Feb 11, 2020
Real Estate & the Phoenix Market
w/ Jim Belfiore of Belfiore Real Estate
- BRT S01 EP2 2-9-2020
Guests: Jim Belfiore of Belfiore Real Estate Consulting & AZ Dealmakers Event
Things We Learned This Week
Jim Belfiore is founder and President of Arizona’s leading full service market research firm, Belfiore Real Estate Consulting. He is widely considered Arizona’s foremost housing market expert, with more than 20 years of experience in Arizona housing research, supporting developers, homebuilders, equity and debt lenders, appraisers, investors, and brokers with off-the-shelf data and advisory products and custom market feasibility and advisory reports. In mid-2019, the company launched a new mobile app device, now offered in iOS and Android versions.
From 2000 to 2005, Jim served as VP of Market Research and Investment Mgr for one of the largest off-balance sheet financing organizations in the US, co-underwriting an estimated $1.5 Billion of residential real estate in the top 20 U.S. metropolitan areas, including Phoenix. Prior to this, he helped build the largest multi-family brokerage firm in the U.S., helping it to expand from 8 to 23 offices, as its National Research Director.
Jim currently serves as Vice-Chairperson of The Care Fund, an organization dedicated to paying living expenses for Arizona families and their children. He has previously served on the Board of Directors of the Phoenix Chapter of Lambda Alpha International, as the 2011 and 2012 Program Chairperson, and he currently services on the Steering Committee for Urban Land Institute’s Arizona District UrbanPlan program.
Jim regularly speaks at major industry events; in early 2019, his company hosted the 10th Annual AZ DealMakers event, an event that is drew more than 820 registrants. The 11th Annual AZ DealMakers event, scheduled for January 2020, is expected to attract nearly 1,000 attendees. He has been quoted in major national, regional, and local publications, and has been selected as an Arizona Business Leader by AZBigMedia for 8 consecutive years.
AZ Dealmakers - annual real estate event, homebuilder’s industry and land developers talking about Phoenix market. Mortgage interest rates are low, more diverse housing for young people and retirees. Elliot Pollack – economist in AZ, focus on housing shortage, home values will appreciate, 89 million new home owners.
Offer Pad CEO Jerry Coleman – serial entrepreneur changed industry with ease of selling homes and improve services, turnkey opp., tech disruption.
Jordan Rose – Rose Law Group. Works in real estate development.
20 communities being built, 4500 homes, sell in a few years. New housing community building west side near 303.
2006 – market peaked, crashed in 2007-08 and market shrunk. Challenges to home builders.
I-17, Happy Valley – new home building
Master Plan Community – land use and set up for future development
Glendale & 101
Scottsdale Kierland and DC Ranch/Silverleaf
Golf Course – seven in Desert Mountain
More affordable housing –
Lower 202 (new highway), connect with I-10, plus malls, AMC, Target, Frys, etc.
Freeway building – smaller plans, state route 24 on east side.
Sales tax – ½% pays for freeways/infrastructure
Pinal County needs more freeways
Coolage, AZ – building 8 communities
San Tan valley and Queen Creek
Supply shortage 2020, labor pool shortage so building is slow for high demand. Home prices increase 2021 & 2022, 10% +. Rent increases in apartments. Building products and costs increasing.
Nowicz, President - Wealth For
Denver is an advisor with nearly 20 years experience working with clients in investments and insurance, designing retirement plans with a combo of both. He takes us through different strategies for clients to get the best allocations for their money over the long term. It is the Combo Strategy of both Offense and Defense, the synergy of the mix, not ‘All or Nothing’.
Why You Should Own Assets
In The Founder movie when Ray Kroc was having trouble getting a loan, he was telling the bank about current sales, and future sales. The bank kept asking him what Assets he has.
Banks like to own Assets, Tier 1 Capital like cash, real estate, life insurance.
People (customers) put money in the bank, and get an interest rate of half percent % (.005), and bank turns around and loans out money at 3 – 5%. Because of Fractional Reserve Banking, only need to keep 10% in reserves and can loan out the other 90% to make that loan spread of 2/12 to 4% + on the customer’s deposits.
Business Owners put all of their money $ in the business (all eggs in one basket), but do not acquire Assets (Real Estate, Gold, Stocks, etc.) outside of the business. Wealth looks ok on paper when looking at the business valuation, but in reality a business owner’s net worth may be less than thought.
If the business is not worth what is on the balance sheet, big problem. Most believe they can sell the business for retirement, but may not work out.
Business Owners struggle to leverage their cash flow to grow wealth. Market and Business Cycles can hurt business owners and cash flow.
Wealth Creation is in the Assets, as the Assets appreciate more than cash and inflation.
Debt can be used to acquire Assets (Leverage) in the right way to build long term wealth. Can also get write offs with debt and interest. If you buy Real estate, more write offs which lessons taxes.
What Business Are You In? - McDonalds is a Real Estate Company
Matt talks (MB on) about the biggest franchise of all, and what their real business model is. McDonalds has built an business empire thru Real Estate, not burgers.
The Dollar Menu is designed to get customers in the door. McDonalds loses $ when people purchase from the dollar menu, it is a Customer Acquisition Cost (CAC). This is also called a ‘Loss Leader’, selling a product at a low cost to get customers. McDonalds then makes money when people buy more, and off return business.
McDonalds is one of the biggest Real Estate companies in the world. The stock is valued on the $37 Billion in Real Estate they own. They make money as a landlord, because the franchisee is their tenant.
The Founder – business movie biography of Ray Kroc. Kroc started as a milk shake salesmen to the McDonalds brothers in California, then went on to create the franchise system we know today. The first President of McDonalds Franchise (Harry Sonneborn) helped Kroc create the real estate model that the franchise was base on, and used to scale to a billion $ company. Internally McDonalds used the Brother’s Speedee Service System created pre-Kroc.
The Question ‘What Business Are You In?’ comes from business consultant Peter Drucker. Business owners need to understand what problem or service they really offer their customers.
Ie – Starbucks is in the Customer Experience business, not coffee, but the atmosphere of drinking the coffee
Link to Taxes Show on 10/31/2021 w/ Denver: Here
Link to Offense / Defense Show on 6/6/2021 w/ Denver: Here
Link to Shows, Denver was a Guest: Here
Real Estate Topic: https://brt-show.libsyn.com/category/Real+Estate
‘Best Of’ Topic: https://brt-show.libsyn.com/category/Best+of+BRT
More 'Best of Investing': Here
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