Latest / Own More Doors / #7 Property Management in 2024: New Laws, Key Changes, Challenges, and Expert Insights (Tyler Mehl)

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#7 Property Management in 2024: New Laws, Key Changes, Challenges, and Expert Insights (Tyler Mehl) · Own More Doors

• 0:00
  SPEAKER_00: What's up, everyone?
• 0:01
  SPEAKER_00: Juan Weezar here with another podcast, Own More Doors.
• 0:05
  SPEAKER_00: If you're a housing provider or a landlord, but now we're using the term housing provider, which I'm perfectly fine with.
• 0:11
  SPEAKER_00: If you're a housing provider or you plan to be, you need to understand the nuts and bolts of property management.
• 0:17
  SPEAKER_00: And so today I'm sitting down with Tyler Mell, the president of Belmont Shore Land Company, uh local property manager here in Long Beach, good friend of mine.
• 0:27
  SPEAKER_00: We've we've been working well together.
• 0:28
  SPEAKER_00: We're part of different uh organizations together.
• 0:31
  SPEAKER_00: And um I really appreciate um Tyler's knowledge, his experience, and uh, you know, we just have a good time working together.
• 0:38
  SPEAKER_00: Tyler, thank you so much for being here today.
• 0:39
  SPEAKER_00: You're welcome.
• 0:40
  SPEAKER_00: Afternoon.
• 0:41
  SPEAKER_00: Cool.
• 0:42
  SPEAKER_00: Uh so let's get into it.
• 0:43
  SPEAKER_00: Uh let's talk about the so it's 2024, May 2024.
• 0:49
  SPEAKER_00: What are some of the hot topics that we're dealing with right now that that owners are concerned with that they're just uh and start wherever?
• 0:55
  SPEAKER_00: I know there's a lot of stuff.
• 0:56
  SPEAKER_00: And you the thing is you hear the same things that I hear, and so I'll let you take it from wherever you want.
• 1:00
  SPEAKER_02: Yeah, I mean, the big topic right now today is uh insurance.
• 1:06
  SPEAKER_02: Correct.
• 1:06
  SPEAKER_02: So we're seeing um a number of our clients being removed for insurance um permanently, andor hey, you have to fix a bunch of stuff at your property before we reinsure you.
• 1:21
  SPEAKER_02: We have seen probably at least 10% of our clients get some form of letter from insurance already this year.
• 1:27
  SPEAKER_02: And these aren't all state farm.
• 1:29
  SPEAKER_02: There's some state farm because they're leaving altogether, but we're seeing it from everywhere Safeco, Mercury.
• 1:38
  SPEAKER_02: Um, they're asking people to replace roofs or do minor cosmetic stuff, but there's a lot more involvement from insurance in the past, maybe a few a year would say, Hey, we drove by the property, you need to correct X, Y, and Z.
• 1:53
  SPEAKER_02: Now it's hey, you need they're flying drones over the properties or looking at the roofs.
• 1:59
  SPEAKER_02: Um, in one instance, they said you got to replace this roof.
• 2:03
  SPEAKER_02: We sent a roofer up and he said it's fine.
• 2:06
  SPEAKER_02: And we hadn't had any leaks.
• 2:08
  SPEAKER_02: Um, so we had to send a report to the insurance company saying the roofer is giving it five to ten more years.
• 2:14
  SPEAKER_02: Uh, and then they sent back another correction.
• 2:17
  SPEAKER_02: Hey, you know, two steps here don't have a railing, and your oh wow, your utility boxes have a have a door missing.
• 2:23
  SPEAKER_00: Yeah, so so what's happening right now with with property owners, and and I get the same.
• 2:27
  SPEAKER_00: There was uh like a two-week span where every day I was getting a call or a text.
• 2:31
  SPEAKER_00: So it in fact, actually, from a from like a business perspective, it's great.
• 2:35
  SPEAKER_00: The clients are are are calling me, but it's not great that they're that their insurance is gonna go away.
• 2:42
  SPEAKER_00: And if we are able to connect them with other insurance companies that that will insure, right?
• 2:48
  SPEAKER_00: Yeah.
• 2:49
  SPEAKER_00: And but then the cost goes up.
• 2:51
  SPEAKER_00: And this is going up.
• 2:52
  SPEAKER_00: I mean, what are the percentages that you're seeing?
• 2:54
  SPEAKER_02: I mean, so a lot of times we're not paying the insurance, so we don't really know.
• 2:59
  SPEAKER_02: Um, but I just saw a condo association uh email all their members letting us know that uh they were being removed from their insurance.
• 3:09
  SPEAKER_02: Yeah, their previous insurance was$22,000 a year.
• 3:13
  SPEAKER_02: I think it's a 30 to 40 unit building.
• 3:16
  SPEAKER_02: And the cheapest estimate they had received was$106,000.
• 3:20
  SPEAKER_02: Yep.
• 3:20
  SPEAKER_02: And they'd got another one from$119 and they were pursuing more.
• 3:24
  SPEAKER_02: But a 30-unit, 30 to 40 unit building, you're talking about a special assessment of$25,000 to$3,000 plus an increase of dues of$250 a month just to pay for the new insurance.
• 3:36
  SPEAKER_00: It's a real problem.
• 3:37
  SPEAKER_00: We um we just helped um one of our clients sell a 12-unit building.
• 3:42
  SPEAKER_00: Yeah.
• 3:43
  SPEAKER_00: And, you know, Tyler, and you know this when a buyer buys a property, the buyer has three contingencies.
• 3:49
  SPEAKER_00: So these are like call them like um reasons to cancel the escrow.
• 3:53
  SPEAKER_00: So so one of them would be the physical inspection, uh, one of them would be the appraisal, meaning that the property should appraise for what you're buying it for, otherwise you may not buy it.
• 4:02
  SPEAKER_00: And the other thing is like the loan if the person needs a loan.
• 4:05
  SPEAKER_00: In this specific scenario, um, we had the opportunity to represent the buyer.
• 4:09
  SPEAKER_00: Their one contingency was one I had never heard of.
• 4:12
  SPEAKER_00: My ability to get insurance on the property.
• 4:15
  SPEAKER_00: They didn't care about the appraisal, they didn't care about the condition, they didn't care.
• 4:20
  SPEAKER_00: They were buying it cash, they didn't care about, but it's it's it's interesting how now it's it's top of mind.
• 4:25
  SPEAKER_00: It's it's top of mind.
• 4:27
  SPEAKER_00: And before, when we were calculating, you know, when we're looking at a property, and even if it's a whatever, five, six unit building, and we're saying, well, it's probably gonna be about a hundred dollars a unit, a hundred dollars per unit for insurance.
• 4:41
  SPEAKER_00: That I can't make those assumptions anymore.
• 4:43
  SPEAKER_00: And that's been like that for the last 20 years.
• 4:44
  SPEAKER_00: Now I'm like, uh, we we got to get a quote, and I don't know how much it's gonna be.
• 4:48
  SPEAKER_02: Yeah, we uh we recently we manage one commercial building, the one on San Antonio that you've been a part of a little bit, and uh she is being removed from her insurance and not for cause, just because uh I believe it's State Farm actually.
• 5:03
  SPEAKER_02: So she's being removed um for because of removing a lot of people.
• 5:09
  SPEAKER_02: And I believe she was paying around 4,000 for a nine-unit commercial building, not retail, just office space.
• 5:17
  SPEAKER_02: And the initial estimate from an agent who wasn't going to be writing the policy, so this is not concrete, but he he was assuming 15 to 20.
• 5:28
  SPEAKER_02: Wow.
• 5:28
  SPEAKER_02: So that's a three to four hundred percent increase on insurance in one year.
• 5:34
  SPEAKER_00: You know what's interesting is that there's this perception that, you know, landlords, housing providers are you know greedy, they don't want to fix anything.
• 5:47
  SPEAKER_00: Uh, there are these big corporations.
• 5:49
  SPEAKER_00: And, you know, I see the other side because when I sell a building, I have to look at the income and the expenses.
• 5:57
  SPEAKER_00: And you as a property manager, you're paying the expenses.
• 6:00
  SPEAKER_00: So if anyone's closer to it, it's it's you.
• 6:03
  SPEAKER_00: And um, you know, everyone wants to buy real estate with the hopes of cash flow, and that's and that's kind of the big that's that's what everyone talks about.
• 6:12
  SPEAKER_00: But when you're looking at these profit and loss, I mean, you see really what it cost to run a building, and now that cost is going up on an item that normally wasn't a big item.
• 6:24
  SPEAKER_00: Insurance was just overlooked, yeah.
• 6:26
  SPEAKER_02: And and insurance is definitely part of the play.
• 6:29
  SPEAKER_02: And a lot of times we're not we're not looking at insurance.
• 6:32
  SPEAKER_02: Yeah, uh, we don't often pay mortgages or insurance just because the bills can be large, and that requires us to do some budgeting that isn't a normal process, and that would have different pay periods for different buildings.
• 6:47
  SPEAKER_02: It wouldn't be very efficient for my company to pay everybody's insurance bills.
• 6:52
  SPEAKER_02: Um, so we're not always seeing that, but you can roughly assume what insurance is and factor in other costs, and and it's a pretty simple math equation.
