The Line Strategy ---------- Host: Victor Menasce email: [email protected]

In September of 2019, I published an episode on the podcast entitled “Why Wework doesn’t work.” This week Wework filed for Chapter 11 bankruptcy protection in NJ. The bankruptcy filing affects the main company, and over 400 subsidiary entities that also simultaneously filed for bankruptcy. The landscape is littered with companies that have made long term obligations and have only secured short term sources of revenue to cover those long term obligations. Wework signed long term leases, many with payment guarantees that stretched years into the future. The only way out of those leases was would be to force a reorganization in a bankruptcy proceeding. The company’s balance sheet shows about 16B in assets and $18B in debts.  -------------- Host: Victor Menasce email: [email protected]

On today’s show we are looking at the energy transition away from fossil fuels. This is not real estate per-se. But it is a macro economic factor that affects our economy very deeply, even though most members of the population are completely oblivious. With global geopolitical tensions rising, understanding energy sources is critical to understanding what is happening in the economy. Energy is the economy. For every unit of economic output, there is an equivalent unit of energy consumed somewhere in the world.  You might be wondering why the price of gasoline is falling at the same time that the price of diesel is rising. On today’s show we’re going to answer that question.  ----------- Host: Victor Menasce email: [email protected]

On today’s show, we are talking about the importance of offering a discount without lowering your price. There is so much emphasis on sale price that the value of inventory is strongly linked to the most recent comparable sales. From the perspective of the end customer, affordability is a function of the total sale price and more importantly, the monthly carrying cost associated with that purchase. When you visit a car dealership and the dealer is offering that shiny new vehicle with a 1.9% interest rate don’t be fooled by thinking you’re getting a discount. The dealer is charging you thousands more for that vehicle in order to give you that 1.9% interest rate. They actually tell you what it costs for that financing when they say, take $5000 off the sticker price or 1.9% financing.  Most people understand the game when we’re talking about buying a new car. These techniques are not typically associated with real estate. ------------- Host: Victor Menasce email: [email protected]

Clayton Young is an elite distance runner. He is currently ranked among a handful ot top runners in the US and top 50 in the world. On today's show we are talking about the mindset and habits that are required to do anything at a high level, whether it's in sport or in business. To connect with Clayton you can email him at claytonyoung88 at gmail.com. You can also follow him on social media with the handle _clayton_young_ --------------- Host: Victor Menasce email: [email protected]

Chris Long is based in Central Florida where he builds and operates Longyards facilities across the US and Canada. On today's show we are talking about the market characteristics of industrial outdoor storage and what customers are asking for. To connect with Chris, visit longyards.com ------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about translating vision into execution. There are many companies that have an impressive company tag line. But when you ask employees and stakeholders about it, there is usually an awkward pause. What comes after that is often a disjointed statement. At our development company, we spent a lot of time thinking and refining what our business is about. We are real estate developers. All developers have a calculator that works pretty much the same. In order to generate a profit, you need income to be higher than expenses. You want to build the best product for the lowest possible cost. All of the usual things that maximize profit. For many developers, that means squeezing the subcontractors.  When I tour newly completed projects in the market, I’m stunned at how poorly things are built. I’m astounded at the low quality of finishes. But most of all, these brand new apartments in supposedly luxury buildings are truly awful. I see living rooms with columns that make the space virtually impossible to furnish. I see bedrooms that are so small you can’t fit anything but a bed and a single night table. You’re thinking of hosting friends for dinner? Maybe have dinner in a restaurant because there isn’t really a space to entertain. That’s what I see when I look at many brand new projects. So back to our company vision.  We thought long and hard. Our company exists to build communities that people feel compelled to call home.  So what does that really mean? How does that translate into what we actually do? Does it mean sacrificing profitability?  This vision is more than just a vision, I consider it a guiding principle.  ---------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about signs of stress in the construction industry.  It’s no secret that many developers have put projects on hold as a result of higher interest rates.  When we talk about counter party risk, that term conjures up an image for the GFC that started in 2008. This is the result of an asset being held by one party constituting a liability for another party. If the liability can’t be met, then the asset on the books may not be properly valued and may need to be written down. We saw the cascade of dominos across the entire banking system. The Federal Reserve recognized the linkages between different counterparties and has attempted to alter the structure of the banking system by encouraging banks to borrow from the Fed, or by putting excess reserves on deposit with the Fed. That way if the Fed is the counterparty in most cases, the systemic risk to the banking system would be reduced. Sounds good in theory.  On today’s show we are going to look at another form of counterparty risk that is rarely considered. It was brought to our attention in the past few days. Our own due diligence processes are being strengthened as a result of what we have learned.  --------- Host: Victor Menasce email: [email protected]

