On today’s show we are going to do a walk-through of a property offering memorandum in Arizona. Let me be clear, I’m not here to disparage any property. I’m simply going to share our perspective of how we would look at the property.

The property in question is a conversion of a 1960’s vintage motel in Tempe Arizona. The original property had 140 motel rooms with a two story structure. The centre courtyard has amenities including a swimming pool. All of the parking is surface parking around the perimeter of the property.

When we look at a property, we are looking at the submarket and the specifics of the deal.

This particular property is located in an area that I would consider to be a lower income area.

Apartments in these neighborhoods have been the subject of ICE raids resulting in deportations. If residents fear being discovered, they will often leave and the question becomes who will rent these apartments?

This particular property is being advertised as newly renovated. But the truth is, the physical layout of the units means the bedrooms do not have windows. They are tucked at the back of the old motel room design. If they were built today, they would not pass the building code as a legal bedroom.

The financial model that accompanied the glossy package showed some stellar returns. But unfortunately some of the financial metrics did not seem credible when viewed through our lens.

There is no way in our opinion that a 70 year old motel converted to apartments would value at over $500 per SF in the open market.

The sad part is that these types of listings are out there. I never want to see an investor lose money. I don’t want to see a property fall into disrepair and become blight within the community. But things do get old. Once they’re functionally obsolete, the right solution is to demolish and rebuild. Extending the life beyond the useful life is rarely the right answer.

I’ve had to demolish properties in Philadelphia. It’s sad when that happens.

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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)

On today’s show we are talking about the street level process for getting a property leased up. Marketing is all about generating interest. Sales is about generating revenue.

We have an industrial outdoor storage project that was built in central Florida to meet the needs of contractors who have equipment and materials that need storage. These are businesses that have valuable equipment like excavators that you can’t just park in your driveway. The HOA won’t allow it. These contractors have trailers full of battery powered tools that need a secure place to charge overnight.

Many landscaping companies purchase composite decking materials for each job because they don’t have the space to store materials. They have to charge more, and they lose some bids because their prices are not competitive.

If they purchased materials by the truckload, they could get a 15-20% discount on those materials. In the landscaping business that kind of discount can make the difference between getting the job or not. It can make the difference between a profitable season and a break-even season. Not every customer will want the colors you chose. But if you have a few standard colors that are widely popular, you can win more bids for the modest cost of renting additional outdoor storage space.

This is a relationship-driven outreach, not a passive listing exercise. The contractors who will sign leases are often busy doing project work, not browsing general property sites. To lease to these clients you need to target where they are, speak their language, and make the transaction clear and simple.

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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)

REGISTER HERE for the December 16 live demonstration of VictorAI.

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On today’s show we are talking about the myth of the housing crisis.

But first, I’d like to invite you to a webinar next week on December 16 where I will be demonstrating the use of our new AI tool which we affectionately call VictorAI. This is our own custom language model which is built on top of ChatGPT. We trained VictorAI with the contents of the Real Estate Espresso podcast and my book Magnetic Capital. It’s the difference between going to a family doctor versus going to a specialist. The specialist is always going to give you a more precise answer. Click on the link in the show notes and we will talk to you on December 16 at 2PM.

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Yes, there is a problem with affordability in the US. But affordability is not limited to housing. It is broadly based. Inflation has impacted virtually all aspects of daily life. The problem is that the US dollar has been devalued and that incomes have not kept pace with the devaluation of the currency.

The problem is not a result of greedy landlords jacking up the rent above what ordinary people can afford. When landlords price their properties above market, they experience extended vacancy. A vacant property is losing money and will ultimately result in bankruptcy for the landlord.

The crisis of affordability is the result of inflation which has eroded the purchasing power of ordinary citizens across the board. It’s reflected in record levels of student debt, crushing levels of consumer debt, falling levels of home ownership, rising levels of automotive debt, and it’s affected the ability to afford basic groceries.

The solution is not rent control, any more than price controls at the grocery store will improve the affordability of groceries. We have had a succession of governments on both sides of the political spectrum who have been using devaluation of the currency as a way to fund excess government spending.