• 7:02
  SPEAKER_02: But now not knowing, um, and it all the other costs are going up too.
• 7:08
  SPEAKER_02: Oh, yeah.
• 7:08
  SPEAKER_02: I mean, vacant if if a client of ours hasn't had a vacancy in three, four years, I'm spending most of my time on that vacancy explaining to the new to the client why this vacancy is double.
• 7:24
  SPEAKER_00: And and and you're talking about uh painting, painting, maybe some trash hauling, maybe some replacing of the floor.
• 7:31
  SPEAKER_02: Yeah, you know, what we usually find is most every place needs a full paint job.
• 7:36
  SPEAKER_02: And that's because most vacancies, our vacancy rate, and we can get to this later, our vacancy rate has halved in the last two years, uh almost overnight, beginning in 2022, 2023.
• 7:49
  SPEAKER_02: And that means properties are normally occupied for seven, eight years at a time.
• 7:55
  SPEAKER_02: So not only are these bills much bigger, but there's more deferred maintenance.
• 8:00
  SPEAKER_02: So, yes, a full paint job.
• 8:02
  SPEAKER_02: Sometimes you're talking about converting oil-based paint because they've really stopped.
• 8:08
  SPEAKER_02: That's not a very price cost-effective thing to do anymore, is to continue with the oil-based.
• 8:14
  SPEAKER_02: Um, so you're converting properties from oil to water uh on the paint, and that's that's another cost.
• 8:22
  SPEAKER_02: Um, every eight years, yeah, we don't normally paint cabinets and stuff like that, but if they're occupied for eight years, you're gonna have to that's becoming a more common thing that happens on every vacancy, and that's sometimes just a little bit less than painting flat paint on the walls.
• 8:37
  SPEAKER_02: Yeah.
• 8:38
  SPEAKER_02: So we're you're seeing the cost go up all over the place.
• 8:42
  SPEAKER_02: And at some point, and we're probably close to that now, where you can't pass all, you cannot pass all these on to the tenants by higher rents.
• 8:51
  SPEAKER_00: No, no, no.
• 8:52
  SPEAKER_00: And you know, as we're talking about the rising cost of insurance, the rising costs of uh keeping the maintenance up and and turning a property, um getting it ready for for rent.
• 9:05
  SPEAKER_00: When when we sit down with a with an owner and they're like, well, here's my expenses, and those expenses are high.
• 9:11
  SPEAKER_00: So that impacts the net the net operating uh income and which impacts the cap, the cap rate, which then in caps um impacts the value.
• 9:20
  SPEAKER_00: So it's gonna the higher the expenses, the values are dropping because the return is gonna be the return's gonna be less.
• 9:27
  SPEAKER_00: And so then it's it's it's a problem for the seller who most sellers, of course, they want to sell um at the top with the price in terms that are um appropriate to them.
• 9:40
  SPEAKER_00: But then the buyer is looking at it saying, Well, I have to buy it, and now the expenses are way higher than they've ever been.
• 9:47
  SPEAKER_00: Yeah.
• 9:48
  SPEAKER_00: And to your point, it's we're probably at the point where that the tenant can't.
• 9:53
  SPEAKER_00: Well, listen, there's statewide rent control.
• 9:55
  SPEAKER_00: Yeah.
• 9:56
  SPEAKER_00: And so in most cases, you know, just because your insurance went up anywhere between 20, 30 percent, which it could be very likely, that's not spread across the tenants.
• 10:06
  SPEAKER_02: No, and right now the rent control, uh, I mean, this year 8.9, last year 8.8.
• 10:13
  SPEAKER_02: It it still isn't extremely prohibitive for us.
• 10:17
  SPEAKER_02: I mean, yes, you're running into extreme problems, um, like uh somebody who is 40% under market or 50% the building I mentioned to you earlier, um, they're probably at 50% across nine units of what they should be.
• 10:36
  SPEAKER_02: Yeah, they got a studio rented out for 600 bucks.
• 10:40
  SPEAKER_02: And what has now happened is the the property has become uh it's really in poor condition.
• 10:47
  SPEAKER_02: Yeah.
• 10:48
  SPEAKER_02: And if they're gonna take that slow train of rent raises, it's going to take them eight years to get that rent to what it should be today.
• 10:58
  SPEAKER_01: Yeah.
• 10:58
  SPEAKER_02: And now you have another eight years you got to make up.
• 11:01
  SPEAKER_02: Yep.
• 11:02
  SPEAKER_02: And there's no incentive for people to move under rent control.
• 11:05
  SPEAKER_02: They're they're not gonna find anything cheaper.
• 11:09
  SPEAKER_02: And these properties are deteriorating because there's not enough money coming in to fix them up with all the higher costs, and these people are having to reach into savings accounts to maintain the properties, and they can't recapture it unless they can find a way to move these tenants on, which is difficult.
• 11:28
  SPEAKER_00: Tyler, let's talk about um rent collection.
• 11:34
  SPEAKER_00: And and I know you can only speak so much on on kind of what you guys are experiencing in your company, and also talk about evictions and what's what's the eviction landscape look like right now in 2024?
• 11:48
  SPEAKER_02: So, with rents, the the rent collection, I mean, obviously that became an issue during COVID.
• 11:54
  SPEAKER_02: Um, we're we're lucky in the sense that all of our properties are in good areas of town.
• 12:00
  SPEAKER_02: Um, we haven't been effectively bill collectors ever.
• 12:05
  SPEAKER_02: So you have roughly 10% of people who don't pay down time, 10 to 15, and of that, 60, 70 percent are just people who forgot or having a short temporary issue, and then you have about 5%, and that's uh it's a common thing, or they're having severe financial issues.
• 12:23
  SPEAKER_02: Um, and that's been that's been relatively the same.
• 12:26
  SPEAKER_02: The problem in COVID is we weren't allowed to go after or collect any of this money, or there was so many rules related to it.
• 12:33
  SPEAKER_02: Um, but that I don't see has changed as very much.
• 12:38
  SPEAKER_02: It's still kind of the same, but in terms of the eviction landscape, uh we're finding that the time it takes to complete an eviction has doubled.
• 12:47
  SPEAKER_02: Okay, so at least.
• 12:49
  SPEAKER_02: How long is it taking now, Tyler?
• 12:51
  SPEAKER_02: I mean, my last one was five months and ten days, and that was one where they didn't offer a response, so there was no no delays from the tenant being evicted.
• 13:06
  SPEAKER_00: So yeah, I wonder, I wonder how much longer it would have taken had they responded.
• 13:10
  SPEAKER_00: Most tenants do respond.
• 13:12
  SPEAKER_02: In the in the past, I found that um on a non-response, it was about six weeks to complete an eviction, and on a response, it was about eight.
• 13:24
  SPEAKER_02: So is it a two-week difference or is it a 25% difference?
• 13:28
  SPEAKER_02: I don't know.
• 13:29
  SPEAKER_02: Yeah, um, we when we were doing them during COVID, they were all surrounded by these COVID laws, and the the judges were seemed a little unsure on how to act on some of these when the people were fighting them.
• 13:42
  SPEAKER_02: So I I never got a good look of what the eviction landscape looked like with just AB 1482, the the Tenant Protection Act.
• 13:53
  SPEAKER_02: So we never got a an independent view of that and what it looked like because COVID started three months after.
• 14:00
  SPEAKER_02: So now that it is COVID is over and most of these protections are over unless you have you know payment from that time period, um they're still backed up.
• 14:15
  SPEAKER_02: The sheriffs took, I think, about three months to schedule that lockout.
• 14:21
  SPEAKER_00: Typically, when when you went to eviction court and you were granted the property, they would give the tenant about a week to clear out their stuff.
• 14:30
  SPEAKER_02: Yeah, that's when they'd post the notice and it'd say, hey, we're gonna be here on X date, and then they'd show up a week later.
• 14:36
  SPEAKER_02: So from that point, yeah, it would add about two weeks to it.
• 14:39
  SPEAKER_02: But now we're talking about three months.
• 14:41
  SPEAKER_02: And I wonder how many, how many um sheriffs they have on the case, because every eviction I have the same sheriff.
• 14:50
  SPEAKER_02: Okay.
• 14:51
  SPEAKER_02: And I said, you know, where are you doing evictions?
• 14:53
  SPEAKER_02: This was the last one a few months ago.
• 14:55
  SPEAKER_02: And he says, Oh, I do them all over LA.
• 14:58
  SPEAKER_02: Oh, wow.
• 14:58
  SPEAKER_02: He said, How many are you doing a day?
• 15:00
  SPEAKER_02: He said, 12.
• 15:02
  SPEAKER_02: Now, if you've got one one pair of sheriffs doing 12 evictions a day, that that portfolio of evictions probably is growing.
• 15:11
  SPEAKER_00: Now I can't imagine that, but going why it probably is growing.
• 15:15
  SPEAKER_00: So going back to hey, it it's taking between five and six months to get an eviction, and you're saying in some cases it could take another three months for the lockout.
• 15:24
  SPEAKER_02: Yeah.
• 15:24
  SPEAKER_00: That is crazy.
• 15:25
  SPEAKER_02: Yeah, five months and ten days.
• 15:27
  SPEAKER_02: We started it in late November, and uh the lockout date was April 30th.
