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#43 Real Estate Law 101 for Investors: Avoid These Costly Mistakes (Sara Naheedy) · Own More Doors

0:00
SPEAKER_00: What's up everyone?
0:00
SPEAKER_00: Juan Weezar here with the Own More Doors podcast.
0:03
SPEAKER_00: This specific episode was first shared on our YouTube channel, Sage Real Estate.
0:08
SPEAKER_00: Check it out.
0:08
SPEAKER_00: And we're excited to bring it to you here.
0:11
SPEAKER_00: We hope you enjoy the interview.
0:12
SPEAKER_00: Hey everyone, it's Juan Weezar, and I'm here with Sarah Nahiti, real estate attorney, and we're going to be diving into everything having to do with purchases, acquisitions, lawsuits, and how to protect yourself if you're out there owning and buying real estate.
0:29
SPEAKER_00: Sarah, thank you so much for being here.
0:30
SPEAKER_00: Thank you, Juan, for having me.
0:32
SPEAKER_00: So let's just hop into it.
0:33
SPEAKER_00: Sarah, you know, we're in the first quarter of 2025.
0:37
SPEAKER_00: What are some of the major issues that you're seeing as an attorney when it comes to housing providers?
0:44
SPEAKER_01: So one of the biggest issues that crosses my desk is landlord tenant issues.
0:50
SPEAKER_01: So you're in the business of helping your clients become landlords and investors.
0:56
SPEAKER_01: Some of my most important clients are landlords, and they're usually small landlords that own maybe one to four rentals, and they're having issues with their tenants.
1:08
SPEAKER_01: And specifically, you know, how much how much can I raise the rent?
1:14
SPEAKER_01: What is the reason that I could terminate a tenancy?
1:19
SPEAKER_01: Also in LA, you know, rent relocation is a really big issue.
1:23
SPEAKER_01: So I have a client who recently bought a four-plex in Los Angeles County and had no idea that the property was covered under rent stabilization ordinance.
1:35
SPEAKER_01: And he told me, wow, if I knew this, I would have never bought this property.
1:39
SPEAKER_00: So let's be clear, we did not represent this client on that purchase, okay?
1:43
SPEAKER_00: We had nothing to do with that.
1:44
SPEAKER_01: Not one-on-one's deals.
1:45
SPEAKER_00: Yes.
1:46
SPEAKER_01: But it was shocking to me the fact that him and his agent didn't do their due diligence, and perhaps his agent dropped the ball and didn't reveal to him, hey, this property is under rent stabilization, and that comes with its own host of very stringent rules and regulations as to how much you can raise the rent.
2:07
SPEAKER_01: If you terminate a tenancy, how much money do you have to pay the tenant in order to have them move out?
2:12
SPEAKER_01: Um, so rent relocation is a really big issue right now for my clients who own rental properties in LA County.
2:19
SPEAKER_00: Let's let's start off with uh terminating tenancy and the different options.
2:24
SPEAKER_00: And obviously, there's there's the hey, this, you know, this is the option that's out there, but some of all some of the alternatives, if you could talk to that, that you've seen relating to terminating tenancy.
2:36
SPEAKER_01: So in California, if a property is subject to the Tenant Protection Act, you can only terminate a tenancy for one of several allowable reasons.
2:47
SPEAKER_01: One reason is the owner or a close family member is moving back into the property.
2:51
SPEAKER_01: Another reason is you're doing a major renovation to the property that requires you to pull permits and you have to show those permits to the tenant.
3:00
SPEAKER_01: And then another reason is you're removing the property from the rental market.
3:05
SPEAKER_01: So if you fall under the Tenant Protection Act, you have to be very careful and you have to provide a reason of why you're terminating and provide the proper notice period and provide rent relocation assistance, which would be at the bare minimum one month.
3:22
SPEAKER_01: But let's say you have a property, it's not, it's exempt from the Tenant Protection Act.
3:28
SPEAKER_01: Number one, you don't have to pay rent relocation assistance.
3:31
SPEAKER_01: And number two, you don't have to specify a reason for termination of tenancy.
3:36
SPEAKER_01: You can just terminate a tenancy and um do it with the proper notice.
3:41
SPEAKER_01: One of the alternatives I'm seeing is let's say um you have a client, they buy a building um somewhere in Long Beach or Bellflower, um, and they need to get the tenants out because these are long-standing tenants, the prior owner never rent, uh never increased the rents.
4:03
SPEAKER_01: One alternative that I'm helping clients with is cash for keys.
4:06
SPEAKER_00: Okay.
4:07
SPEAKER_01: So if we do a cash for keys agreement, the landlord can offer payment to the tenant in exchange for them um leaving and vacating the premises.
4:17
SPEAKER_01: So I'm sure you see this with your clients as well.
4:20
SPEAKER_00: Sarah, so let me ask you, when it comes to cash for keys, some of the questions that I get from owners is if I do this, if I engage or if I hire someone like Sarah to do this, am I in violation, like am I gonna get in trouble for doing this, uh, for offering this to a tenant?
