"The Slap Heard Round the World: Trump Bets, Inflation Jumps, & The Surprising Future of Real Estate" -175

In this action-packed episode, we dive into the week’s most jaw-dropping stories—from Mike Tyson’s disastrous comeback fight to the $84 million bet that could change the 2024 election. But that’s not all! LA’s controversial mansion tax is leaving nonprofits reeling, and we’ve got the inside scoop on how real estate dynasties are finally breaking their cardinal rule. We also explore the latest AI-driven office space boom, and how Vegas is reshaping its future with a $900M film studio investment. Plus, could Trump's new government office truly cut bureaucracy without crashing the economy? Buckle up—this episode will have you questioning everything.

Transcript

Welcome everybody. Good Life Housing Partners, our weekly podcast. This is episode 175. Today is Monday, November 18th, 2024. And I'm sitting here with a very disappointed Mr. Fong. He watched Old Man Tyson, hoping to see some glory days. Didn't get any glory. Just another day. I gotta admit, was a fight. A lot of spectacle, not a good fight. The fight was boring fight, but...

The event itself was somewhat of a spectacle. So that was kind of entertaining. People showed up. was in Dallas. People showed up. You know, there's a little controversial slap in the way in. so... the slap was very exciting because I was like, slap. Maybe this fight's going places. Maybe Tyce is a little crazy.

Although I don't know if they had planned that. actually, they... I guess when you see the fight, apparently, which you didn't notice before he slapped, that he actually had stepped on his foot.

and they said that's what triggered Mike according to Mike because you know, he doesn't like people stepping on his feet Nobody likes that. Nobody likes that. Nobody likes a foot stepper So we're at I guess a week. Is it a week past the election or more? It's almost two weeks now, guess I guess so, so You know a little little more post Trump jumping at the Trump whale which we talked about on the betting markets. actually apparently

They calculated this in the Wall Street Journal. made $84 million on his little Trump bet. A little Trump bet, huh? A little Trump bet. So Trump did good for him. Last week, the main news on economics front was the CPI report and the PPI report came out. Yes. So consumer price index, both indexes show inflation is kind of popping up a little bit. Yeah, making people nervous. So it's not gone.

Going up a little bit the CPI came in at two point six percent for October So that was expected a little higher than the two point four percent we had the month before so a little point two percent real nudge upwards Yes, the core PCI Went up three point three percent again. It was expected and it was flat last month. It was also three point three percent So that was okay and then the PPI Which is wholesale inflation. That's basically you measuring our prices for what Walmart pays when it buys

It went up a little bit, went up to 2.4%. It was estimated to be 2.3%, so it was a little higher than expected by .1. But definitely higher than last month. Last month it was 1.9. So, 1.9 to 2.4 is a pretty big job. Core PPI was up 3.1%, expected to be 3%.

Again slot is a little bit higher than the 2.9 percent we had last month. So interest so still you know wholesale inflation is the Filling a little more there than the consumer so far, but inflation is still popping up a little bit Yes, still so rearing its head. So I guess and then I guess the next meeting is December 18th Yes, we'll what's wrong data should be going at data. Yeah, what Jerome would do? By the way, one other last Trump item I'll talk about

I guess he's he talked about this and he actually is more vocal about this office of government efficiency that he's the Trump office of government efficiency, which will be led by Good old buddy Elon Musk. Yes, and revet. I'm a Swami. Yes basically their job is to make the government more efficient and You know if you follow the campaign trail he was talking about

you firing a lot of the bloated bureaucracy in the executive branch and bureaucracy and trying to make government more efficiency and less regulation which as business people we always like less regulation. only concern is I guess if you really fire all these people you're to have a lot of unemployed people running around and I don't know what that will do to the economy too. I'm always concerned about unemployment. As long as the inflation is down people will care about unemployment. But again the other concern that economists say is will this push us into recession.

He's also made it clear, no role for Nikki Haley. Your poor little Nikki Haley. Supported him. two? Number two? Yes. Number And then I saw actually one of his, you know, it's interesting all his different appointments as we're all watching. Your South Dakota governor, Kristi Noem? That's a mine. Was it Noem? Was that her name? Noem? Kristi Noem? I don't know. Yeah, yeah. So she got nominated for Homeland Security.