• 15:33
  SPEAKER_00: And and yet people want to point the finger at the housing provider.
• 15:36
  SPEAKER_00: You're the bad person, you're to blame.
• 15:39
  SPEAKER_00: And and here's eight months of lost rent, not to mention all the unpaid rent that gave you the right to start the eviction.
• 15:46
  SPEAKER_02: Yeah.
• 15:47
  SPEAKER_02: Uh and and one of the issues is you're getting you're you're damned if you do and you're damned if you don't.
• 15:53
  SPEAKER_02: You don't want to start one really early because they're expensive and they take a long time.
• 15:57
  SPEAKER_02: But you let somebody get into you for some rent on the assumption that they're gonna come good.
• 16:05
  SPEAKER_02: And if they don't, now you've eaten another few months of rent and it's gotten even more expensive.
• 16:10
  SPEAKER_02: So we've been put in this tough position of going, what do we do?
• 16:15
  SPEAKER_02: You know, do we we start an eviction because they're crazy expensive?
• 16:19
  SPEAKER_02: They've they've tripled in cost with the attorneys.
• 16:22
  SPEAKER_02: So now you're talking about, let's say it's a$2,000 unit,$3,000 for the eviction, five months, you're talking about$13,000 in lost rent, or$10,000 in lost rent and$3,000 in attorney's fees.
• 16:39
  SPEAKER_02: I mean, that that's crazy.
• 16:40
  SPEAKER_00: I I've always seen some of most of the housing providers that I work with, which are independent mom and pop apartment owners, I see them as the victim, and and I get that everyone else sees them as the problem.
• 16:54
  SPEAKER_00: Like you're the problem.
• 16:56
  SPEAKER_00: They hang homelessness issue on on the landlords.
• 16:59
  SPEAKER_00: It's the craziest thing.
• 17:01
  SPEAKER_02: No, there's no landlords who has a mass amount of vacancies because they're not getting the amount they want.
• 17:06
  SPEAKER_02: So there's not empty housing just sitting around.
• 17:10
  SPEAKER_02: Yeah.
• 17:10
  SPEAKER_02: Um, what we're finding is the I mean, in certain categories, like two bedrooms, two bedrooms are not doing well.
• 17:21
  SPEAKER_00: And I don't entirely know why.
• 17:23
  SPEAKER_00: Do you think that that's something that you're that that's unique to your company, or do you think that other property managers are having issues with a two-bedroom?
• 17:34
  SPEAKER_02: I think, I mean, based on what I see on Zillow, there's just a ton of vacant two-bedrooms, and a lot of them are sitting for 15, 20 plus days.
• 17:46
  SPEAKER_02: And, you know, I I rent most of my properties within two weeks once they hit the market.
• 17:52
  SPEAKER_02: And the one bedrooms and studios, they're gone in two weeks.
• 17:56
  SPEAKER_02: And the houses are usually gone in two weeks.
• 17:59
  SPEAKER_02: You know, there's sometimes there's some difficulty in pricing a house because everybody thinks the market is still going up, up, up.
• 18:07
  SPEAKER_02: So there's a lot of people who are overpricing their properties when we look on Zillow.
• 18:11
  SPEAKER_02: Um, but if you price it right, that house moves fast.
• 18:15
  SPEAKER_02: And with the two bedrooms, in some cases, just a minor difference in area.
• 18:20
  SPEAKER_02: Your one bedrooms are renting for the same as two bedrooms.
• 18:23
  SPEAKER_02: My one bedrooms in Belmont Shore are renting for the same as my two bedrooms near Wilson High School.
• 18:29
  SPEAKER_02: That's a seven, eight block difference.
• 18:31
  SPEAKER_00: Yeah, it's not that big of a difference in area.
• 18:34
  SPEAKER_00: Um, you know what's interesting?
• 18:35
  SPEAKER_00: We had a cli back in the day.
• 18:38
  SPEAKER_00: I would have clients who would shy away from studio.
• 18:43
  SPEAKER_00: Like if I sold them an eight-unit building, they're like, you know what?
• 18:46
  SPEAKER_00: Half of them are studios.
• 18:48
  SPEAKER_00: I'm I'm gonna pass.
• 18:49
  SPEAKER_00: And they had reasons for it.
• 18:51
  SPEAKER_00: Well, through the years, times have changed.
• 18:53
  SPEAKER_00: Now I have investors saying, hey, Juan, I love studios.
• 18:56
  SPEAKER_00: I'm like, really?
• 18:56
  SPEAKER_00: Because other investors hate them.
• 18:57
  SPEAKER_00: And they're like, I'm like, well, why do you like them?
• 18:59
  SPEAKER_00: And they're like, uh, on a price, on a price per square foot with the rent that it brings in, it's the highest.
• 19:05
  SPEAKER_03: Yeah.
• 19:06
  SPEAKER_00: And I'm like, can you rent them?
• 19:08
  SPEAKER_00: And they're like, oh, it's great.
• 19:10
  SPEAKER_00: And and the thought process of of of years ago was studios, there's a lot of turnover was was the issue.
• 19:21
  SPEAKER_00: That that's why owners did not like them in the past.
• 19:25
  SPEAKER_00: There's turnovers, but now you welcome the you welcome the turnover.
• 19:31
  SPEAKER_00: If you want the turnover, yeah, it's expensive to uh to paint and do everything else, but to set a new rent, because in most cases, you yeah, it's crazy how you could always set a new rent.
• 19:40
  SPEAKER_00: Yeah, it's crazy how the how the rent just keeps going up.
• 19:44
  SPEAKER_00: Now, it doesn't mean that that a housing provider can raise a rent, but certainly if it's vacant, you get to set the new rent.
• 19:49
  SPEAKER_00: So there's this uh like I don't know, a new appreciation for studio units, and you're telling me that they're that, and even on your end, that it's easy for you to rent studios.
• 19:58
  SPEAKER_02: Yeah, it's a really easy.
• 20:00
  SPEAKER_02: Now, if we're looking at from my standpoint, yes, the higher value per door is much better for my company.
• 20:08
  SPEAKER_02: Um dealing with, you know, a tenant making you have one unit, you make 120 bucks versus another unit, you make 250.
• 20:18
  SPEAKER_02: Much rather have the 250, you're dealing with sometimes multiple tenants in the other one, but you're still dealing with one tenant group.
• 20:26
  SPEAKER_02: And on the other one, you're dealing with one.
• 20:29
  SPEAKER_02: So, yes, I want to make more per val per door.
• 20:32
  SPEAKER_02: So studios aren't always my favorite, but they do rent really fast.
• 20:37
  SPEAKER_02: Same with one bedrooms.
• 20:38
  SPEAKER_02: Um, and the two bedrooms, I find that the stuff that's really nice still rents, even if it's a two-bedroom.
• 20:45
  SPEAKER_02: It's high-end, it it moves and it moves for good money.
• 20:48
  SPEAKER_02: Um, but if you've got an average two-bedroom, I think they're fighting a lot of different categories of property.
• 20:56
  SPEAKER_02: And it's hard to know exactly why, because some of these some of the perceived causes started after the price.
• 21:08
  SPEAKER_02: I mean, and I've noticed this for five, six, seven years.
• 21:11
  SPEAKER_02: This wasn't precipitated by COVID or rent control.
• 21:15
  SPEAKER_02: I noticed that my two bedrooms in the shore were just you know not as valuable.
• 21:21
  SPEAKER_00: Interesting.
• 21:22
  SPEAKER_00: You know, you know what you said about high-end units still doing well.
• 21:26
  SPEAKER_00: Um, and we I think we touched upon this um on our first on our first YouTube video, where there used to be this older, old school mindset of um, hey, just keep everything beige, broker, broker beige carpet, keep everything simple, don't don't fix up your rentals, it's just a rental.
• 21:48
  SPEAKER_00: And and the idea was just keep everything just just plain, Jane, white, clean, uh, but don't do any improvements.
• 21:58
  SPEAKER_00: Don't do the better light fixtures.
• 21:59
  SPEAKER_00: Don't do The better faucets, don't do the better counters.
• 22:03
  SPEAKER_00: That used to be this mindset on how I was brought up, yeah 25 years ago.
• 22:08
  SPEAKER_00: Like, oh, do it this way, don't spend too much.
• 22:10
  SPEAKER_00: But but now, and I've now I've seen this for over 15 years now, where other people have come in and and and they try to make them high-end.
• 22:18
  SPEAKER_00: Yeah.
• 22:19
  SPEAKER_00: And and it makes the difference, and the market will pay more than what the market rent is.
• 22:24
  SPEAKER_00: Like, so all I'm saying is it so if you overimprove, and I don't want to use the over-improve, I'll say just improve.
• 22:32
  SPEAKER_02: Yeah.
• 22:32
  SPEAKER_00: If you make it better than average, you're you're gonna make it up on the new rent, on the demand, and on the quality of the tenant.
• 22:40
  SPEAKER_02: And the the other difference is, and I I can't, you know, I've been doing this for 15 years, it's probab pretty much the only job I've ever had.
• 22:47
  SPEAKER_02: Um the the nice stuff is actually cheaper to install than it used to be.
• 22:54
  SPEAKER_02: Vinyl planking floors, you know, granite countertops, you know, subway tile backsplash, nice fixtures.