4:36
SPEAKER_01: So that's a great question.
4:37
SPEAKER_01: And no, um, you're not gonna get in trouble.
4:40
SPEAKER_01: It's a completely independent private agreement, a negotiation between the owner and the tenant.
4:47
SPEAKER_01: And essentially, you would get the tenant to waive any rights they would have to pursue any issues related to that tenancy.
4:56
SPEAKER_01: So that's that's the point of the cash rekeys agreement.
4:59
SPEAKER_01: You're saying, hey, we're not gonna provide you with all of the maybe legally required notices or amounts of payment we have to make.
5:06
SPEAKER_01: Uh, we're gonna negotiate our own deal.
5:08
SPEAKER_01: And typically my clients will pay, you know, a good amount of money above and beyond what they could have gotten in order to get the tenants out in order to essentially start the process over and be able to raise the rent to fair market value.
5:25
SPEAKER_00: Sarah, so walk us through an example of how you go about doing the cash for keys.
5:30
SPEAKER_00: And so for anyone watching this, the all of California is under statewide rent control.
5:36
SPEAKER_00: Certain cities have their implemented their own uh rent control, and so their requirements might be different than what I'm about to state.
5:44
SPEAKER_00: But at the state level, specifically here in Long Beach, it's um for the relocation fee.
5:49
SPEAKER_00: And if you're gonna give them reason for substantial renovation or owner intends to occupy, here's the rule: either two months' rent or$4,500, whichever one is greater.
6:00
SPEAKER_00: So if someone's rent's$3,000, that's$6,000.
6:03
SPEAKER_00: Now you can't offer them$4,500 as a relocation fee.
6:07
SPEAKER_00: You got to give them$6,000 proper notice and everything that Sarah just mentioned.
6:11
SPEAKER_00: If someone did not want to go down that route and they wanted to just do the cash for keys, like, can you talk about your process and like do you go in person?
6:20
SPEAKER_00: Do you call them?
6:21
SPEAKER_00: Like, how do you do it?
6:22
SPEAKER_01: So, for example, I just had a client who bought an apartment building in Bellflower, and these rents had never been raised.
6:29
SPEAKER_01: Um, essentially, the property has to be completely renovated, refurbished, and just kind of start over.
6:36
SPEAKER_01: Um, in that situation, the new owner negotiated directly with the tenants and offered each one of them the ability to move out.
6:46
SPEAKER_01: Um, and and they negotiated their own cash for keys.
6:49
SPEAKER_00: So the owner did it with the tenants.
6:51
SPEAKER_01: Yeah, the owner did it directly with the tenants in that situation, um, which could be easier and and cheaper um than having your attorney do it for you.
7:00
SPEAKER_01: And then essentially I just wrote up the contract.
7:03
SPEAKER_00: Um the the uh just just so that we follow the the cash for keys contract.
7:08
SPEAKER_01: Yes, the cash for keys agreement.
7:10
SPEAKER_00: Got it.
7:11
SPEAKER_01: And for this situation in particular, the tenants were Spanish speaking, so um we created the contracts in English and in Spanish so that there was no issue as to potentially somebody, the tenant coming back later and saying, I I wasn't sure what I was signing, it wasn't clear to me.
7:29
SPEAKER_01: Um, so we offer um we offer bilingual services.
7:34
SPEAKER_00: And that's and that's perfect because a lot of times people, you know, people will say, well, who's who's the best person to handle the cash for keys?
7:41
SPEAKER_00: And we've we've done a cash for keys video, and and and we advised if you as an owner are very uh emotional, temperamental, if you don't think that you're the the right person to have that conversation, you should probably bring in a professional to do it, right?
7:58
SPEAKER_00: Because not everyone is um can handle that conversation properly.
8:05
SPEAKER_00: And and I like that you're saying, hey, even if you're an owner that can, then just let me come in and do the right paperwork.
8:12
SPEAKER_00: With the case in Bellflower, do you remember what what the what the fee was that that was negotiated?
8:18
SPEAKER_01: Yeah, so the one that I most recently did, um, we paid$5,000 to the tenants in exchange for them moving out within 30 days.
8:27
SPEAKER_00: Okay.
8:28
SPEAKER_00: Okay, so slightly more than than than the$4,500.
8:32
SPEAKER_00: That's kind of a a relocation fee out there, and they were okay with that.
8:36
SPEAKER_01: Yes, they were happy with it, they were okay with it.
8:39
SPEAKER_01: And in this situation, the landlord um or the landlord's agent negotiated directly with the tenants.
8:45
SPEAKER_01: Okay.
8:46
SPEAKER_01: And then my job was essentially to just write up the contract in Spanish and English, have the tenant sign and get all of that covered.
8:53
SPEAKER_01: But, you know, like you're saying, Juan, if if you don't have the temperament to deal with that, if you're too close to the transaction emotionally, my job as the attorney is to take the emotion out of the situation and just focus on the facts.
9:08
SPEAKER_01: And so sometimes when you're too close to something, you don't have the ability to do that.