Brené Brown, renowned for her research on vulnerability, courage, and empathy, delves into the heart of leadership in her book "Dare to Lead." In this captivating and insightful read, Brown explores the intersection of vulnerability and leadership, offering a refreshing perspective on what it means to be a daring and effective leader. Brene Brown is someone who I’ve been following for years. Her work on the emotions that drive behaviour has been groundbreaking. I would describe her work as being in the shadows, in involving topics that are rarely discussed in the context of leadership. At the core of this is shame. Leaders are just people and people often grapple with shame at their imperfections.   --------------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about what is driving the economy.  There was a time when I thought the fear over communism taking hold in the west was overblown. Yes, communism had taken hold in China, the Soviet Union, and Eastern Europe. But we saw how that turned out. Communism is a recipe for economic stagnation. I have visited parts of Eastern Europe, the Ukraine, and mainland China. I’ve seen the remnants of communist economic policies and how it killed innovation and entrepreneurship. I’ve seen the drab grey concrete buildings with virtually no interior finishes. These cement caverns feel more like a war bunker than a home.  People who rail about communism are out of touch. Don’t they know that the Berlin Wall fell in 1989? Don’t they know that China opened up their economy to more free market forces? Have they not visited Shanghai and seen the advances that free market forces have brought to China?  We don’t need to worry about government dominating the economy here in North America. After all, we hear that consumer spending influences 70% of GDP. That statistic is quoted regularly.  So when you look at all layers of government, government spending in the US stood at 38% of GDP. In Canada, government spending at all levels is at 41% of GDP.  Communist China reports they are at 31% of GDP for all levels of government. Russia is at 36% of GDP.  Exactly what is communism? ----------- Host: Victor Menasce email: [email protected]

Kelly Koontz is based in Seattle Washington where he is a principal at Submetering Solutions. The company specializes in all forms of submetering for the major utilities like water, gas, electric and more. Some of the newer technology meters don't require cutting pipes and merely wrap around the pipes. To connect with Kelly or to learn more, visit submetersolutions.com/espresso and you will be able to get in touch directly. ---------------- Host: Victor Menasce email: [email protected]

The Fed is losing money. Now you might say, how can the Fed lose money? Isn’t the Fed the very definition of money? Can’t they just print more? Well I guess sure they can. But printing money only works as long as confidence remains in the currency. It works until it doesn’t. When it doesn’t, then it’s incredibly difficult to restore that confidence.  ------------- Host: Victor Menasce email: [email protected]

Chris Prefontaine is based in Rhode Island where he invests in the local and nearby states. The strategies he teaches apply nationwide. To connect or to learn more, visit smartrealestatecoach.com. To get a copy of the free book, visit whickedsmartbooks.com/victor1 and they will mail a physical book to you at no cost. ------------ Host: Victor Menasce email: [email protected]

On today’s show we are talking about the technology in some of the newest materials for new construction. It’s increasingly common to have building plans examiners and building inspectors reject materials for use in a new construction project. This often comes down to an issue of liability.  Gone are the days of stick building a frame and slapping on some siding. There is an entire building science and modern buildings have a lot of technology built into the structure, the cladding, the windows, in fact the entire building envelope.  Buildings can degrade with moisture and multiple defences agains moisture penetration are key to having a long life building.  That means designing layers to keep moisture out, and then making sure that moisture has a way to get out if it does happen to penetrate the first layer. The other source of moisture is the result of condensation. This happens when there is a difference in temperature between inside and outside. If its colder outside, then moisture is likely to be on the outside. If it’s colder inside, then moisture is likely to condense on the inside. Both can be a problem.  The latest innovation is something called an air barrier. These new technologies have created confusion with contractors and many of them don’t understand the difference.  ------------- Host: Victor Menasce email: [email protected]

When I speak with listeners of the podcast, I’ve been asked on numerous occasions how I come up with topics for the daily show. More specifically, how do I decide what angle to explore on a particular topic.  I get this question often, so I decided to dedicate a few minutes to sharing how the background work happens in coming up with a new episode.  When deciding the content for the show, I’m looking for a variety of topics that are going to be interesting to my listening audience.  That means a mix of topics that are more evergreen in nature, as well as topics that are a tie-in to the news. An evergreen topic is not tied to a particular point in time. For example, I did an episode on water rights and how they differ from one jurisdiction to another.  Tie-ins are related to what’s happening now. For example, if the Fed makes an announcement on interest rates, then I’m going to report on that in real time. Talking about it a week later makes no sense.  Real estate investing is affected by many factors, ranging from the macro-economy to the micro. Then there are specific vertical asset classes each with their own dynamics.  ----------- Host: Victor Menasce email: [email protected]

On today’s show we are talking about ways in which you could get a solar system almost for free. That’s right, you heard me correctly. Under the inflation reduction act, the US Federal government offers a tax credit of up to 30% of the cost of a solar power generation system being installed. When talking solar power, I’m talking about commercial systems that would serve an entire business like a warehouse. But there are additional incentives that can be layered on top of the investment tax credits.  There is a program of grants administered by the US department of agriculture call REAP which is an acronym short for Rural Energy For America Program. ------------ Host: Victor Menasce email: [email protected]

