John McNellis is based in Palo Alto and has been in commercial real estate for more than 40 years. He has been focused on grocery anchored shopping centers in Northern California for most of that time. On today's show we are talking about what is working today and the fundamentals that have stood the test of time.

He is also the author of the book "Making it In Real Estate", now in its third edition.

To connect with John visit https://mcnellis.com/ or email him at john@mcnellis.com.

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**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)

Dani Lyn Robison is based in Orlando Florida, but operates a real estate business located in Ohio. On today's show we are talking about Senior Housing. This is one of several asset classes in their portfolio. To connect with Dani and to learn more, visit chatwithfreedom.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)

On today's show, we're talking about a situation that confuses a lot of investors. How can the same property have two different underwriting models, and how can both of them be correct?

The answer comes down to perspective.

A lender is underwriting the property for one purpose. An investor is underwriting the property for a different purpose. Those two objectives overlap, but they are not identical.

Let's use a real-world example.

There are a number of state and local programs around the country that offer some form of property tax abatement for qualifying projects. Perhaps the property provides affordable housing, senior housing, or satisfies some other public policy objective.

The economics can be very meaningful.

Suppose the property would normally pay one million dollars a year in property taxes. Under the applicable program, the actual tax expense might be a $700,000 difference in net operating income.

But there is a wrinkle.

The tax abatement has to be approved each year. There is a small but non-zero risk that the property might not qualify one year. Should you assume the tax abatement in your underwriting?

-------------

**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)