Season 1,

83: How to Lose Money by Getting Threatened by the Government with Victor Menasce

September 27, 2017
MP3

A lot of people are scared of the government. However, as Victor shares, we don’t have to live in fear if we are doing the right thing and being proactive.

Victor Menasce spent the first 25 years of his career in the high tech industry. He started his career at Bell Northern Research and Nortel where I designed chips that were used to control the telephone network. For approximately a decade, 54% of the phone calls in North America were routed by a chip that Victor designed.

He eventually learned to raise capital in technology companies and authored of the book “Magnetic Capital”. Today he’s building multi-million dollar apartment buildings as a real estate developer.

Time Stamped Show Notes

[4:50] The idea for Magnetic Capital was born after Victor was on the Real Estate Guys podcast and based on what was said in the podcast his business coach told him that there was a book right there.

[6:34] Victor’s strategy is ‘buy on the line, move the line’ which means buying on discount on the ‘wrong side’ of the city line, build a great product and expand the line by expanding the gentrified neighborhood.

[9:16] In 2014 the government gave notice about eminent domain. The Philadelphia Housing Authority initiated the expropriation of properties and one particular project of Victor would be affected.

[10:02] The state wanted to redevelop an area which included 344 properties, not clear which ones. On this project, there were 8 properties in total.

[13:55] Not knowing which or if the properties would be expropriated, Victor and his team were uncertain of moving forward to prevent a big loss of investors money. It took one year of uncertainty.

[15:34] After the decision was taken, they lost 3 out of 8 properties on the parcel

[17:17] This delay also meant increases in construction costs, so the project was no longer viable to build.

[18:27] Hiring another architect, he brought the idea of having a green roof, and that makes the project eligible for higher density and make the project viable again.

[21:41] Without taking into account the construction cost rise, it was around $80,000 that they lost after having to wait for the final decision on the eminent domain.

[23:29] Investors were patient, recognized their capital was being taken care of and Victor’s team was open in every step of the way.  

[24:26] Make sure the investors’ money meet the goals and objectives of the project. If not, don’t go forward.

[27:45] Failing Forward Segment

  • What is the bottom line reason of this failure? – “We were trying to be overly cautious.”
  • What is the single most important lesson you learned from this? – “To listen to my mentors and get to the bottom of it.”
  • What are the major ways you protect yourself from future failures? – “I still talk to George (Ross) every couple of week, we have a mastermind call. I talk to other developers, to compare notes and learn from them.”
  • What advice would you give to someone in a similar position? – “I would definitely talk to other developers who have gone through eminent domain with the city, with the state and see how they handled it.”

[34:47] In his book “Magnetic Capital”, Victor shows 5 principles to raise money and how when those 5 are met, it’s extremely easy to raise money.

[35:53] Connect with Victor through his website www.victorjm.com , join the conversation in the Facebook Magnetic Capital group and reach him directly at victor@victorjm.com.

[36:] Victor’s final thought: “Rookie investors often tend to be ver deal-focused. It’s never about the deal, because a good deal badly managed is not a deal. It always comes down to the management.”

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