• 23:02
  SPEAKER_02: It's just if and these buildings are aging.
• 23:06
  SPEAKER_02: I mean, you see it in every building you sell, they're old, and a lot of them haven't been repiped or remodeled.
• 23:13
  SPEAKER_02: And if you're gonna go in and just slap some paint on and do minor repairs, well, the buildings are still showing their age.
• 23:20
  SPEAKER_02: So you're you have to fix stuff, you have to replace tile.
• 23:23
  SPEAKER_02: So if you're gonna do all that stuff, spend a little extra money, put it up, you know, a stainless steel dishwasher, it costs a hundred more than just a white one.
• 23:33
  SPEAKER_02: That's not a big price difference to make it look nice.
• 23:36
  SPEAKER_02: And people see that and they want that.
• 23:38
  SPEAKER_02: And that's I think why two bedrooms aren't always doing great, is because if you go, I'm gonna spend$2,200 on a two-bedroom with carpet and nothing fancy in the kitchen and bathroom, or I get this spectacular one-bedroom where I've got stainless steel appliances, you know, laundry inside the unit.
• 23:58
  SPEAKER_02: Yeah, it's a little bit smaller, but this is Shangri-La.
• 24:02
  SPEAKER_02: I love it.
• 24:02
  SPEAKER_02: Yeah, yeah.
• 24:03
  SPEAKER_02: Why am I gonna live in this kind of dingy apartment?
• 24:06
  SPEAKER_02: And how many the crazy thing is I can't imagine why none of these properties were built with lights in the living room.
• 24:14
  SPEAKER_02: Yes, none of them have it.
• 24:16
  SPEAKER_00: Yeah, it's crazy.
• 24:17
  SPEAKER_00: Uh they were trying to keep costs low and the city wasn't requiring it.
• 24:21
  SPEAKER_00: And if it's not a requirement, we're not gonna do it.
• 24:23
  SPEAKER_00: Yes, I know, I know.
• 24:24
  SPEAKER_02: Yeah, so you have some canned lighting, people love it, and yeah, and I think a lot of people who were moved to work from home from COVID have been called back into office.
• 24:33
  SPEAKER_02: Yeah, I mean, there's been a few studies showing that yeah, people are way more productive when they go into work versus when they sit at home and work in their pajamas.
• 24:41
  SPEAKER_02: Walk their dog.
• 24:43
  SPEAKER_00: And they walk their dog, yeah.
• 24:45
  SPEAKER_00: Yeah, they they go work out, so they should be back in the office.
• 24:50
  SPEAKER_02: Well, I remember the first few weeks of COVID, you know, everybody's freaked out.
• 24:53
  SPEAKER_02: I'm sitting in my apartment and going, nobody's calling, nobody wants anybody in their home.
• 24:58
  SPEAKER_02: So playing video games for two weeks, and I realized this isn't gonna continue.
• 25:04
  SPEAKER_02: The phone is gonna start ringing again, but I'm not gonna get anything done here.
• 25:08
  SPEAKER_02: Yeah, I was ready to head back, and you know, the good part is at the time I was solo, yeah.
• 25:13
  SPEAKER_02: So it's not like I had uh I had any restrictions from seeing people, so yeah, I went back in, but um yeah, it's uh maybe that's why people don't need the extra bedroom anymore.
• 25:25
  SPEAKER_00: Yeah, it uh it's interesting.
• 25:27
  SPEAKER_00: I wanna I want to switch gears here.
• 25:29
  SPEAKER_00: Uh one of the concerns that I'm hearing right now is um the balcony retrofit.
• 25:36
  SPEAKER_00: What do you know about that?
• 25:37
  SPEAKER_00: You know, we what's happening on your end.
• 25:39
  SPEAKER_00: What are you hearing?
• 25:40
  SPEAKER_02: We haven't done a lot of the inspections yet.
• 25:43
  SPEAKER_02: Now we have prices.
• 25:44
  SPEAKER_00: Um, and I've had talk to our viewers on what's being required and what what law was passed and what they're asking.
• 25:52
  SPEAKER_02: Uh so it's SB721.
• 25:55
  SPEAKER_02: It's a different if it's it's a different bill for the condos, and a lot of the condos have been very proactive.
• 26:01
  SPEAKER_02: Yes.
• 26:02
  SPEAKER_02: Um, and mainly probably because they had many more problems and many more balconies, and we've been seeing balcony issues for years on on these local buildings.
• 26:14
  SPEAKER_02: So the requirement is uh three units on a lot.
• 26:19
  SPEAKER_02: So anything with three or more units on a lot, you're required to do these inspections.
• 26:24
  SPEAKER_02: And it sounds like, based on my conversation with these inspectors, is there's a little bit of gray area on what qualifies as a balcony and what doesn't.
• 26:32
  SPEAKER_02: Um, if it's within the bounds of the building, I mean, i.e., the if you have a staircase going up the interior of your of your units, that doesn't qualify.
• 26:44
  SPEAKER_02: So it's got to be exposed to the elements, it's got to be outside the boundary of the actual building.
• 26:49
  SPEAKER_00: So if it's covered by kind of like a overhang, or call it like an overhang.
• 26:54
  SPEAKER_02: Not necessarily.
• 26:55
  SPEAKER_02: Okay.
• 26:56
  SPEAKER_02: So if it's a walkway on top of a a unit and it's got an overhang and it's made of concrete, you don't have to get that inspected.
• 27:04
  SPEAKER_02: Now, if it's a staircase running on the outside of the building, that qualifies.
• 27:09
  SPEAKER_02: Uh as a balcony.
• 27:11
  SPEAKER_02: As a balcony.
• 27:12
  SPEAKER_02: A staircase doesn't.
• 27:13
  SPEAKER_02: Yeah, it's an elevated, exposed uh place for people, you know, a walkway, balcony, whatever it is that that is normally uh supported by wood.
• 27:26
  SPEAKER_02: I mean I don't know if they're gonna make you if you've got, you know, a metal, a metal staircase.
• 27:34
  SPEAKER_02: Are they gonna really take you to town for that?
• 27:36
  SPEAKER_02: Probably not.
• 27:37
  SPEAKER_02: Um, but my guess is it's gonna be an requirement for insurance.
• 27:41
  SPEAKER_02: So you're gonna want to start even if you think it might qualify.
• 27:45
  SPEAKER_00: Who's who's doing the inspections or how does someone go about getting these?
• 27:50
  SPEAKER_02: So there's specific licensing requirements, and it's all on the bill.
• 27:53
  SPEAKER_02: Um, I believe there's uh there's a few different licenses you can have.
• 27:57
  SPEAKER_02: You can, I think be an architect, uh, a framing license, there's a class level on that.
• 28:03
  SPEAKER_02: I believe it's a B level framing license.
• 28:07
  SPEAKER_02: Um I think GCs for the most part can do it.
• 28:10
  SPEAKER_02: Yeah.
• 28:11
  SPEAKER_02: Um so yeah, they they do have that specific language in there, and and there's these companies sprouting up all over the place.
• 28:21
  SPEAKER_00: And and uh And when are they required to have an inspection done by?
• 28:27
  SPEAKER_02: So they're required to be inspected by the end of the year.
• 28:30
  SPEAKER_00: And then there's so so if you're if you have a four-unit building, you know, we sell a lot of fourplexes here, um a fourplex you it that would be part of the inspection requirement.
• 28:41
  SPEAKER_02: Yeah.
• 28:42
  SPEAKER_02: So um you have to get you have to get them inspected by the end of the year.
• 28:47
  SPEAKER_02: And my talks from the company is you know, they either pass all clear, they pass with minor repairs needed.
• 28:56
  SPEAKER_02: So you have to go ahead and get that fixed.
• 28:58
  SPEAKER_02: I believe you have 180 days to take care of that.
• 29:01
  SPEAKER_02: Um, and then you have stuff that has to happen today, you know, your your railing's gonna fall apart, or this or that, you know, something that needs to happen right this second.
• 29:12
  SPEAKER_02: At that point, they do submit something probably to the local building authority, letting them know of this issue.
• 29:19
  SPEAKER_02: And then they don't have a time frame, they're just they just say you have to take care of this as soon as possible.
• 29:24
  SPEAKER_02: Yeah, yeah.
• 29:25
  SPEAKER_02: If if you've got another repair or something that requires a permit that isn't an emergency, you know, they give you 150 days to get the permit and then another 180 days to repair it.
• 29:36
  SPEAKER_02: I believe that's how it goes.
• 29:38
  SPEAKER_02: And uh that doesn't have you know, that clock starts when the inspection is done.
• 29:44
  SPEAKER_02: You just have to have the inspection completed by the end of the year.
• 29:46
  SPEAKER_02: You don't have to have all the work completed by the end of the year.
• 29:50
  SPEAKER_02: Interesting.
• 29:51
  SPEAKER_02: Um and you'll be required to do this every four years now.
• 29:54
  SPEAKER_02: So great.
• 29:57
  SPEAKER_00: You mean it's it's it's harder and harder to own property?
• 30:01
  SPEAKER_02: Shocking.
• 30:02
  SPEAKER_02: Yeah, geez.
• 30:03
  SPEAKER_02: Well, and and the other thing is if you're doing this every four years, hey, another that's another 800.