9:13
SPEAKER_00: No, thank you for that, Sarah.
9:14
SPEAKER_00: Um we we list a lot of apartment buildings in Long Beach and we receive offers.
9:21
SPEAKER_00: And one of the biggest requests, Sarah, is I'll buy it, but I want one vacant.
9:26
SPEAKER_00: And typically the seller doesn't want to deal with that because they've owned this for many years and they built a relationship with the tenants and they kind of feel bad.
9:35
SPEAKER_00: They don't want to be the bad person.
9:37
SPEAKER_00: Uh, and sometimes the buyer coming in doesn't want to be the bad person.
9:42
SPEAKER_00: And sometimes we're we're actually coming to a complete stalemate where the seller doesn't want to ask the tenant to vacate, even though you just gave us there's this perception, Sarah, that if there's tenants, oh my gosh, I could never get them out.
9:57
SPEAKER_00: And which is really not the truth.
9:59
SPEAKER_00: And so we have all these buyers coming, and sometimes they're being represented by maybe agents that don't have the experience uh with state law and kind of the proper um way to terminate tenancy.
10:11
SPEAKER_00: And there's this fear like I don't know how to do it.
10:13
SPEAKER_00: Sarah, talk to the buyer out there and just kind of say that this that this is what you see.
10:19
SPEAKER_00: You do have a legal right.
10:21
SPEAKER_00: There's also this perception that as an owner, I've lost all my rights and and I can't ask anyone to move.
10:27
SPEAKER_00: There is a process to do that.
10:29
SPEAKER_00: Which is the most popular process that you've seen?
10:32
SPEAKER_01: When a new owner comes in?
10:34
SPEAKER_00: When a new owner comes in and they must vacate one of the units.
10:36
SPEAKER_00: Like what's the best way to do it?
10:39
SPEAKER_01: That's a great question.
10:41
SPEAKER_01: Um I would say that the best way and the most and the way that could resonate most easily with a tenant is hey, as the owner, me, my you know, I myself or a close family member are moving in.
10:57
SPEAKER_01: That's the most relatable.
10:59
SPEAKER_01: That is you're not intentionally displacing anybody, and so there's less of a resistance to that idea.
11:08
SPEAKER_01: So, and that's a great reason, right?
11:10
SPEAKER_01: I mean, I have plenty of clients who are landlords and they maybe want to move back into their own property.
11:17
SPEAKER_01: Um, and that's a lot less um it's perceived more positively than some of the other avenues of terminating a tenancy.
11:27
SPEAKER_00: Yeah, I agree.
11:29
SPEAKER_00: And I I don't know why there's this um perception that there's no way to get them out because there's actually a lot of ways, and sometimes it's just I I think it all comes down to people who are unfamiliar with the process.
11:41
SPEAKER_00: Yes.
11:41
SPEAKER_00: You know, if if someone does intend to occupy, would you say, because someone's gonna ask me, Juan, do you think I should just go and like should I send them a text message, a call?
11:51
SPEAKER_00: I know how I would advise them, and I'm just curious as to how you think it's the best way.
11:55
SPEAKER_00: Um, because it is delicate, and you do want to not everyone is this corporate landlord, and you know, you're gonna send out this letter and the deal's done.
12:03
SPEAKER_00: I think people are humans and they're and they do care, and they are legitimately gonna be moving in and remodeling this property that probably in most cases needs to be remodeled and someone needs to pump some life back into it.
12:15
SPEAKER_00: What's the best way to do that?
12:17
SPEAKER_00: Like, how would you recommend someone?
12:18
SPEAKER_01: That's a great question.
12:19
SPEAKER_01: I I always advise my clients to have a conversation directly with the tenant to feel them out.
12:27
SPEAKER_01: I think having a conversation directly with the tenant, it it makes them feel everybody wants to feel seen, heard, understood.
12:38
SPEAKER_01: So if I'm your landlord and we're having a conversation and I'm saying, hey, Juan, you know, I just, you know, bought this building or I bought this unit, um, you know, are you are you even amenable or open to the possibility of vacating?
12:54
SPEAKER_01: And I would take care of you and I would, you know, do it fairly and properly and and give you a fair amount of compensation, right?
13:01
SPEAKER_01: So I always advise my clients to have a first conversation with somebody directly to feel them out.
13:06
SPEAKER_00: Yeah.
13:07
SPEAKER_01: Because you just don't know what people are thinking, and not everybody, not every landlord, you know.
13:15
SPEAKER_01: I think a lot of times landlords are demonized and you know, people think, oh, they're just out to get me, they just want my money, they're just greedy.
13:22
SPEAKER_01: No, I mean, if if you're a landlord who cares, that goes a long way.
13:26
SPEAKER_00: Right, right.
13:27
SPEAKER_00: There's a certain way to do that.
13:30
SPEAKER_00: Um, oftentimes, Sarah and I don't know if you could speak to this, but especially in LA City, we get listings out there, and the rents are low.