Yes, yes. She's tough on the Homeland Security. we'll see. We'll see what happens. South Dakota. Homeland Security over there. So I guess she's she and they put in a very hawkish immigration person to run the immigration service. And everyone's talking about mass deportations. Come day one. He said it'll be the biggest. I know that was a concern for you. And Trump said he will use the military to enforce it. OK. And he said he will, although technically, know, not to use military law enforcement. But.

he is declaring he said he would clear national emergency so that will allow him to use the military he said they would be for all the criminals first and and will see will see if the three of silent whether families of people go to that's that's about right that's about right in las vegas news has been aspect one of others and you will be old school that were familiar with that's housing project

Warner Brothers agreed that it will commit to invest $900 million to build a massive studio. guess it's going to be the third film HQ. Right. Right. I've about this. a massive double down. Yeah. This will be basically about just sound stages at the Harry Reid Research and Technology Park, which is sort of in the Southwest, the Vegas, Flamingo and Durango. And the vision is it's the partnership with UNLV because they're trying to create

a top film school, rival USC and NYU are homeowners. so, you know, the thinking is, you know, kids will be at film school, and you and LB during the day and at night they work at these sound stages and you know, works and, you know, investing in it, all sorts of movie productions here in Las Vegas, which will diversify its economy. Sony also has a competing project up with Mark Wahlberg up in Summerlin.

So now, originally they were partnered together, but apparently now they're competing because the state said they're not going be able to give tax credits for both projects. and I think this, my understanding is the UNLV one is going to, because of the connection to UNLV, will help it win. So, but I also think this could increase demand or maybe some more student flow to UNLV. sure, I mean, I don't know. I think it's a pretty splashy sort of thing.

We'll see what the net effect is. It's interesting because you know that it's the proximity to Los Angeles, but the cost factor, as you well know, is what's got to be driving all this. What do think? that make sense? And sort of the, it's an entertainment city too in itself with all the things happening in Vegas. Yeah, performance is about performances. But it is a different real industry that's not here. That's true. So I think it will help the economy diversify more. So I think it's a good thing for the Vegas people.

folks. Yes, I think for the Vegas folk it is net positive. So speaking of comparisons, like you said, of other cities, let's talk about our LA's mansion tax. Yes. So now we go into the, I guess what they call it, the law of unintended consequences. Okay. So one of the consequences they realize now is the mansion tax.

A lot of the sellers who have actually now had to pay mention text a lot of them actually are nonprofits. and they're all complaining Interesting the sex interesting, especially some of these nonprofits who are somewhat involved directly indirectly in in them, you know homeless issues to Housing issues and so first first just a little recap again. This is the mansion tax that we talked on it's basically 4 % transfer fee on anything residential or commercial. Yes above five million and

that up to five million and then five and half percent, excuse me, over 10 million. They expected this to generate 1.1 billion a year. Very healthy number there. as hasn't gotten that. As of October 31, they've only raised 439 million. So basically about a 60 % plus shortfall there. But the problem is a lot of charities who actually sold real estate to get funds to

you know, like in a given example, when the motion picture and television fund apparently they do a lot of stuff for like elder actors, retired actors and stuff and they provide subsidized housing and other things. So they get like excess land and all the projects they have and they went to sell some things to developers. And because the developers, the buyer is not doing something associated with affordable housing, in which case if there was, there would be an exemption because the buyer is going to do luxury housing.

the seller had to pay the mansion tax. And so it's taking money that they could have used to give housing to their people, but they can't do it. And similarly, it does happen to a couple of other non-profits. so little unintended consequences there. They're trying to see if they can speak out at exception, but right now the exception is only if your buyer uses it for something to do with affordable housing. Well, I think one of the, and that's an interesting...

you know, view of it with these nonprofits. What's interesting, I guess, some degree is that now that Prop 33 has failed and subsequently Prop 34 has failed and you've had a real swing towards a more conservative legislation, more conservative tax systems, even here in California with the failing of some of these legislation.