• 30:10
  SPEAKER_02: I mean, we got it draw, we got a price of 800, and I think that's a great price per building.
• 30:15
  SPEAKER_02: Wow.
• 30:15
  SPEAKER_02: Um, and we negotiated, you know, as a group, you know, all my I could put all my clients together and I said, hey, I can bring you, you know, a lot of business.
• 30:24
  SPEAKER_02: Okay.
• 30:25
  SPEAKER_02: Can I get that price?
• 30:26
  SPEAKER_02: Their original price was$1,200 per building.
• 30:28
  SPEAKER_02: So now you're talking about, let's say it is$1,200 building.
• 30:33
  SPEAKER_02: You're talking about another$300 a year.
• 30:36
  SPEAKER_00: And imagine you spend$1,200 and then you don't need anything.
• 30:40
  SPEAKER_00: Your$1,200 got you nothing.
• 30:42
  SPEAKER_02: Yeah, and that'll happen every four years.
• 30:44
  SPEAKER_02: Oh, great.
• 30:45
  SPEAKER_02: So, and you I'm assuming insurance companies will need this on file.
• 30:49
  SPEAKER_02: If you're selling the building, you'll need this on file.
• 30:52
  SPEAKER_02: So, right now, you know, I'm not seeing a lot in terms of what happens if I just ignore the law.
• 30:59
  SPEAKER_02: I'm sure they'll they'll force other private industries to enforce their laws.
• 31:04
  SPEAKER_02: Right.
• 31:05
  unknown: Right.
• 31:05
  SPEAKER_02: So they're not gonna come out and send inspectors out and go, you didn't do this, we don't see this.
• 31:10
  SPEAKER_02: They're gonna say, Hey, insurance companies, you have to require this now.
• 31:14
  SPEAKER_02: So good luck.
• 31:17
  SPEAKER_00: Um, Tyler, one of the concerns and and um, you know, I read an article on this, just how the uh kind of the whole squatter situation is working.
• 31:26
  SPEAKER_00: Um I'm looking at buying a building.
• 31:29
  SPEAKER_00: Uh even all these bad things that are going on.
• 31:31
  SPEAKER_00: I'm still I still believe in in investing for the future and buying real estate long-term whole investments.
• 31:37
  SPEAKER_00: I'm looking at these, uh, it's two homes on a lot, they're currently vacant.
• 31:41
  SPEAKER_00: And, you know, we were submitting an offer, and I'm like, how can I protect this property while I'm gone and not get a squatter in there?
• 31:51
  SPEAKER_02: You know, we keep hearing about all this stuff.
• 31:54
  SPEAKER_02: It's not pervasive.
• 31:55
  SPEAKER_02: In 15 years, I've never had a true squatter, as far as I'm aware.
• 32:00
  SPEAKER_02: You know, we had a lady move into uh one of my clients.
• 32:05
  SPEAKER_02: Uh she had an empty building.
• 32:06
  SPEAKER_02: Her mother used to live there, and it was right next to the properties we managed.
• 32:09
  SPEAKER_02: So by effect, we we had to care for this property, this vacant unit, whole building next door.
• 32:16
  SPEAKER_02: And uh we had a lady show up.
• 32:19
  SPEAKER_02: This is a story, actually.
• 32:20
  SPEAKER_02: We had a lady show up at her office, and within a few seconds you realized this isn't uh a person who uh should be at the property.
• 32:30
  SPEAKER_02: And she said, Oh, I work for the owner and I'm cleaning it out, which makes sense because the place was filled with junk.
• 32:38
  SPEAKER_02: But if the owner had hired this person to help clean out their, I needed to step in and stop this because this was not a good situation.
• 32:46
  SPEAKER_02: And I even with this owner, I didn't think she'd make this mistake.
• 32:50
  SPEAKER_02: So I said, you know what?
• 32:51
  SPEAKER_02: I gotta talk.
• 32:52
  SPEAKER_02: She was asking for a key.
• 32:53
  SPEAKER_02: She had locked herself out, she wanted to get back inside.
• 32:56
  SPEAKER_02: So I said, you know, I have to talk to the owner, come back in an hour.
• 33:01
  SPEAKER_02: So uh about 55 minutes after I said that, I took the key and I went down there with a handyman.
• 33:08
  SPEAKER_02: And we walked through and basically cleared the property.
• 33:13
  SPEAKER_02: So um we believe that she got in somehow, a door was left unlocked, she was in there, and then she left her stuff in there and she needed to get back in.
• 33:21
  SPEAKER_02: So that wasn't a true squatter.
• 33:23
  SPEAKER_02: Right.
• 33:24
  SPEAKER_02: But people break into properties and excuse me.
• 33:30
  SPEAKER_02: What's gonna happen is you're gonna be forced to make the decision.
• 33:33
  SPEAKER_02: If I call the police and they say it's a civil matter, now I do have a squatter.
• 33:37
  SPEAKER_02: Yeah.
• 33:38
  SPEAKER_02: Or do I go and put myself in danger and throw this person's crap out because there's no legitimate way they live there.
• 33:46
  SPEAKER_01: Yeah.
• 33:47
  SPEAKER_02: But there's also no proof.
• 33:48
  SPEAKER_02: You can't prove a negative.
• 33:50
  SPEAKER_01: Yeah.
• 33:51
  SPEAKER_02: So I'm not sure, you know.
• 33:55
  SPEAKER_02: I guess when they happen, it's pretty awful.
• 33:58
  SPEAKER_00: Yeah, and well, I guess I'm glad to I'm glad to hear, and I'm glad that you share that.
• 34:02
  SPEAKER_00: That hey, it's not as it's not as big of an issue as the news is making it be.
• 34:08
  SPEAKER_02: It's not pervasive, but the stories are awful because I mean, I think it's become popular to report on because it is so unfair.
• 34:19
  SPEAKER_02: And people can't look at these situations and go, how does anything like this even remotely happen?
• 34:24
  SPEAKER_02: Well, I own this, this person just moved in and took it, and now I have to go through court proceedings to say it's mine.
• 34:31
  SPEAKER_00: Well, Tyler, it it's it's unfair to uh from your perspective, and there's a lot of people that are gonna say uh that it's somehow the housing provider's problem, and that it's that that these people I don't know.
• 34:46
  SPEAKER_00: I mean all I'm saying is that not not everyone's in agreement that it's that it's bad on the housing provider.
• 34:52
  SPEAKER_02: Yeah, these and unfortunately it's the view that all my clients are rich and well off and they can afford a thing or two, and that's absolutely not the case, right?
• 35:04
  SPEAKER_02: I have 80 clients and it's a bell curve.
• 35:08
  SPEAKER_02: I have a few wealthy clients, I have probably far more clients who live on close to every dime of the money that comes out of these properties, and they are maintaining these properties, and these are even people who own them free and clear and have inherited them.
• 35:23
  SPEAKER_02: Yeah, you know, they've come to rely on this money, so they're not wealthy people who are sitting on a beach drinking a a Mai tie.
• 35:30
  SPEAKER_02: These are people who worked really hard, maybe they retired, and they require this income.
• 35:36
  SPEAKER_02: Sure.
• 35:37
  SPEAKER_02: And all these, all these rules and laws that that uh assume that the property owner can absorb these costs, um, they're gonna cause the mom and pop owners, the people who do rely on every dime, to to go, this is no longer a safe thing for me.
• 35:58
  SPEAKER_02: Right.
• 35:59
  SPEAKER_02: The safe thing is for me to sell this, yes, and have that money in the bank.
• 36:04
  SPEAKER_00: Yes, and then and then bigger corporations come in and run them like a business, and it's not things will only get worse.
• 36:12
  SPEAKER_00: And so that I'm seeing a lot more people saying, I gotta get out of the I gotta get out of California.
• 36:18
  SPEAKER_00: I gotta get out of California, but I gotta get rid of my buildings.
• 36:21
  SPEAKER_00: Um, there's just too many requirements.
• 36:23
  SPEAKER_00: I I I can't operate it the way that I used to.
• 36:25
  SPEAKER_00: They're making me do too many things.
• 36:27
  SPEAKER_00: I'm not making money anymore.
• 36:29
  SPEAKER_00: And and it's and it's odd because, and and I had mentioned this to you before is um the people that I mostly help are much, much older.
• 36:39
  SPEAKER_00: Uh, blue collar, sometimes English is a second language, and they're the housing providers.
• 36:44
  SPEAKER_00: That's who they are.
• 36:45
  SPEAKER_00: They're they're older, they're so much older.
• 36:47
  SPEAKER_00: I could hear it in their voice when they call me and it's an old voice.
• 36:50
  SPEAKER_00: Yeah, I know that they probably own an apartment building and they're probably thinking about selling.
• 36:55
  SPEAKER_00: And they're selling for a couple reasons.
• 36:58
  SPEAKER_00: The laws that are being placed, in their opinion, uh, and I guess in my opinion too, are very anti-landlord.
• 37:04
  SPEAKER_00: They're it's punishing to a landlord, punishing.
• 37:08
  SPEAKER_00: And then um the cost of insurance is going off, uh, up the maintenance, the rent control.
• 37:15
  SPEAKER_00: So all these things are happening, and they're just, I can't keep up with it.
• 37:18
  SPEAKER_00: I gotta sell it.