13:42
SPEAKER_00: The cost to get someone to relocate in LA City is different than what we just talked about.
13:47
SPEAKER_00: This is not$4,500,$5,000.
13:49
SPEAKER_00: It's it's nowhere, it's it's much, much higher.
13:52
SPEAKER_00: In fact, in most cases, it's$27,000 and and more.
13:56
SPEAKER_00: A lot of times with these buildings, when we list them, I ask the owner, can you can you have this conversation with the tenants?
14:04
SPEAKER_00: Because the only way that we could potentially get this building sold is if we have an idea if they're willing to vacate the property.
14:12
SPEAKER_00: Because everyone calling me is saying, Hey, would the tenants be open to a cash for keys offer?
14:21
SPEAKER_00: And if we don't know that answer, then it it could be that the deal comes to a halt because they want to know.
14:28
SPEAKER_00: Um, is that something that that you would advise?
14:31
SPEAKER_00: I I think it's important to do it before we even list the property because we kind of know what we're stepping into.
14:36
SPEAKER_00: Yeah, I agree.
14:37
SPEAKER_01: Yeah, I think the best way to do it is to do all of the work beforehand, before it even comes onto the market.
14:44
SPEAKER_01: You, as the real estate broker and advisor for the seller, you have that discussion with the seller and say, hey, I think it would be beneficial if we figure out who is open to relocating and who is not.
14:56
SPEAKER_00: Yeah.
14:57
SPEAKER_01: Because that is a pain point in so many deals.
15:00
SPEAKER_01: I'm sure you experience this all the time.
15:03
SPEAKER_00: Every every property we list, uh, the it goes like this.
15:08
SPEAKER_00: Can you deliver them all vacant?
15:09
SPEAKER_00: And then I have, I'm like, come on, all vacant?
15:11
SPEAKER_00: You gotta be kidding, I can't deliver them all vacant.
15:13
SPEAKER_00: It's really hard to do that.
15:15
SPEAKER_00: One maybe, right?
15:16
SPEAKER_00: And so that's that's always a conversation.
15:18
SPEAKER_00: Now, if you can get them all vacant, then of course there's gonna be a bigger pool, buyer, uh, um, a pool of buyers, and they're probably gonna compete to try to get the deal because now it's there's more value to them now that it is vacant, but that's tough to do.
15:31
SPEAKER_01: So, for you, how often are you seeing deals that a buyer says, Hey, I like the rent rolls here, I like how everything's going, I am willing to buy the property with all the tenants existing in place.
15:45
SPEAKER_01: How often do you see that versus a buyer saying, you know what, I don't want any of these tenants to be there at the close of escrow?
15:55
SPEAKER_00: With with every listing, there are more buyers wanting the units vacant.
16:01
SPEAKER_00: That's the reality.
16:02
SPEAKER_01: That's a preference.
16:02
SPEAKER_00: Okay, that's the preference now, which is which is interesting.
16:05
SPEAKER_00: So a lot of times um sellers will contact us and they'll say, hey, I got this eight-unit building, but I have two unit vacants, but but don't worry, I'll I'll get them filled and I'm like, no, no, no, leave them vacant for now.
16:16
SPEAKER_00: Or let me help you come up with a strategy of the new rental rate because your rate might be too low for what the market believes it should be.
16:23
SPEAKER_00: So these these little things matter in terms of, you know, income, like the higher the income, the higher the value.
16:29
SPEAKER_00: It's very delicate.
16:31
SPEAKER_00: It's it's it's um$100 spread across several units adds to this tremendous amount of equity in terms of difference in value.
16:39
SPEAKER_00: And so if you're a seller, it's very important that we're having these conversations early on just so that we're not shooting ourselves in the foot because oftentimes they do.
16:48
SPEAKER_00: So let me give you an example.
16:50
SPEAKER_00: I'm selling a building and the owners um signed a very low listing for five years with the tenant, with one tenant.
16:58
SPEAKER_00: No one ever signs, no one ever does a five year or even a two year, a one year is very common.
17:04
SPEAKER_01: Yes.
17:04
SPEAKER_00: But these are the kind of things that they're doing because they want to protect the tenant.
17:06
SPEAKER_00: And I'm like, you know what you just did to the value of the property?
17:09
SPEAKER_01: You shot yourself in the foot.
17:11
SPEAKER_00: Exactly.
17:11
SPEAKER_00: And so, but not everyone knows this.
17:13
SPEAKER_00: And so, to your point, going back to the first question, um, every buyer in most cases would want one or more of the units vacant.
17:21
SPEAKER_00: Like that would be what they really want.
17:23
SPEAKER_00: Uh, through negotiations back and forth, we're able to come up with some type of uh compromise.
17:29
SPEAKER_00: And sometimes it's a compromise on value.
17:31
SPEAKER_00: Okay, you can't deliver any vacant, then I'll only pay this much.
17:34
SPEAKER_00: And this is so in most cases, in a perfect world, more vacants, more vacant units is better.
17:40
SPEAKER_00: You know, what's interesting, Sarah, is that years ago, you know, we go back before statewide rent control, this was not an issue.
