Sep 22, 2025 · 51m · paul-morris
Turning Rent Control Into Profit
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Commercial real estate broker Kimberly Stepp joins host Paul Morris on Radical Wealth Plan to reveal institutional underwriting strategies, how to capitalize on distressed and rent-controlled multifamily assets, and the balance between coastal wealth preservation and out-of-state cash-flow investing.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
Paul as informed peer 5.4 Guest teaching 3.1 Guest disagreement 1.9 Paul pushing back 1.9
speaking balance: gold is Paul, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 31:26 Differentiating pros from mom-and-pop metrics
Kimberly directly challenges Paul's exclusive reliance on cash-on-cash yield, stating that all serious industry pros prioritize price per square foot regardless of apparent gross multipliers.
Hardest push from Paul ▶ 35:07 Host pushes back on the utility of square foot metricsPaul presses Kimberly on why price per square foot matters if an investor can successfully renovate deferred maintenance units and double cap rate yield on exit.
Biggest teaching moment ▶ 36:03 Kimberly explains the pro vs mom-and-pop food chainKimberly explains the market dynamics where mom-and-pop investors buy purely on yield while institutional pros evaluate basis and price per square foot, prompting Paul to realize his analytical blind spot.
Paul holds their own ▶ 19:47 Paul breaks down cost segregation tax shelteringPaul demonstrates deep technical real estate expertise by explaining the 27.5-year structural depreciation schedule versus accelerated cost segregation to shield income.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Paul as informed peer | Guest teaching | Guest disagreement | Paul pushing back | Why |
|---|---|---|---|---|---|---|
| Breaking into Male-Dominated Commercial Real Estate | 4 | 2 | 1 | 1 | The conversation opens cordially as Paul asks Kimberly about breaking into commercial real estate as a woman and her transition from acting. Kimberly explains her institutional-grade marketing approach for non-institutional sized deals, while Paul validates her insights with his own observations. | |
| Hyper-Local Market Intelligence and Buyer Reputation | 6 | 3 | 1 | 2 | Kimberly details how hyper-local market intelligence and knowing off-market retrades provides an edge over generic MLS data. Paul demonstrates his industry experience by elaborating on buyer reputation management and proof of funds when approaching sellers. | |
| Market Disruption and Emerging Opportunities in Los Angeles | 5 | 3 | 2 | 1 | Kimberly describes how rate hikes and tenant-friendly Los Angeles regulations have created distress and distressed-asset buying opportunities requiring high cash-on-cash yields. Paul affirms the contrast with previous market cycles where cap rates were compressed. | |
| Turning Rent Control and Deferred Maintenance into Long-Term Equity | 7 | 3 | 2 | 2 | Paul goes in-depth on his strategy of embracing rent control and deferred maintenance for long-term holds and tax sheltering via cost segregation. Kimberly agrees on the power of cost segregation and discusses how B-location multifamily has retained rent growth compared to prime A-locations. | |
| Targeting B-Locations and Navigating Out-of-State Investments | 6 | 4 | 3 | 3 | Kimberly advocates for high-yield out-of-state investments in markets like Indiana, whereas Paul defends his conservative rule of only investing in geographic areas he intimately knows. Kimberly explains that partnering with trusted local management mitigates the risk of being taken advantage of out-of-state. | |
| The Four Core Metrics: Price Per Square Foot vs. Cap Rates | 7 | 7 | 4 | 4 | Kimberly firmly schools Paul on why professional commercial investors prioritize price per square foot over mere cap rates, gently contrasting pros against mom-and-pop operators. Paul tests his thesis against hers, consults live insights from a partner, and eventually concedes that price per square foot determines whether upside is real. | |
| Action-Oriented Investing and High-Performance Team Building | 5 | 2 | 1 | 1 | Paul and Kimberly share a reflective, collaborative exchange emphasizing that education is worthless without execution. Kimberly notes the challenge of finding high-performing team members who match her work ethic. | |
| Rapid-Fire Question Round and Podcast Conclusion | 3 | 1 | 1 | 1 | Paul conducts a rapid-fire closing questionnaire exploring Kimberly's personal motivations, career resilience, and core values before wrapping up warmly. |
Statements from this episode (19)
Stepp: Women Represent Disproportionate Share of Top CRE Brokers
“I think there's a Small percentage of women, but the women that are in the business do very, very well. I think the top one percent of commercial real estate brokers that a lot of women are in that pool.”