• 37:19
  SPEAKER_00: And what's interesting is, you know, given all that, you'd be like, Well, who the heck would take it off their hands?
• 37:26
  SPEAKER_00: Yeah.
• 37:27
  SPEAKER_00: But there's people that are lined up.
• 37:29
  SPEAKER_00: It's it's almost like the um the older folks that have owned it for 30 years are getting out, and then it's this new wave of younger folks saying, Yeah, the landscape has changed.
• 37:39
  SPEAKER_00: It's not in my favor, but I want to own it for the next 30 years so that I could walk away with my millions as well.
• 37:46
  SPEAKER_00: Hopefully that they're able to do so.
• 37:47
  SPEAKER_00: It's it's gonna be harder.
• 37:49
  SPEAKER_00: Yeah, it's gonna be harder.
• 37:50
  SPEAKER_02: And and I still believe that property ownership is the way for normal people to get rich.
• 37:58
  SPEAKER_02: I mean, it's clear that you own and hold property in California.
• 38:03
  SPEAKER_02: Yeah, cash flow is it's not the prospect it was.
• 38:08
  SPEAKER_02: No, but you're not that's not the the true moneymaker in all of this.
• 38:13
  SPEAKER_02: Yes, it helps the investment and helps you maintain the investment, but the true value is in the equity and the future sales.
• 38:21
  SPEAKER_02: And you look at places that do have heavy rent control like San Francisco, Santa Monica, New York, uh, Portland, um, or have heavy housing restrictions, those property values are still up.
• 38:34
  SPEAKER_02: So I don't think that these laws damage the property values overall, but it removes, you know, the incentive for people to self-manage.
• 38:47
  SPEAKER_02: So you've added eight to ten percent on for property management right off the bat, the more you're complicated, you make it.
• 38:54
  SPEAKER_01: Yeah.
• 38:55
  SPEAKER_02: And all these, a lot of these laws just create huge inefficiencies in the market.
• 39:01
  SPEAKER_02: Right.
• 39:02
  SPEAKER_02: You know, if you have a four-plex and three of them are severely underrented, and you can't raise the rents to a way that that impacts it, you also can't make up the difference on that one vacant unit.
• 39:15
  SPEAKER_02: You're gonna raise that as high as possible, but you're still not gonna create cover the inefficiency.
• 39:21
  SPEAKER_02: What would be best is all the prices at a certain level, all the apartments at a certain level, rent for roughly the same cost, and the market would let that happen if let if let off the leash.
• 39:33
  SPEAKER_02: Correct.
• 39:34
  SPEAKER_02: But and even the the places where you could subscribe to you know, Section 8 used to not be a requirement.
• 39:42
  SPEAKER_02: And people could make a judgment call.
• 39:44
  SPEAKER_02: Do I I'm gonna get a little bit more rent, but it's also gonna be a riskier thing because it's not it, you know, there's not income there.
• 39:53
  SPEAKER_02: These aren't traditional tenants in the sense that they're paying all the rent.
• 39:58
  SPEAKER_02: And now with you being forced, you're being forced to take an imperfect thing that might screw up, you know, the natural flow of things.
• 40:07
  SPEAKER_02: And yes, somebody is paying more for a unit that, you know, if you were paying for yourself, you'd go, it's not worth that.
• 40:13
  SPEAKER_00: The the new investors coming in, kind of the new wave of clients that we have.
• 40:19
  SPEAKER_00: They're very pro-section eight.
• 40:21
  SPEAKER_00: Um, I've been pro-section eight for for a bunch of reasons, and I and I do hear what you're saying.
• 40:27
  SPEAKER_00: Um, getting right now, anytime you could get a a market rent or above market rent, and in most cases the income is guaranteed because um, you know, it's the it's a a state funded program.
• 40:41
  SPEAKER_00: And they directly uh deposit the funds into the account, right?
• 40:45
  SPEAKER_00: Yeah, and so and even during COVID when some tenants weren't able to pay rent, like Section 8 was still paying rent.
• 40:52
  SPEAKER_00: So I think it's it's changing.
• 40:53
  SPEAKER_00: I I think the new wave of people are saying, well, listen, the new wave of people are saying, hey, my property taxes are gonna be higher now.
• 41:01
  SPEAKER_00: Yeah, insurance is higher, uh, property management's gonna be higher, everything's higher.
• 41:06
  SPEAKER_00: So they need a higher rent.
• 41:07
  SPEAKER_00: And so then they're and I think it's good.
• 41:10
  SPEAKER_00: I think it's good that that that it's changing and that section eight has gotten a little easier to go through the process to try to help the families that need it.
• 41:18
  SPEAKER_02: Yeah, but the other problem is the families who don't qualify, who don't make enough money to afford these places, they're fighting against people who are giving they're the losers, the people who are just above the ability to get section eight because they're fighting higher prices caused by the influx of of state money.
• 41:37
  SPEAKER_02: Of state money, correct.
• 41:39
  SPEAKER_02: So, and the other part is if you're if you're in your 70s and you've been managing your properties for your whole life, and now you're required to take section eight, are you going to want to go to school and learn all the ins and outs of what you have to do for section eight?
• 41:57
  SPEAKER_02: So it's it's a it's a cost to these owners.
• 42:01
  SPEAKER_02: It might not be a financial cost, but they might go, I don't want to deal with this, I don't know what this is.
• 42:08
  SPEAKER_02: Right.
• 42:09
  SPEAKER_02: And I don't know how to operate in this landscape.
• 42:12
  SPEAKER_02: So I'm just gonna again sell.
• 42:15
  SPEAKER_02: That's their only way out, or hire a management company that can deal with, which again is an offset on the extra money they get from Section 8.
• 42:24
  SPEAKER_00: Um, let me talk about property management and kind of the tough situation that property managers are in.
• 42:30
  SPEAKER_00: Um anyone anywhere, you know, and obviously we have listeners statewide, uh international, international uh folks that are listening to us, so I appreciate them too.
• 42:40
  SPEAKER_00: But like if anyone looks up for the most part, any property management on Yelp or Google, that every property manager has bad reviews.
• 42:49
  SPEAKER_00: And this is not to say they're they're bad property managers, it's just the people reviewing them are not the people hiring them.
• 42:55
  SPEAKER_00: And so let me give you, and you know where I'm going with this.
• 42:58
  SPEAKER_00: It's a it's a shame.
• 43:00
  SPEAKER_00: It's tenants typically coming in, love or pretend to love the property manager.
• 43:06
  SPEAKER_00: Oh, you're great, you're great, I appreciate you.
• 43:08
  SPEAKER_00: You're not like my last property manager.
• 43:10
  SPEAKER_00: And then when they leave, they normally hate them.
• 43:12
  SPEAKER_00: That doesn't happen all the time.
• 43:14
  SPEAKER_00: I know I I mean I know for you it's different.
• 43:16
  SPEAKER_00: You you treat the you treat tenants a little differently, but and when they leave, they leave a bad review.
• 43:22
  SPEAKER_00: And yeah, but they weren't the ones who hired you.
• 43:25
  SPEAKER_00: And so I I think it's it's very tough for a property manager, like if someone is looking and says, Man, I I want to find a property manager, let me look the reviews, uh, I'll s I'll save you the time.
• 43:37
  SPEAKER_00: They're all gonna be bad reviews.
• 43:38
  SPEAKER_02: Yeah, and and we get we I mean, we take it because it's a win for us, but we have good reviews.
• 43:45
  SPEAKER_02: So as much as I know that you know the truth behind the reviews is yeah, a lot of the bad reviews for the other companies are silly things because we've gotten them too.
• 43:56
  SPEAKER_01: Yeah.
• 43:56
  SPEAKER_02: Oh, I I made a call to this company and uh they never returned.
• 44:00
  SPEAKER_02: My call.
• 44:01
  SPEAKER_02: We got one of those.
• 44:02
  SPEAKER_02: And this was right around the time where I think it was 2021.
• 44:06
  SPEAKER_02: I mean, when I put a studio on the market, I would get 100 inquiries in two days.
• 44:14
  SPEAKER_02: And I was a one-man show during during some of this COVID period.
• 44:19
  SPEAKER_02: And it's like I I'd call back 15 people because my tenant would be in that 15.
• 44:24
  SPEAKER_02: I didn't need to call back 100.
• 44:25
  SPEAKER_02: So I got a review.
• 44:26
  SPEAKER_02: Like they never pick up their phones and they never call us back.
• 44:30
  SPEAKER_02: And it was like, well, that's not really that's not an honest review.
• 44:34
  SPEAKER_02: They don't have any understanding of my company.
• 44:36
  SPEAKER_02: And you know, the fact that I can't return 100 phone calls, that would take me a full day.
• 44:41
  SPEAKER_00: Yeah, it it's it's a shame sometimes that someone applying who never even rented from you, but because there wasn't a call back, they're gonna leave a better review.
• 44:50
  SPEAKER_02: Well, I mean it's like But there's there's legitimate cases where that is the case.
• 44:54
  SPEAKER_02: You know, you see a lot of this, and this is for some of the bigger companies, they take 15 applications and they don't call everybody back to tell them no, to tell them no.
• 45:04
  SPEAKER_02: And I don't know exactly why.