17:46
SPEAKER_00: Most times it didn't matter, it matters now.
17:48
SPEAKER_01: Yes, I I agree.
17:50
SPEAKER_01: You know, ever since the Tenant Protection Act went into place, January 1, 2020, the landscape has changed.
17:56
SPEAKER_01: I would imagine in the past you would have buyers be very much open to buying the building with the existing tenants because they're happy with the rent rolls, right?
18:05
SPEAKER_00: Yeah.
18:06
SPEAKER_00: And I think one thing, you know, if people watch this video, they're like, well, they're talking about terminating tenancy.
18:11
SPEAKER_00: They're they're both bad.
18:12
SPEAKER_00: And I would say, they might say that, okay, but if if I walk through these buildings and they're old and they need new windows and they need a new roof and they need new flooring and they need new kitchens and new bathrooms, and it needs so much of investments.
18:27
SPEAKER_00: And this is hundreds of thousands of dollars.
18:29
SPEAKER_00: It's not ten thousand dollars.
18:30
SPEAKER_00: That's construction has gone up.
18:33
SPEAKER_00: And the only reason a housing provider would ever do that is that there's gonna be some level of payoff on that capital expense.
18:42
SPEAKER_00: And if you're if you're not gonna let us raise rents, they're not gonna make those improvements.
18:46
SPEAKER_00: And so what happened here in Long Beach, we have a lot of old housing stock, and we actually need and we actually need to motivate um housing providers to buy more.
18:57
SPEAKER_00: But there's apprehension on, well, I'll I'll buy it, but I don't why would I redo the windows?
19:04
SPEAKER_00: You're limiting me on on getting a return on that huge expense.
19:08
SPEAKER_00: So it's it's it's it's very it's tough because we we need them to renovate these buildings that are old.
19:14
SPEAKER_00: We need not, you know, people throw around the word uh oh, slum lord and stuff like that, but that's not the majority of the people that I represent, mom and pop, independent apartment owners, uh hardworking, blue-collar, they're doing this for nesting, to retire, to leave behind something for their family, to have cash flow.
19:33
SPEAKER_00: They actually want to be and they want to renovate the buildings, but they have to be able to get some return back.
19:40
SPEAKER_00: You know, it's not to squeeze every little uh bit of juice out of that lemon, but it it's it is tough.
19:46
SPEAKER_00: It's it's it's so challenging, Sarah, that a lot of people are now selling their buildings because um insurance costs are up by 40%.
19:55
SPEAKER_00: The insurance wants me to replace the roof.
19:58
SPEAKER_00: They want me to upgrade the electrical panels because they're saying that these could be a problem, and now my premium is up by 40%.
20:05
SPEAKER_00: Oh, and um listen, if I'm in LA County or unincorporated, I can't raise rents this year.
20:12
SPEAKER_01: It's tough.
20:13
SPEAKER_01: So, what do you tell people in that situation that are saying, hey, well, you know, I'm a small landlord, you know, I care about my tenants, I want to do the right thing, but it's not financially making sense for me.
20:25
SPEAKER_01: What's an alternative to somebody having to sell the property?
20:29
SPEAKER_01: Because I always think, hey, hold on to real estate as long as you can.
20:33
SPEAKER_01: I'm sure you do too.
20:34
SPEAKER_01: So what do you tell somebody in that situation who's really struggling financially and doesn't want to sell but feels like there's no alternative?
20:41
SPEAKER_00: You know, a lot of times by the time they've contacted me, Sarah, they've convinced themselves that they are done.
20:47
SPEAKER_00: Like they're like it's just it's been building up.
20:51
SPEAKER_00: It's been building up, it's been weighing on them.
20:53
SPEAKER_00: They're their family are saying, look, mom, dad, it's too much for you now.
20:57
SPEAKER_00: So by by the time it comes to me, they themselves, in most cases, probably 80% of the time, they've already decided I'm done with California and I'm and I'm ready to sell.
21:08
SPEAKER_00: Yeah, and you know what's interesting too, because um they ask me, they say, Juan, it's it's so difficult to be a housing provider now.
21:16
SPEAKER_00: It wasn't like this before.
21:17
SPEAKER_00: Juan, the contracts are longer.
21:18
SPEAKER_00: I I've lost, I feel like I've lost all control, and I feel like the government has stopped looking after me.
21:23
SPEAKER_00: So this is, I hear this over and over.
21:25
SPEAKER_00: In fact, I could I know what they're gonna say because I hear it over and over again.
21:29
SPEAKER_00: And they and they say, Who the heck would want to buy this off of me?
21:33
SPEAKER_00: And you'd be surprised.
21:35
SPEAKER_00: And and you represent the it's it's it's you 30 years ago, you 30 years ago, that's who's willing to step into this property, right?
21:44
SPEAKER_00: Because they still believe that this is a great way to build wealth.
21:49
SPEAKER_00: It's someday it's gonna give me cash flow.
21:50
SPEAKER_00: And folks, I say someday, because don't ask for cash flow for year one, please.