Stepp: Female commercial real estate brokers have an advantage securing client meetings
“It's a, there's some benefits of being a woman in this business for many reasons. I mean, I think getting indoors where men can't get in. I mean, it's, they seem to say yes to women a little bit more than they do to men. If I say, call someone up and say, Hey,…”
Stepp: Westside LA Multifamily Lacks 100-Plus Unit Institutional Product
“Because Westside doesn't have many a hundred plus unit buildings. In the west side, but they, there exist, but not to a grand scale. So institutional buyers don't usually come and pick one off here and one off there.”
Stepp: Generalizing across property types is fatal in commercial real estate
“I think being a Jack of all trades is really a kiss of death in, in, Any real estate, but commercial real estate in particular.”
Stepp: Commercial sellers often reject full-price offers based on buyer reputation
“Many times I'll tell the seller this, the backstory of a buyer and sometimes they won't even count or even if it's at full price based on the personality and then the reputation of the person.”
Stepp: Buyers crossing submarkets have a lower probability of closing
“If they're just a person that came from, you know, Downtown Los Angeles that wants Santa Monica or downtown Los Angeles that wants the Valley. It's just it's not a fit. It's generally speaking. So there's a lower probability of closing.”
Stepp: Over-Leveraged 2020-2022 Property Acquisitions Are Creating Distressed Deals
“Deals that were bought in 20 to 20, 20, 20, 22, they were over leveraged. Those are the opportunity because people are in distress situations now and that it's kind of like a feeding frenzy.”
Stepp: Active Real Estate Buyers Require Cash-on-Cash Returns in the 7% Range
“Most of the guys that are doing deals, I'm hearing it's the cash on cash return must be in the sevens. You know, to get their attention.”
Stepp: 20x Gross Multiplier Deals Are No Longer Happening
“There's no more 20 times gross deals happening. There's certainly not. I'm shocked. I'm shocked. How low even the most prime locations are going on the gross rent multiplier level, cap rate level.”
Stepp: Rent Growth Has Slowed in Prime Areas but Persists in B Locations
“The demand for affordable units, units in my business also remains very strong and rent growth has slowed very much so in the prime primaries, but not in the B locations.”
Stepp: Used cost segregation tax depreciation to fund new real estate acquisitions
“I mean, I did cost segregation on all our buildings and that was nice. Nice. Nice amount of change to go buy more real estate.”
Stepp: Indiana real estate properties regularly yield 12% to 13% returns
“The like say in Indiana, I get 12%, 13% returns regularly.”
Stepp: Out-of-state multifamily costs $50,000 per unit versus $500,000 in coastal markets
“Florida, Texas, Tennessee, Phoenix, some Nevada. It's just opportunities are, you can buy a heck of a lot more for your dollar. You know, the cost per units are like 50,000 a unit versus 500,000 a unit.”
Stepp: Deal sourcers receive an automatic 10% equity partnership stake
“We also incentivize, incentivize someone to bring us a deal. They immediately become a 10% partner.”
Stepp: Professional CRE investors prioritize cost per square foot above all
“That's why most astute, and I'm not saying you're not astute. Investors tend to look at cost per square foot. That's the number one. The pros, all the pros do. That's all I care about.”
Stepp: Pros buy from mom-and-pops and sell back to mom-and-pops
“There's only two people in the food chain and commercial real estate do really is the pros and the mom and pops. So the buy mom and pops buy from the pros and the pros buy from mom and pops over and over and over again. It's just the way it is. So pros and pro…”
Stepp: Austin multifamily market became oversaturated, causing high vacancy
“Austin's a hip town that everybody was like, oh my god, you have to buy in Austin. And yes, it's cheaper than United, I mean, in Los Angeles, but it's, but it got oversaturated with too much product. And then you can't rent your units, you have high vacancies,…”