• 45:07
  SPEAKER_02: I I mean I can't imagine there's any money in taking application fees.
• 45:11
  SPEAKER_02: Uh I can't imagine very little.
• 45:13
  SPEAKER_02: Yeah, I can't imagine a company would truly think of that as a revenue source, but the renters do, yeah, and they think it's really unfair.
• 45:22
  SPEAKER_02: So we try and limit the amount of applications we take.
• 45:25
  SPEAKER_02: We try and only take one application fee.
• 45:27
  SPEAKER_02: So I'll review the applications and then call for the application fee.
• 45:32
  SPEAKER_01: Yeah.
• 45:33
  SPEAKER_02: Um, but if you look at the reviews, I mean, and that's what somebody should do if they're looking at management companies, actually read the reviews.
• 45:41
  SPEAKER_02: There's a lot of these companies, some of them are it's small stuff, but it it's it's important.
• 45:48
  SPEAKER_02: Okay, every time I call, they're rude to me.
• 45:51
  SPEAKER_02: Yeah.
• 45:52
  SPEAKER_02: I think I know who you're talking about.
• 45:54
  SPEAKER_00: Yeah, and it it's it's sad because yeah, so there's one company in Long Beach, and just everyone, just the reputation is no matter who you're going to speak with, there, they're all rude.
• 46:04
  SPEAKER_00: Yeah, and it's like in an environment, it's like that's who they hire or that's how they teach you, that's how they groom you.
• 46:09
  SPEAKER_02: Well, and again, I have I have a little bit of you know sympathy because I know some of the calls you get in property management, and they're hard to deal with, and the people aren't very nice.
• 46:21
  SPEAKER_02: And we have a rule in our office it's the person who ruined my day is not the next person to call me.
• 46:28
  SPEAKER_02: But I have one employee, yeah, and she's paid very well, and she's really good at her job.
• 46:34
  SPEAKER_02: So she can deal with this crap because there's just one of her, and she's making enough money to where it, hey, you can take a little bit of the the nastiness from some of these people over the phone.
• 46:47
  SPEAKER_02: Also, we don't we don't manage in tough areas of town where there's really contentious relationships with the tenant.
• 46:54
  SPEAKER_02: Most of my tenant relationships are great, Tyler.
• 46:57
  SPEAKER_00: Um, I'm gonna um I guess give you the final word here, but what what I want to know is what is it that makes your company different?
• 47:09
  SPEAKER_00: And um if someone's looking for a property manager, what recommendations would you give them?
• 47:16
  SPEAKER_02: So the first thing is what makes I think what makes us different is we're we're all still hands-on.
• 47:24
  SPEAKER_02: Uh I'm not checked out, I'm dealing with every repair, anything that Asia, my my office manager, can't handle.
• 47:32
  SPEAKER_02: I step in and it's few and far between.
• 47:34
  SPEAKER_02: She's fantastic, but um I've been doing it 15 years, I have a lot of experience.
• 47:40
  SPEAKER_02: I s I I'm hands-on with all these problems, and I have I've learned a lot in terms of setting expectations with clients because I know the possibilities of when a certain situation arises or when we're hired, I can give them an accurate picture of what's coming through.
• 47:58
  SPEAKER_02: We're not blowing smoke, we'll tell you the truth, and we're we're committed to to doing this right because I I've said this to you before.
• 48:09
  SPEAKER_02: When I focused on doing my job better, the new business came in.
• 48:13
  SPEAKER_02: So I have no almost zero focus on going out and finding new clients.
• 48:17
  SPEAKER_02: Right.
• 48:18
  SPEAKER_02: Because it they seem to come in.
• 48:20
  SPEAKER_00: Yeah, I mean, I know you brought in uh some new accounts this week already.
• 48:25
  SPEAKER_00: Yeah.
• 48:25
  SPEAKER_00: And it's um I think a lot from what you've told me, a lot of your business comes in from um referrals from current people, and I and I think that says a lot.
• 48:34
  SPEAKER_02: Yeah, referrals.
• 48:36
  SPEAKER_02: We I mean, again, Google and Yelp have been good to us because we have good reviews and we don't have a ton of bad.
• 48:42
  SPEAKER_02: And my dad has answered some of the bad reviews, and I, you know, I was always told not to, and he kind of took them on and and I said, nobody's gonna know if we're just somebody who denies responsibility for everything, or yeah, if what you're saying is true.
• 48:56
  SPEAKER_02: And that that is the case.
• 48:58
  SPEAKER_02: There's an incentive for the bad tenants to leave bad reviews.
• 49:01
  SPEAKER_02: They feel they've been treated unfairly, and they're gonna they're gonna make their point.
• 49:08
  SPEAKER_02: The tenants that actually are reasonable and hey, we've made a mistake, they don't write the bad reviews because we make up for our mistakes.
• 49:17
  SPEAKER_02: Because that's what a good company should do.
• 49:19
  SPEAKER_02: Is if you make an error, fix the error, make the tenant happy.
• 49:23
  SPEAKER_02: And usually almost 100% of the time, you can do that.
• 49:27
  SPEAKER_00: You know what's interesting in your situation is you have to make the the owner happy.
• 49:32
  SPEAKER_00: Yeah.
• 49:34
  SPEAKER_00: And and and the tenant happy.
• 49:36
  SPEAKER_00: And yeah, and it's kind of an interesting thing.
• 49:38
  SPEAKER_00: I've I've had the luxury of uh um working alongside you on on properties that you manage, and uh when the owners get to a point of, hey, I hate California, get me out of California, I sell the buildings, and I see the relationship and the care that you uh took care of the building, but also the relationship that you have with the tenants.
• 49:57
  SPEAKER_00: And so I think if any if any owner out there is is thinking like, well, I I I don't want to sell, I'm not ready to sell, I'm not fed up yet with California, to give you a call.
• 50:09
  SPEAKER_00: To to give you a call, because I think um, you know, when I first met you, it was it was um both your father and you, and I know your father's trying to get to a point where he did he gets to retire and enjoy that a little more.
• 50:21
  SPEAKER_00: And and so now the responsibility is on you.
• 50:23
  SPEAKER_00: But um, this is a kind of like a um family-owned business, and and you guys aren't taking everyone, you're not trying to grow and scale and all these things that everyone else is trying to do.
• 50:34
  SPEAKER_00: You're trying to do it um at your pace, in your area, in your specialty of Long Beach.
• 50:42
  SPEAKER_00: You know, you're born and raised in Long Beach, and so I've tried to bring you business and you're like, no, it's not in an area I manage.
• 50:48
  SPEAKER_00: Yeah, yeah.
• 50:49
  SPEAKER_02: We we do turn over, we do turn down about 50% of new business, and and I have been actually taking some cases on where I shouldn't.
• 50:57
  SPEAKER_02: Yeah, but there seems to be more of these uh dilap, I don't want to say dilapidated, but problem buildings.
• 51:07
  SPEAKER_02: Yeah.
• 51:08
  SPEAKER_02: And what's happened is it's not that they're new problems, it's just now you get punished for your mistakes.
• 51:14
  SPEAKER_02: A lot harder than you used to be.
• 51:16
  SPEAKER_02: Okay.
• 51:17
  SPEAKER_02: Renting to a bad tenant in the past was easily curable.
• 51:21
  SPEAKER_02: It is not anymore.
• 51:23
  SPEAKER_02: And we're not talking about a debt, a bad payment, a bad tenant in terms of paying rent.
• 51:27
  SPEAKER_02: We're talking about a bad tenant, they're bothering their neighbors, they're making noise, they're they're jerks.
• 51:33
  SPEAKER_01: Yeah.
• 51:34
  SPEAKER_02: Um, you can't remove those people, and you have to maintain some sort of relationship with them when you really don't want to.
• 51:41
  SPEAKER_02: I mean, anybody who has any business out there, just imagine somebody said, Oh, this customer you don't like, you have to keep them as a customer.
• 51:51
  SPEAKER_02: And by the way, you can't raise the rates on them either.
• 51:53
  SPEAKER_02: So they're always going to be your client until they decide they're done with you.
• 51:58
  SPEAKER_01: Yeah.
• 51:58
  SPEAKER_02: And that's what we're dealing with is we're dealing with people we don't want to be in business with.
• 52:04
  SPEAKER_02: I have a 30-day contract with my clients, they can fire me at any point.
• 52:09
  SPEAKER_02: Right.
• 52:09
  SPEAKER_02: And I can fire them.
• 52:11
  SPEAKER_02: Can't do that with the tenants.
• 52:13
  SPEAKER_02: No, I know.
• 52:14
  SPEAKER_02: So anybody out there who's doing something else, just imagine that prospect of, hey, you're a uh you're a plumber.
• 52:23
  SPEAKER_02: This one person calls, you don't like dealing with them.
• 52:25
  SPEAKER_02: Guess what?
• 52:26
  SPEAKER_02: Still have to go.
• 52:27
  SPEAKER_02: You still have to accept their money.
• 52:29
  SPEAKER_00: And that's the unfortunate part.
• 52:31
  SPEAKER_00: Yeah.
• 52:31
  SPEAKER_00: That's the unfortunate part.
• 52:32
  SPEAKER_00: It's it's there's sad, it's you could be in any other industry.
• 52:35
  SPEAKER_00: You know, I was saying this on other it's Target could go raise their prices whenever they want.