21:54
SPEAKER_00: It's tough, it's very challenging right now.
21:56
SPEAKER_00: Interest rates are high and values are still high, but they Wonder why would anyone want to do this?
22:01
SPEAKER_00: I have to do a balcony inspection.
22:03
SPEAKER_00: The city of Long Beach now, if you have what they call tuck under parking, meaning like you have uh four units and there's garages underneath.
22:10
SPEAKER_00: Well, now those might have to be reinforced.
22:13
SPEAKER_00: Very expensive, right?
22:15
SPEAKER_00: So they haven't passed that yet, but it's coming.
22:17
SPEAKER_00: And so, um, most times, most times, by the time they come to me, they've already decided.
22:22
SPEAKER_01: They've already made up their mind.
22:23
SPEAKER_00: Oh, it's very clear, and and they're very vocal of like, I'm done.
22:27
SPEAKER_00: And in some cases, I'm like, how would you, you know, because it comes to pricing too.
22:32
SPEAKER_00: You know, they have an idea on what it's worth, it's not worth what it was three years ago.
22:36
SPEAKER_00: I'm sorry.
22:37
SPEAKER_00: And uh look, from a market perspective, we've we've seen a decrease in prices.
22:43
SPEAKER_00: Um, in 2024, we did see a slight increase in sales from the prior year, but why?
22:49
SPEAKER_00: Oh, because prices dropped.
22:51
SPEAKER_00: Um, right now, right now, you know, so there's there's two types of buyers, and I and I ask people, are you duplex to a four-plex buyer, like two to four, or are we five plus?
23:01
SPEAKER_00: And both of the markets are doing um it's a buyer's market, which is great, which is great.
23:09
SPEAKER_00: And so I tell people, hey, this is a great time to get into the market.
23:12
SPEAKER_00: And then they think that I'm just being salesy, but I'm not.
23:15
SPEAKER_01: No, it is a it is really a great time to be in the market.
23:18
SPEAKER_00: Um, Sarah, what let's talk about um partnership?
23:25
SPEAKER_00: So a scenario that plays out for both you and I.
23:29
SPEAKER_00: Hey, I'm gonna buy this with my best friend from college.
23:33
SPEAKER_00: Hey, I'm gonna buy this with my brother.
23:35
SPEAKER_00: Um let's talk about forming partnerships.
23:39
SPEAKER_00: Whose name should it be in?
23:40
SPEAKER_00: Should they create an LLC?
23:42
SPEAKER_00: Is there some advice you could help us with that?
23:45
SPEAKER_01: Yeah, so when it comes to real estate, everything needs to be in writing.
23:48
SPEAKER_01: So if you and I decide to go in business together and we want to be landlords, we need to have it in writing.
23:55
SPEAKER_01: If it's not in writing, it doesn't count when it comes to real estate.
23:59
SPEAKER_01: So the best way to prevent any dispute between us is to create an agreement, right?
24:07
SPEAKER_01: Whether it's a partnership agreement, whether it's a tenants, tenancy and common agreement, um, you know, a joint venture, we need to understand who has who, what are the rights and responsibilities of the parties when it comes to this investment property?
24:25
SPEAKER_01: And so something I see time and time again is, you know, somebody says, hey, I own this property with my brother.
24:32
SPEAKER_01: We don't have anything in writing, but this is how it goes, and we've never had any problems, and we hold it in our names individually.
24:41
SPEAKER_01: Okay, well, you know, and then they they talk to their CPA or they talk to an attorney, and and they come back to me and they're like, Oh, like I was advised that that's not actually a good way to do it, and that I need to have an agreement.
24:55
SPEAKER_01: So have an agreement.
24:58
SPEAKER_01: If you are thinking that you want to be in the business of being a landlord, I would highly advise that you put the property into an LLC.
25:08
SPEAKER_00: So let me ask you, Sarah, because a lot of people will call and maybe they're buying their first fourplex.
25:13
SPEAKER_00: So this is like entry-level, listen, it's an expensive property, nevertheless.
25:17
SPEAKER_00: But even if they've just bought one, you think they should have an LLC?
25:22
SPEAKER_01: One rental property?
25:23
SPEAKER_00: Yes, it's their first one.
25:24
SPEAKER_00: Like, because they'll ask me, hey, Juan, like how should I hold this?
25:28
SPEAKER_01: So it really depends on your risk tolerance.
25:31
SPEAKER_01: Um, you know, landlords, you have to have proper insurance, you have to have great liability insurance because tenants can get injured on the property, they can sue you for habitability issues.
25:44
SPEAKER_01: You know, I represent tenants all the time that have issues with their landlord not providing habitable um lease premises.
25:53
SPEAKER_01: And I think it's a good idea if you're risk averse and you want to protect yourself more than having it in your name alone, to hold the property into an entity.
26:05
SPEAKER_01: I think at first you take the property in your name alone.
26:09
SPEAKER_01: Um, and then as you become a more seasoned landlord and get things down, I think it's a better idea to put it into an entity because there's some level of liability protection when it's not in your name alone.