It'll be interesting because for a long time, I'd say for almost a year plus after the Manchina Vast, was like every month someone would try something different to repeal the Manchina Vast. And I think they've since been stopped a number of ways, but it feels like the enthusiasm for that also stopped for a while. And I wonder if it'll start getting picked up again. Maybe. Well, as us in the real estate business, we don't like it. Just one other interesting note about it too. guess,

out of this money raised of $139 million, Westside neighborhoods like Beverly Hills, just single family homes basically, sales that accounted for nearly half of all these bands of taxes. So those are the guys where it's been going. guess these charities are complaining. Again, their vision when they supported this tax was that the rich guys would be paying, not them, developers and landlords. So they're kind of peeved that they're...

foot in the bill too. No one's happy with Karen. Yes, unintended consequences. Another Karen bites the dust on this one. Avalon Bay, a very large REIT, one of the largest publicly traded REITs known for urban luxury apartment developments. Yes. May has now made their foray and committed a strategy to also do a dedicated build to rent business.

Built around built around what makes sense? They're getting in that game. They say it's a growing cap. They're trying to cap cap capture growing demand of the sector. Makes sense. It's how they did their first deal in the suburbs of Austin for 49 million dollars. They bought a project up there. think the man for this property type is expected to accelerate in the coming years. You know, you've got major players like Blackstone that are active in it. You know, built to rent, as we know, just to be clear, is basically, you know,

houses that are built, designed just to be rented, typically some millennials, they think a lot of the younger generation, it's a combination of millennials, don't want to buy houses, but they kind of want to live maybe in houses. And they're in prime household formation years and we still have under supply of houses. so they think- I buy that. So they're capitalizing on this trend and also using this as a way to also expand into the Sunbelt. So, which is kind of an area we're looking at. We actually are a-

looking at a built to rent project too. We all have a building to rent. Interesting that Avalon Bay, know, I like it when we followed some of the strategies that have been thoroughly embedded with hundreds of researchers and public companies like this and Blackstone. It's nice to know sometimes when our strategies line up. Yes. You know, they're also Hunter, Brad Hunter of Hunter Housing Economics also talks about, he thinks that while there's been a little bit of softening in that market, the built to rent market,

He thinks that there is still huge pent-up demand that will be basically popping in the next 12 to 24 months from now. so, you know, he thinks it's a good investment, just given the structural under-supply of of housing.

Interesting about some content any any fun stuff. There's some more facts to share. There's more facts. Okay, bring on more facts So the cardinal rules of rich real estate families, okay, I'm starting to be broken the rule was never sell Okay, especially New York City real estate. Yes, the Rudin's the Kaufman's the Trump's the Durst's There's always your own real estate and you never sell and for generations

that real estate is gonna keep feeding all the aunts and uncles and the cousins and everyone. And so unfortunately, then the pandemic hit and remote work from home came. And so all these office buildings that a lot of these New York City dynastic real estate families own, some of these families now are breaking the current rule. They're actually starting to sell. What's the reason? The reason is because the office market has changed. And instead of these 50 aunts and uncles getting distributions, they're getting a letter.

for the dreaded capital call. The CC, the capital call. so, because the reality is lot of the buildings they own are also old buildings. And as we've talked about in this podcast, all the buildings to kind of make it in today's world of office buildings, need the newer building, you need the new amenities, need all sorts of things. That requires money. since the advocacy is not great, the only way to get this money is capital calls. And these families, number one, it's a pain in the ass to get all the uncles and aunts to greet it.

give money when they've just kind of been freeloading. Yeah. The distributions. And number two, they also realize that a lot of these buildings, just doesn't pay to put the money in. And so they are breaking the kernel rule like the Rooted family recently. So the actually is a building I remember as a little not nostalgia, but a little personal history. 80 Pine Street in Manhattan. Yeah. Down in Wall Street used to be the headquarters of AIG. And when I was a young and I was a worked in the mail room for AIG. So I remember delivering mail to that.