• 52:41
  SPEAKER_00: Uh any company could go raise their prices whenever they want.
• 52:44
  SPEAKER_00: Gas goes up any day, milk goes up, rent goes up.
• 52:47
  SPEAKER_00: Oh, not you.
• 52:48
  SPEAKER_00: Oh, you want to raise your rent?
• 52:49
  SPEAKER_00: No, no, no, no, no, not you.
• 52:50
  SPEAKER_00: It's like, wait, but everyone else could do it, not you.
• 52:53
  SPEAKER_02: Yeah, and you know, I was thinking about this last night.
• 52:56
  SPEAKER_02: I was I was thinking about, you know, property management and and uh rent control and all the stuff that could come down the pipeline, and and we look at LA as a as uh the future.
• 53:09
  SPEAKER_02: Sure.
• 53:09
  SPEAKER_00: And that is because it's rough, it's very rough in LA.
• 53:13
  SPEAKER_02: Most of the stuff that happens happens in LA first or Santa Monica or San Francisco.
• 53:17
  SPEAKER_02: I mean in San Francisco, it's already happened 10 years ago.
• 53:21
  SPEAKER_02: But um what we're what we're gonna be finding now.
• 53:26
  SPEAKER_02: Oh, what you see is you know, new buildings.
• 53:28
  SPEAKER_02: They're not subject to rent control because nobody will ever build with these laws in place.
• 53:34
  SPEAKER_02: So they have to remove their system, get people to even build housing.
• 53:39
  SPEAKER_02: That should tell you that the that the rules are wrong.
• 53:41
  SPEAKER_02: Yeah, nobody wants to build.
• 53:43
  SPEAKER_02: Well, remove the rules, don't just give a break to the people building.
• 53:46
  SPEAKER_00: That they're they're trying to pass a law that takes that away.
• 53:50
  SPEAKER_02: Again, the people, yeah.
• 53:52
  SPEAKER_00: I mean so then why would anyone ever build?
• 53:54
  SPEAKER_02: That would be the fair thing.
• 53:56
  SPEAKER_02: We we should all be subject to it.
• 53:58
  SPEAKER_02: You shouldn't because again, when you cherry pick people like new builders, who are new builders, they're not mom and pop people.
• 54:04
  SPEAKER_02: Yeah, nope.
• 54:05
  SPEAKER_02: You and me aren't going out and building no 10-unit buildings.
• 54:08
  SPEAKER_02: That's too expensive.
• 54:10
  SPEAKER_02: Yeah, so why do these people who already have the money get the break?
• 54:13
  SPEAKER_02: Yeah, I think they should remove them from everybody.
• 54:15
  SPEAKER_02: In second case is they should apply them to everybody.
• 54:18
  SPEAKER_02: Sure.
• 54:19
  SPEAKER_02: So my advice for for finding a property management company is I think you want to find somebody who obviously cares about the tenants, and the tenants aren't just a hassle.
• 54:32
  SPEAKER_02: That's a that's a big deal because the tenants can make or break how easy it is to manage your property.
• 54:39
  SPEAKER_02: If you have a good relationship, a complicated situation might arise.
• 54:43
  SPEAKER_02: It's a lot easier when you're dealing with a tenant who's easy to get along with.
• 54:47
  SPEAKER_02: Doesn't mean you can't have acceptable rents, doesn't mean you have to do everything the tenant requests, but respond promptly to stuff, uh, be on time, do what you say you're gonna do.
• 55:01
  SPEAKER_02: Uh that's a big deal.
• 55:03
  SPEAKER_02: You wanna a company should care about the tenants, they're not just a hassle.
• 55:07
  SPEAKER_02: Yeah.
• 55:07
  SPEAKER_02: Um, and I guess you'll find the companies who probably feel better about their tenants or the companies that have better tenants.
• 55:15
  SPEAKER_02: So making sure uh you know how the the company is selecting their tenants, it's such a big deal these days.
• 55:22
  SPEAKER_02: It's it's where you get punished the most if you make a mistake, is choosing the wrong person.
• 55:27
  SPEAKER_00: Right.
• 55:27
  SPEAKER_00: Yeah, some people rush to get a tenant in, and then that tenant tricked you and ends up being someone that uh won't pay and you can't get out for the next eight months.
• 55:40
  SPEAKER_02: Yeah, and the other item is you know, we always talk about what's your price.
• 55:45
  SPEAKER_02: Every that's the first question, 90% of people ask, what's your price?
• 55:49
  SPEAKER_02: I mean, that's important, but if we're talking about a difference between six and eight percent management, um, if it's not breaking the budget, it's probably worth it.
• 56:00
  SPEAKER_02: And I, you know, this is my feeling about HOA management, because we get calls all the time.
• 56:06
  SPEAKER_02: Nobody's ever happy with their HOA, the management company, usually.
• 56:11
  SPEAKER_02: The only ones that I tend to see that they're happier with is when it's all in-house.
• 56:16
  SPEAKER_02: They pay somebody to kind of maintain the books and call everybody and email everybody, but it's one person.
• 56:22
  SPEAKER_02: Yeah, and they're hired by the HOA.
• 56:25
  SPEAKER_02: Um, and they're not a big management company.
• 56:28
  SPEAKER_02: But I've always speculated they probably just aren't paid enough.
• 56:32
  SPEAKER_02: Yeah, they have a lot to do, they get paid less per door than we do by far.
• 56:37
  SPEAKER_02: And they have to go to all these after-hour board meetings, and they have to deal with half the the units being occupied by retirees who who come to those board meetings and they and they have an agenda and they discuss everything for a long time.
• 56:53
  SPEAKER_02: So I I partly think that you know you got to make sure a company is is getting enough to hire the right people to service your accounts because it's not Asia, you know, my my office manager, she's the one who deals with the tenants day to day.
• 57:08
  SPEAKER_02: It's not me so much anymore.
• 57:12
  SPEAKER_00: Tyler, for for anyone who wants to get a hold of you, would would you say to go to your website?
• 57:17
  SPEAKER_00: And and if so, would you mind sharing what that is?
• 57:20
  SPEAKER_02: Yeah.
• 57:20
  SPEAKER_02: Um, our website is www.belmontshoreland.com.
• 57:25
  SPEAKER_02: Uh and you can call, you can call us, you can email us.
• 57:29
  SPEAKER_02: We're pretty good at responding within the same day.
• 57:31
  SPEAKER_02: Obviously, we have busier times, um, including your your property address.
• 57:37
  SPEAKER_02: And we're happy to sit down.
• 57:39
  SPEAKER_02: We're not we're not gonna throw a sales pitch at you.
• 57:41
  SPEAKER_02: We want we want the right properties, and that requires a discussion and some trust and an understanding of where where both parties sit.
• 57:51
  SPEAKER_02: So we don't want I don't want to pick up an account and then lose an account because I picked up one that doesn't fit into our philosophy.
• 57:59
  SPEAKER_02: So there has to be a meeting of the minds.
• 58:01
  SPEAKER_02: Um, so it's kind of a no pressure thing.
• 58:03
  SPEAKER_02: I had somebody come in today, met me for the first time, and they said, Can I sign this contract right now?
• 58:08
  SPEAKER_02: I said, You need to read the contract.
• 58:11
  SPEAKER_02: So take it home.
• 58:12
  SPEAKER_02: Yeah, call me with any questions, and then I can docu-sign it over to you.
• 58:16
  SPEAKER_02: And I understand they're on a timeline, but I'm not, I need to know more about the property.
• 58:22
  SPEAKER_02: You need to know more about me.
• 58:24
  SPEAKER_02: I don't trust anybody who's just going to sign right up.
• 58:28
  SPEAKER_02: I said, This is a big deal.
• 58:30
  SPEAKER_02: You need to take your time with this.
• 58:32
  SPEAKER_02: Got it, got it.
• 58:33
  SPEAKER_00: Well, we'll wrap up with that.
• 58:34
  SPEAKER_00: Tyler, thank you so much.
• 58:36
  SPEAKER_00: Thanks for having me.
• 58:36
  SPEAKER_00: I know we discussed a lot of things today.
• 58:38
  SPEAKER_00: It it some of it might sound doom and gloom, and oh my gosh, you can still get rich owning property.
• 58:45
  SPEAKER_00: It's just a little more complicated.
• 58:46
  SPEAKER_00: It's gonna be harder and maybe not as fast as not as quick.
• 58:51
  SPEAKER_00: You know, um, Tyler and my mentor Mark Milan would say um it's not get rich quick, it's get rich guaranteed.
• 58:58
  SPEAKER_00: Yeah.
• 58:58
  SPEAKER_00: And that is the mindset of a long term apartment owner.
• 59:02
  SPEAKER_00: And I think that that's still true today.
• 59:04
  SPEAKER_00: I think that it's going to be more challenging.
• 59:06
  SPEAKER_00: I think it's gonna be more difficult, and more and more people will need a professional like yourself to oversee the assets.
• 59:11
  SPEAKER_00: Yeah.
• 59:11
  SPEAKER_00: Thank you so much.
• 59:12
  SPEAKER_02: You're welcome.
• 59:13
  SPEAKER_02: Thank you.
• 59:13
  SPEAKER_02: Bye bye.