26:28
SPEAKER_00: Okay, so there you have it.
26:29
SPEAKER_00: I I mean that's a question we get all the time.
26:30
SPEAKER_00: Hey, I this is my first property.
26:32
SPEAKER_00: Should I have an LC?
26:33
SPEAKER_00: You're saying you should.
26:34
SPEAKER_00: It's gonna give it's gonna give you the protection, more protection than than not having you.
26:40
SPEAKER_01: Yes, I would say so.
26:41
SPEAKER_01: And I get that question a lot.
26:43
SPEAKER_01: And then we have the the questions as to, you know, some of my clients, you know, have small family offices, they own 15 to 20 rental properties.
26:52
SPEAKER_01: And one of my clients in particular, um, they own 18 properties, and every single property is under the same LLC.
27:01
SPEAKER_01: And now there's pros and cons of that.
27:04
SPEAKER_01: Um, and it really just depends again on what is your risk tolerance, what is your goal, and the most important thing I can tell you if you're going to start being in the business of being a landlord is to have enough liability coverage.
27:18
SPEAKER_01: Because I have friends and clients who own several rental properties, and it California is a very litigious state.
27:27
SPEAKER_01: And I have one client who's being sued right now for an injury that happened on the property, and thankfully for him, he has coverage, right?
27:38
SPEAKER_01: He has an insurance defense counsel that was appointed to him.
27:41
SPEAKER_01: Um, so that is great that he doesn't have to pay out of pocket for an attorney to defend him.
27:46
SPEAKER_01: So I I mean, a big part of your job is counseling, you know, buyers and sellers on having enough insurance.
27:55
SPEAKER_01: And and that's become such an expensive part of owning and managing properties.
28:04
SPEAKER_01: So that alone is a reason that you see people selling.
28:08
SPEAKER_00: Sarah, um, I know you also help people with you call it partner buyouts, or or or sometimes uh two people own a property, someone wants out, maybe it's a divorce.
28:21
SPEAKER_00: What type of advice can you can you give people when it comes to that situation?
28:26
SPEAKER_01: So, first and foremost, in California, there is a right to partition.
28:31
SPEAKER_01: So if you and I own property together, and I want to sell the property and you want to keep it, California has an absolute right to partition.
28:43
SPEAKER_01: So I can what that means is I can ask the court to force a sale of the property and then to divide up the proceeds.
28:53
SPEAKER_00: Okay, wow.
28:54
SPEAKER_01: So if you don't want to go down or even be exposed to the liability and possibility of litigation, a partition lawsuit, you can get a waiver, right?
29:05
SPEAKER_01: The importance of having an agreement.
29:06
SPEAKER_01: So if you and I had an agreement beforehand on how we were going to manage and deal with this property and what we were going to do if we broke up or wanted to end our partnership, if if there was a waiver in there of the right to partition, then I know that we wouldn't end up in a lawsuit.
29:23
SPEAKER_00: Got it.
29:24
SPEAKER_01: So if it's clear in the agreement what the um method of dispute resolution is, it can clear up a lot of problems on the back end when you're trying to unwind the asset.
29:36
SPEAKER_01: So let's say I had an agreement with you and I had the right, you know, I had the first rate of refusal.
29:42
SPEAKER_01: Um that would be great because then, you know, you could buy me out and and we wouldn't have to deal with, you know, litigation and the nightmare that comes with that.
29:53
SPEAKER_01: So it's very important to have an agreement in place, and it's very important to understand what are my options when we want to unwind.
30:01
SPEAKER_00: One of the things that Sarah just talked about is really what she's talking about is the exit plan.
30:06
SPEAKER_00: You know, we and this is something that I learned early on, is I I was like fresh out of college, and luckily I had the right mentors in place, and they said you should buy real estate.
30:15
SPEAKER_00: So I'm like, I I would ask my friend, hey Chad, let's go buy a property.
30:19
SPEAKER_00: But we I we were rushing into it, and sometimes maybe Chad wanted to sell by year three, and I'm like, why the hell are we selling now?
30:25
SPEAKER_00: We we're we haven't made enough money, right?
30:28
SPEAKER_00: And I realized the importance of having the exit plan in the beginning before you even get started.
30:33
SPEAKER_00: And that's kind of what you're talking about in terms of like knowing or preventing this uh dispute that could come.
30:38
SPEAKER_00: It's gonna at some point someone's gonna want out.
30:40
SPEAKER_00: Yes, and what is that, and that's gonna happen, and what's and how how is it that you've set it up for that to play out?
30:48
SPEAKER_01: So I I help couples and owners of property that you know, multiple people own a property together, let's say it's family members or a couple or friends, you know, and and one of them wants out, and that's fine, and that's great.
31:02
SPEAKER_01: And in order to do that, you have to, you know, get that person off of the title, get that person off of the mortgage.
31:08
SPEAKER_01: There's a whole process that comes into assuming a loan or you know buying somebody out.