It's a different offices in that building for a G and a G moved out and they get no tenants. Yeah, basically they're selling that building with someone who's converted to residential, which is part of a trend in the downtown Wall Street area. So the Cardinal rule has been broken. Yeah, no longer a Cardinal rule. It makes sense. know, it's it's where you know, that's that's where we are in the current state of affairs. Yeah. And then the last piece is I took is

Tech demand for office space is starting to show a little blip up. Tech companies leasing a space jumped in the third quarter of 2024 to its highest levels in three years, reflecting two factors, a little more job growth in the tech sector, but more importantly, the huge growth in AI. So AI is leading this sort of resurgence. For office leasing. For office leasing, yes. Tech firms leased 9.9 million square feet.

the US during the third quarter, which is up from 8 million the second quarter. So a million nine more square feet least from tech in the whole US in whole US according to CoStar. So that's mostly AI driven. Yes. So it's it's starting to come back. It's not now doesn't mean job growth in the tech sectors back to the heyday when there was a ton of jobs and everyone's hiring and competing. There's only a 1 % take up a job growth from quarter to quarter. But

It is an upgrowth though. tech is definitely leading the way in terms of office leasing, terms of any other, know, in the old days, used be New York City financial services was always leading. I wonder if that number of like, let's just say somewhere between eight and 10 million is the office space leasing probably last several quarters since the pandemic. I wonder what it was pre-pandemic.

It's still that's definitely not up to pre not on that number, but it's definitely it had to have been a much higher number Yeah, it's the highest since the fourth quarter of 2021 So 2020 was a little bit higher. That was just after the pandemic. Yeah, and I think tech growth is coming so That's all I got for for general news Contact other than the Tyson Paul. Yes contact

remarkable number of people that were talking about it Friday. Yeah, I was surprised to people watched it. How many people watched it? How many people? Pretty impressive. wasn't like a lot of lead-up talk before. was a bit. A little bit. But also Friday was like everyone It that they were going to do it, right? yeah, I guess that's true. And then it got cancelled because I someone got hurt or something. And then Friday, there was a into Friday, was a lot of chatter about it. Mayweather never fought one of them, right? No. Okay. He just fought.

kind of regret Carter because for reason I kept thinking like he they had tried to do something with him no I think he's too small he's too small though right yeah because they're weights yeah and actually is the brother I saw he I didn't realize it these two brothers yeah Jake and Logan because I mixed the two of them together who is that what is the other one do that if this this one I think he also does some like YouTube but is he is fighting but has he fought he's fought too I guess

So who is the actually the better? I think Jake is better. Jake is better. He's more like because that's because at the end of the fight they did ask Mike kind of off spontaneously would you fight who you're fighting next? And then he's like, don't know where his brother. Yeah. And then and then and then the brother was there who said he would destroy him. So I thought maybe the brother was that much better. I didn't know. I think I've heard his brother is like more I've heard him say things like that. They don't look very like Cavalier.

but I don't know that he's actually truly better. think Jake has had more fighting success. means a lot. Speaking of the spectacle, the one thing that was funny was they drove out in this really decked out car and I guess they had the pigeon in the back. And I guess apparently he had offered it as a gift to Tyson. To Tyson, So was some kind of disease pigeon. I guess Tyson used to be really into pigeons. used to take care of pigeons. He loved animals. He loved animals.

It's just kind of kind of a just a little little story My other content was the diplomat. That you seen it. I've seen bits and bytes of it. Okay, so I was curious I it was As I said, I like to see what's on the top 10 Decide to try it and so It was it was actually good. I saw the whole season. I watched Wow Look at you big yeah, and it was interesting for a number of reasons one. It's kind of like

Well, it's entertaining, number one. Number two, dialogue. It's kind of like a West Wing, but you know, some ambassadorships, this sort of American ambassador in London. And I guess, you know, I never I haven't watched a ton of British shows, although I was enjoying Guy Ritchie directed movies. And so the other thing other than the dialogue is always a little snappy. Some of the British dialogue. But the other thing I never thought about, which this show makes you think about is.

sort of all the pomp and circumstance and rituals and I guess it's also because it's a diplomat there's a lot of protocol and so just even like when the ambassador went for the first time to the ambassador's residence and you know there are tons of butlers and maids and everyone lines up outside to greet you and and so there's all this you know it's very British and other things too there's other protocol about you know she

couldn't officially be an ambassador until she presents her whatever certificate to so-and-so and whatever house. So that was kind of interesting. Plus it had a little bit of Tom Clancy political intrigue to it, so it was kind of fun. Yeah, yeah, yeah. I'm still watching. I watched everyone else, Logan and Jake Paul and Mike Tyson. was kind of dud. Actually, the fight before was actually pretty intense. women. Two women, and I think they were fighting over a real belt of support.

