The Real Estate Espresso Podcast Victor Menasce

On today’s show we are talking about the non headline revisions to economic data. 

I’m here to tell you beyond a shadow of a doubt that the US economy is in recession. 

What I’m sharing today is the good work that is done by Danielle DiMartino Booth. She is the CEO and chief strategist at QI Research. Previously Danielle was at the Federal Reserve Bank of Dallas for nine years working under Richard Fisher. 

This past FOMC meeting marked a significant departure from previous meetings where Fed chairman Jerome Powell described a change in Fed posture. This was not part of the initial remarks or the press release, but rather a response during the question period. 

He said that the Fed was shifting posture from fighting inflation to a return to its dual mandate to both maximize and maintain price stability. That means that the Fed is seeing something in the employment data that is concerning. On this show I’ve been reporting inconsistencies in the employment data for many months. 

Well now we have one more data point that categorically shows what is really happening in the jobs market. 

Every month the BLS puts out the payroll establishment survey and they publish the GDP for the nation. 

In addition to the payroll survey, the census bureau also conducts their own survey once a quarter. The data from the Census Bureau is much more comprehensive than the BLS survey. We also experience frequent revisions to the payroll survey. 

What the census data shows is that in the third quarter of 2023 instead of having 640,000 jobs created during that three month period, the economy actually lost 190,000 jobs in that time period. This is not a small difference. The narrative in the mainstream media is that the economy is strong and the consumer is resilient and the jobs market is strong. If the true data was being reported, I think it would be much more difficult to propagate that story. 

Max Hansen has been practicing law for more than 40 years and is a true expert in tax sheltering with section 1031 of the US tax code. On today's show we are talking about some of the common pitfalls of using the 1031 exchange. Coming up on May 21 at 8PM EDT, 6PM MDT, we are going to be hosting an educational webinar where Max will be available to answer your questions live on sheltering capital gains. The best way to understand the process is with your own specific questions.



To register for the webinar, click on the link below.

https://event.webinarjam.com/register/25/n0n36u77

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Host: Victor Menasce

email: podcast@victorjm.com

On today's show we are talking about land development in Florida, about buying at the right time, and the elongated timelines associated with land development.

To connect with Josh, search for Joshua Pardue on all of the major social media platforms.

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Host: Victor Menasce

email: podcast@victorjm.com

On today’s show we are talking about the kinds of questions that are helpful when determining the scope of a project. 

We are often given estimates by contractors for work to be performed. Those elements that have the largest variability continually seem to be related to site work. 

I often experience sticker shock with these estimates. 

The key to getting an optimized cost starts with determining the proper scope of work. If you’re simply negotiating with a contractor to lower their price, that’s a pretty blunt instrument. The contractor is going to feel squeezed and they are simply seeing their margin being eroded. 

But if you approach the conversation from the perspective of making sure the contractor gets fairly paid for their work. You just want to make sure that we have a common understanding of the scope of work, that context usually changes the nature of the conversation. The bottom line number may actually increase in the event that the estimate is low. 

In order to have a meaningful conversation about the scope of work, you need to be prepared to go deep with the contractor on the assumptions behind the estimate. 

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Host: Victor Menasce

email: podcast@victorjm.com

Back in the 1960’s the first disposable diapers were introduced by Proctor and Gamble under the Pampers brand name. Cloth diapers had been the staple up until then and these new wonders were supposed to buy back time for new mothers who were previously saddled with massive amounts of laundry. 

By the mid 1970’s, Kimberly-Clark, the makes of Kleenex introduced the Huggies brand of diapers. This alternative to Pampers started to gain market share. In the meantime, Proctor and Gamble also introduced another brand of diapers called Luvs.

Throughout the years there were numerous innovations in diaper technology including different fasteners, better form fitting around the legs, increased gel content and so on. With each new innovation, the manufacturers had a choice as to where to introduce those innovations. Pampers had been the dominant brand. They owned the market. They were the world reserve currency of disposable diapers. 

Huggies was there in the background with a distant second in market share. 

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Host: Victor Menasce

email: podcast@victorjm.com

Virtually every apartment project is going to be constrained by parking. That one factor will determine the density that is going to be possible. 

In rental apartments, charging for parking is going to very from one area to another. 

For example in a dense urban area like NYC or Boston, it’s fairly routine to charge for parking. In fact, in cities like NY, I consider a car to be more of a liability than an asset. Those areas have very effective public transit and finding parking at your destination is going to take so much time that you would spend less time and less money if you simply took an Uber or a Taxi to your destination. 

In less dense areas and in places where public transit is not deeply ingrained into the culture like in Texas or Arizona, a car is a must. The distances are too large and public transit simply is not an option. Except in the rarest of instances, parking is free. So when you are designing your apartment project, how much land should you allocate to parking? Well, you’ll be surprised to hear that it’s about the same as your floor area ratio. 

By the time you factor in visitor parking and accessible parking, the parking ratio is going to be pretty close to 2 parking spaces for every apartment. Some projects are not going to be viable with less than a parking ratio of less than 1.75. I’m seeing cities create incentives to reduce the parking ratio below 1.0. In some cases I’m seeing ratios of 0.7 and 0.5. In places where there is public transit within walking distance, I’m seeing buildings approved with zero parking. I personally don’t think that the market will support those buildings in the long term. If someone wants to own a car at some point, they need to move. If they get into a relationship with someone who owns a car, that person faces the choice of parking or their new found relationship. Chances are they will have to move. This translates into higher tenant turnover. 

Parking is a loss leader from the perspective of a developer. It is not a source of revenue, and is simply a necessary cost.