The Real Estate Espresso Podcast

Today’s episode is another AMA episode. Today’s question comes from Chris who asks: What is an acceptable apartment-turn timeframe (how many days should it take to fix and be ready for next tenant) and how much should those make-ready costs look like between tenants? ----------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

At Y Street Capital we bring in young professionals from time to time to work as interns on a part time basis to learn more about real estate investing and development. These unpaid internship positions foster a win-win relationship that can often accelerate the learning for a young adult. At Y Street Capital we are looking for a research assistant to work for a few hours a week on special projects. Some of that work will also include the background research that could ultimately result in episodes of the podcast. If you have a few hours a week to spare and are a candidate, or perhaps you have a young adult in your life with a high level of curiosity. Send an email to podcast@victorjm.com and put the word research in the subject line.  -------------- On today’s show we are looking at how to create leasing incentives that preserve the value of your building.  Most building valuations are based on the income method which involves taking the gross rent, minus the operating expenses to get the net operating income. You then divide that amount by the market capitalization rate to get the value.  Let’s say that you want to offer a bunch of incentives for new tenants to move into your building. You could offer a discount on rent which would result in a reduction in rent and therefore a reduction in the value of your building. If you offer the tenant something that costs you money to provide, then your expenses increase and you have the same effect of lowering the value of your building.  In a brand new building you will want to pre-lease as much of the building as possible. Many developers I know have 30% pre-leasing as a target to achieve by the time the building is ready to open. But in order to achieve that, tenants need to plan on moving when the building is completed, not necessarily in 30 days or 60 days when it might be otherwise convenient for them. It’s a longer sales cycle.  From an accounting standpoint, investments in the building assets are associate with the balance sheet and not the income statement. For example the materials that go into the building like paint and gypsum board and bricks are all part of the capital improvements. A capital investment is amortized over the depreciated life of the asset. Some startup costs can be capitalized. For example if you have marketing expenses that are associated with the initial lease-up of the building, it would be legitimate to capitalize those costs instead of expensing them since they are a one-time cost and not a recurring cost.  So let’s imagine that you offer a free large format television as part of a move-in special. The cost of that TV can be capitalized. While it appears as an incentive to the tenant, it doesn’t get treated as an operating expense to the business and therefore the cost of the TV doesn’t reduce the value of the building when looking at multiples of net income.  ----------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today’s show we are talking about air rights.  Air rights refer to the legal ability to control, lease, or sell the space above a property. Traditionally, property rights included not only the land and any buildings on it but also the air above and the ground below. The concept of air rights date back centuries and are ingrained in common law. The biggest change to air rights came with commercial aviation which put the ownership of the atomosphere in the public domain while preserving private ownership of the air immediately above a property for the enjoyment of the property owner. Exactly where private property rights transition to the public domain varies by location and by jurisdiction. -------------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

For the past several months I’ve been predicting that the Fed will need to pivot on their interest rate policy.  As recently as Thursday of last week I predicted that the Fed would have no choice but to drop interest rates based on labor market weakness. I also predicted that we would hear some meaningful update at the Jackson Hole conference in Chair Powell’s remarks on Friday morning.  I don’t have a crystal ball, although I expect to some that it might seem like I do. On Friday morning Chair Powell did indeed announce a major change in monetary policy. There were a few things that Chair Powell said in his remarks that were significant.  He declared a bit of a victory lap on the inflation fight, even though the disinflationary progress has been gradual over the past year.  The real story behind the Fed pivot is unemployment is rising sharply.  --------------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Hubert Johnson is a tax lawyer with Guardian Tax Law based in Tucson Arizona. On today's show we are talking about resolving problems with properties that have tax liens filed against them. You can reach out to Hubert at 520-526-9850 or visit their website at guardiantaxlaw.com -------------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

George Ross was executive vice president in the Trump Organization for many years. On today's show George shares his perspective on the current election. ---------------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today’s show we are talking oil and gas investing. I recently had an investor ask about investing in oil and gas. So on today’s show I’m going to tell you the story of my foray into the world of drilling oil wells in the back woods of Kentucky. ---------------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

If you’re been listening to this show for a while, then you will know that I’ve been saying consistently that the jobs data being reported by the Bureau of Labor and Statistics in the United States cannot be correct.  Now think about it, here is a real estate developer who happens to live in Canada stating pretty boldly that the US government is reporting data incorrectly. How crazy is that.  Well some might have been surprised that the BLS issued a revision to the past year’s numbers and disclosed that the number of new jobs reported was actually 818,000 lower that what had been previously reported.  ----------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

I'd like to invite you to be my guest for a sunset cruise in NYC on August 29 from 4PM to 8PM. We will depart from the East River and tour the Hudson River with stunning views of the NY skyline. There will be great conversation, fine cuisine, and a few presentations on alternative investments. If you're interested in learning more, send an email to podcast@victorjm.com and put "Hudson" in the subject line. ------------ On today’s show we are looking at a new rental market report published by Zillow for the month of July.  A cooler rental market is prompting more property managers to offer concessions in a bid to attract new tenants. Though rent growth is only slightly softer than last year, far more property managers are offering short-term perks. On today's show we are going to try and make sense out of what this report could be telling us. ----------------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

I'd like to invite you to be my guest on board a tour of the Hudson River in NYC on Aug 29 from 4-8PM. We will depart from the East River in Lower Manhattan. This exclusive event is for accredited investors only. There will be great conversation, fine cuisine, an incredible view of the NY skyline and a few presentations on alternative investments. To learn more send an email to podcast@victorjm.com and put the word "Hudson" in the subject line. ------------- On today's show we are talking about the 2024 revision of the IECC energy code which was just published last week. The National Association of Home Builders published a summary of the changes in this six page document. --------------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)