Yes, it was very intense. a rematch. It was a rematch. It very intense. And the one gal who ended up losing got like a severe cut over her eye. And she was moving really bad and like they kept on trying to seal it so she wouldn't have to stop the fight. Pretty intense. I I didn't get to see the Indian guy. It seemed very interesting, it was, you know, I think it's really hard to get that much attention for a non like.

first sporting event in the US unless it's something like this. Pretty hard. Yes. Especially for boxing when you don't, I mean it wasn't like a Floyd Mayweather or Mike Tyson, his is Prime. Yeah. Where obviously that would attract, you know, know, Manny Pacquiao or something, right? And so, so it's interesting like, and then sort of out of the blue in the middle of season, so you have this huge spectacle event and it's really, it's really just spectacle. Just a spectacle. Yeah.

But what's pretty interesting about it, while it was just a spectacle, the network's duo was going to be a big one because there was not much other events that night. They actually limited the overalls, just scorecard in general for that evening. It was pretty interesting. I think they had a normal basketball slate, but they would probably put more college football games. I don't know. It seemed like a very light night.

Pretty thoughtful on their end. They realized it was probably gonna be a friendly, for having me watch. Which I didn't have been, I think. Yeah, I'll get the final numbers for next week's part. Yeah, no, well, Tyson made 20, Jake made 40, and in order to pay those guys 60, you gotta think, Netflix is over 100. And I don't know, like, if you, and their subscribers thing, it wasn't like there was tons of like, advertising or anything, it was not really.

and the gate at Texas Stadium, which I've heard was pretty high. Yeah, 70, 71,000. Not the highest. No, but 71. But I think their per ticket price might have been some of the highest ticket prices you've ever seen. That's my guess. So it's 71,000. If they do $1,000 ticket, that's 71 million. It's pretty impressive. Well, it's hard. mean, it's football stadium. So how do you see?

It's a little boxing ring, it's not that huge. No, no, no, but they have... No, no, the screens and stuff, but it's The huge screen. They're the first to create the extremely large screen, which now, like SoFi, Staples has redone their screens, SoFi has redone their... Then you Intuit has these massive screens that like, you end up watching that screen. And you're in the stadium, and part of the allure is being in the party. Well, there's definitely, I can see there's definitely a party atmosphere.

yeah, it was a tough ticket. I guess at one point I saw like they had the, know, instead of Laker girls or whatever, had the Bows Cowboy Champs to perform the whole routine and stuff. No, dude, it was expected. I mean, even like, I don't know who the ring guy was, but was like a young dude with like a big voice. Yeah, I was surprised they didn't have like Michael Buffer. No, I mean, some young guy that like definitely, you know, I've never seen him before. He did his job. But did his job. He did his job.

It's interesting. What was your contact? Do you have any other contact? I didn't really have any. I was really just the fight. And then I just kept watching, like, trying to do these shows. Lincoln Lawyer and Yellowstone. Is that your season of Lincoln Lawyer? Yeah. okay. That's good. A lot of stuff in LA. That's always fun. One thing that I did start watching...

because Yellowstone is a little flat. The next show that they've come out with is Landman. Landman is typically a term used in the oil and gas industry. It's about these guys that will go find oil sites, drilling sites. And it starts like Billy Bob Thornton. It's kind of quite a cast. It's like an impressive cast, the topic itself is pretty interesting. That's where most of the middle of the country was born on this oil and gas stuff.

like pretty interesting because I've seen little bits of it and that world. Netflix? No, it's on, you can watch it on YouTube. But it comes on after Yellowstone. Okay. And it's new series, I guess has gotten a lot of hype. But it's pretty good because it's like a very interesting topic. And generally people, especially in the blue states, they're not really aware of how interesting and in like

It's not really complex, this oil industry, but it's a very interesting sort of industry for the size of it. It's gigantic industry. It's the or sixth largest industry in the world. Something like you were talking about, the oil industry basically makes a billion dollars a day. I can see that. remember that. Yeah, it's been crazy. Anyway, it's an interesting show. I might end up watching that. Any upgrades?

Or downgrades for that matter.