On today’s show we’re talking about getting paid, and who gets paid and in what order. Investment options often include a waterfall provision. This defines the order of precedence of payment. This is an important element of any investment. On today’s show we are going to look at a few of the popular offerings we see in the market, and then we are going to share what we do in our projects. To be clear, we are not soliciting for investment here. This is an educational piece designed to explore investment structure so that you can better evaluate whether a particular structure is beneficial for you. Of course you want to consult your CPA to make sure there are no unintended tax consequences.  At the most basic level, the waterfall speaks to who gets paid in a project and in what order. There are infinite possibilities for the structure you could define for how investors and shareholders get paid. You can get as sophisticated as you want. But if investors can’t understand it, it’s not worth the extra complexity.  ------------- Host: Victor Menasce email: [email protected]

On today show we are looking at a tug-of-war that is underway in the financial markets. There is also a competition for capital between government and private enterprise. For the moment it appears as though government is winning that battle for dollars. We have an economy that is partially being controlled by two gigantic levers. The first lever is monetary policy and the second lever is fiscal policy.  But before we use these terms, it would be useful to define them.  Monetary policy is controlled by the central bank. Those decisions affect bank liquidity, the printing of currency units, and the setting of interest rate policy.  Fiscal policy refers to the decisions made by governments to spend money. Fiscal policy affects taxation, entitlement programs, public infrastructure projects, military spending and so on.  We literally have a situation where central banks are standing with both feet on the brakes. Governments on the other hand, have their foot firmly on the Excelerator. If you have ever tried this in your car do you realize of course that you will either burn out your engine or your brakes very quickly. governments of course. ----------- Host: Victor Menasce email: [email protected]

Galen Hair is a lawyer who specializes in litigating insurance claims on behalf of real estate owners against insurance companies. On today's show we are talking about the insurance landscape and what property owners can do in the current environment. To connect with Galen, visit https://insuranceclaimhq.com/ --------------- Host: Victor Menasce email: [email protected]

Jason Buxbaum is based in Phoenix Arizona and invests in developing and redeveloping workforce housing across multiple markets in Arizona and Texas. On today's show we are talking about the market dynamics and how they're changing. Opportunity that disappeared for a while is now reappearing in a different form. To connect with Jason, visit JevanCapital.com

On today’s show we are challenging some conventional wisdom. Subtrades are pretty set in their ways about how things get built. They have their preferred suppliers. They expect materials to be packaged in a specific way. They have familiarity with a regular and repeatable process for installing materials. Any deviation from those tried and true methods is going to disrupt the normal flow.  The key to building cost effectively often requires creativity. That can mean alternate sources of supply. Some materials can be purchased in lower cost geographies and shipped all over the world. The problem is that some materials have not been tested or certified to US or Canadian standards. Building codes are international in nature, but they are also highly localized as well. Many local jurisdictions point to the national codes and standards. But they often have local regulations to meet as well.  Importing products that are not certified has risks. The most famous example is Chinese drywall.  We have been scouring the planet for high quality materials that can reduce the cost of construction while still meeting the requirements of the building code and materials certification standards. ------------ Host: Victor Menasce email: [email protected]

On today’s show we are making a distinction between new supply and value added opportunities. Investors over the past few years have focused on two different investment theses. Thesis number one is the traditional value added project. This is where you take an existing project that was built a number of years ago. It’s getting tired and the lack of modern amenities and finishes makes the property less desirable and therefore it attracts lower rent.  The idea is to vacate enough of the units that your can improve them over a period of time. The second involves new construction. This is where developers come in. They are adding new product to the market. These gleaming new buildings have modern amenities. They are generally very desirable properties.  What these two approaches neglect is the real needs in the market. Where are the gaps? Is there a business opportunity to fill those gaps?  --------------- Host: Victor Menasce email: [email protected]

On today’s show, we are looking at a market effect that could have been easily predicted. In fact, we made precisely this prediction on the show back in 2021. When markets over-shoot the long-term averages for demand, it is reasonable to expect a bit of a boomerang effect on the tail end of that demand. I have long maintained that second homes are a discretionary investment. People will do everything they can to protect their primary residence and ultimately sacrifice when it comes to a second home. In 2021 and 2022 we saw the surgeon demand for vacation properties whether it was a lakefront cottage Ski chalet in the mountains. There was absolute white hot demand for what seemed like scarce number of properties. Many buyers of these properties, finance their purchase by tapping into a home equity line of credit rather than getting a fixed rate financing pacifically tied to the new property. With the rapid increase in interest rates, the carrying cost associated with these vacation properties has increased dramatically. Owners of these cottages are looking to unload them for a variety of reasons. Some have discovered the cottage. Life is not for them. Some have decided that living in a rural area, not fit their lifestyle. Install others simply cannot afford a higher caring cost at today’s interest rates. The market averages seem to obscure what is truly happening in the market. Paradoxically, sales, volume and prices, in the luxury segment of the market appear to be largely unaffected. These buyers are more sophisticated. They are typically paying cash, and therefore they are largely unaffected by the recent spike in interest rates. we are seeing softness in demand and pricing at the lower end of the market. Lower end properties in less desirable locations are sitting on the market with next to no activity.  Some brokers are reporting price drops of nearly 30% on these lower end properties.