I'm just thinking you think I have an upgrade. So so my kids have gotten into more sports and so As they're getting more in his sports when the sports is basketball and a friend of mine was like you should get this basketball called it's a dribble-up system and it's basically this yellow basketball and The basketball comes with an app. and it's thing in the computer It connects to like your iPad or computer or whatever and basically there'll be an instructor showing the kids how to like

or even adults for that matter, how to do different types of dribbling. And then you basically score points as you're doing the correct dribbling. And I've got this last week, and my kids have been doing it every day. Are your kids into it? Yeah, because they want to score the points. I think they like it, and I think they're seeing different ways on how to dribble. But it's pretty interesting, because they have this rather sports too. I was going say, I've seen it in soccer too.

Yeah, they have soccer and they have other sports now too. But it's like 40 bucks for the ball, so it's very light. But then they charge you like 16 bucks a month for the subscription. Which, but if you could entertain your child, okay, for like, you know, for $16 a month, like you can entertain your child for like 20 minutes or so and they're kind of tired after. It's better than daddy dribbling. Well, I can dribble and they're like, yeah, then they're like, they want the ball.

I can throw them out and dribble and then they'll be like, okay, I want to dribble and they can't do it. So, better than this guy tells them do it. So, it's actually kind of good. It's pretty awesome. And then a friend came over and she liked it. She's all come on to basketball and she's like, this is amazing. Yeah, dribble up is kind of interesting. Any upgrades for you? No, just to try to get better at my cough. Yeah, cough sounds better. Cough sounds better. Any downgrades? Anything not so working out so well? No, I didn't have any bad experiences or anything. No, no downgrades.

I feel like I had a downgrade if I can think. All right, any any very good food this week? Any good interesting restaurants you went to? No, didn't. No, other than like I do want to go hit that wood ranch. I told you that opened up in the head beach. The wood ranch barbecue, which is a hill stone. yeah, yeah, yeah, yeah. That looks good.

I went to Genwa actually, which is a Korean barbecue place with a bunch of friends on Saturday night. it's unique in the sense, it's got three things going for it that are very unique. One is it's like very like Americanized Korean. It's very like not so smoky inside. They cook the food for you. But they actually give you a lot of starters, the banchan. They you a lot compared to like...

most places that look like the Americans have. Where's the dead one? There's actually one down the street in downtown. And then there's one on the very western outskirt of Koreatown in almost like mid-city. Okay. That's the one we went to. That's the one we went to. And there's actually one right here in downtown. Literally right down the street. I have something. I don't know if it's called an upgrade, I did... So because I'm trying to get over this cold, we're trying to eat healthier. I've been getting khaki.

Yeah, let me see. And so there's a thing called thousand year egg. Yes. And so that's in the country. So I had some leftover congee. Yeah. And I reheated the other day. With the thousand year old egg. But since I didn't have a lot left and I was, for reason I craved for a year egg. So I happened to stumble into a 99 Ranch Star and I saw that they sold the thousand year eggs. And so I bought some and you know, looked at it and you know, as you know, I'm not, I'm not.

not quite the cook at all. So I wasn't certain like, is this like a, like an egg that I actually have to cook? Or is this an edible egg? These, these eggs I didn't stay. And the, you know, the, the, the box was in Chinese and I couldn't really, they didn't really explain it. They don't really say like cook the egg 30 minutes or do anything. So, so then I wasn't certain. And then I had to ask the,

the people that worked at the super store just said, I eat this egg or do I gotta do something to You gotta wait another thousand years. And so they said, no, it's already cooked. It's peelable. You peel it and eat it. so I peeled it and it was of the consistency of like a normal hard-boiled egg. And I popped it into the old leftover content. I heated it just to be safe and it tasted fine and Okay, good. You're still here with us. There you go. So yeah. So I got my extra.

whatever eight grams of protein. I like it. like it. Very good. So we're into Genoa. I think that's it. We're done on our fundraise for Lancaster. Yes. So we'll deal final. We're working on another shopping center and retail opportunity, which we'll talk about. Opportunity zone deal, which we'll be talking about soon. And we Thanksgiving next week. It came really fast.

And then the holidays will be here. these are here. yes. guess everywhere you see it's black Friday sales. Yes. Black Friday sales. We started. Yes. We have, we're running many in our apartments. Early back. Yes. Get you some good rent. okay folks, thank you so much. We will be in touch. Please reach out if you have any other questions. Talk with you soon. Stay warm. Everyone stay warm and healthy.