31:16
SPEAKER_01: What does that process look like?
31:18
SPEAKER_01: And so that is one of the more frequent things that people hire me for is to unwind an asset.
31:24
SPEAKER_01: And so in California, like many other places, a lot of couples they buy real estate together and they're not married.
31:30
SPEAKER_01: So that creates its own host of um complications.
31:36
SPEAKER_01: And so it's shocking, but I guess not shocking, because people, you know, in the beginning of relationship, everything is rosy, they never think they're gonna break up.
31:44
SPEAKER_01: Um, you know, but things happen down the line and one person, you know, wants out and the other person has to buy them out.
31:51
SPEAKER_01: And so if they can't afford to buy them out, then you know they have to list the property and then divide up the proceeds accordingly.
32:00
SPEAKER_01: And so if there's no understanding, whether you'd be surprised how many people don't talk about the stuff at the front end.
32:08
SPEAKER_00: Nobody talks about it.
32:09
SPEAKER_00: Yeah.
32:09
SPEAKER_01: I mean, yes, it's it's a yes, it's very unromantic, it's considered, you know, just kind of faux pas, but you're setting yourself up for an eventual conflict if you're not discussing exit strategy down the line.
32:25
SPEAKER_00: Sarah, thank you for that.
32:26
SPEAKER_00: Um, I wanted to go into kind of another part of your service that you offer.
32:30
SPEAKER_00: And, you know, when when I help a client write up an offer on a building, you said that sometimes that client wants their attorney to review the contract, you know.
32:41
SPEAKER_00: And so, yes, I I'm a real estate broker, I'm really familiar with the contract, we deal with it all the time.
32:45
SPEAKER_00: But you're saying that whether someone's buying a commercial building, a multifamily building, and and and they wanted an attorney to have its eyes on it, that's something that you offer?
32:55
SPEAKER_01: Absolutely.
32:56
SPEAKER_00: Give us an example of how how the service works or or how people are utilizing that.
33:01
SPEAKER_01: So, for example, um, I have a client who's a nonprofit and they provide medical services to low-income people in Los Angeles County, and they are working with a lender who has been able to help them buy the medical buildings that they're offering their medical services at.
33:18
SPEAKER_01: So they engage me every time they they buy this piece of you know, the medical building and the commercial real estate, they engage me to number one, look at all of the uh loan agreements, to look at the property inspection report, to look at the title, to make sure that the zoning is clear and it's to the lender's requirements.
33:45
SPEAKER_01: And so, I mean, typically commercial real estate contracts are much more complicated and much longer than a residential purchase agreement.
33:51
SPEAKER_01: And there's a lot of nuances and due diligence that comes into place, you know, reviewing a title report, making sure that there's no issues with the title.
34:00
SPEAKER_01: Um, so clients will often hire me in addition to someone like you to make sure that everything is okay, right?
34:09
SPEAKER_01: Typically the deal's already been negotiated.
34:10
SPEAKER_01: You've done your job, you've negotiated all the deal points.
34:13
SPEAKER_01: They want me to come in, review the contract, and make sure everything is good to go and that there's no issues with them.
34:20
SPEAKER_01: And particularly if there's a loan on the property with this one client who owns the not the nonprofit, the lender has certain requirements, right?
34:29
SPEAKER_01: They they want to make sure that there's no environmental hazards, they want to make sure that there's not going to be any zoning issues, they want to make sure there's enough um parking.
34:38
SPEAKER_01: Um, and so I'll come in and just make sure that everything is is buttoned up and taken care of and that uh they're good to go.
34:45
SPEAKER_01: And that gives them peace of mind.
34:47
SPEAKER_00: Right.
34:47
SPEAKER_00: And you know, a lot of times people people will buy a building, but ultimately it's it's their responsibility.
34:54
SPEAKER_00: And and yeah, you could trust the broker and you should.
34:58
SPEAKER_00: The broker in most cases is not an attorney, not a practicing attorney.
35:01
SPEAKER_00: And that's where the attorney could come into place.
35:03
SPEAKER_00: Um, let's talk about um lease renewals extension, because that's another service that where people can utilize you.
35:11
SPEAKER_00: And then I want to get into short-term rental um because that's very popular right now.
35:16
SPEAKER_01: Yeah, so um I have a lot of mom and pop landlords, and they will um hire me and look to me when they need to number one, raise the rent and and give the proper notice to the tenants, and then also to do lease extensions.
35:33
SPEAKER_01: So um, you know, a lot of my clients every year they want their tenants to enter into a new lease, which is just it's good practice.
35:41
SPEAKER_00: And also it gives them the opportunity a brand new lease or just like an addendum making some changes.
35:46
SPEAKER_01: Typically the lease is good to go and it's in place, and we just do a lease extension for one more year.
35:53
SPEAKER_01: And it also gives you the opportunity at that point to to raise the rent.
35:57
SPEAKER_01: So it's a good idea to at least once a year um check in, make sure you're getting your tenant um into a lease extension, and you're able to update the um the rent amounts and do everything.
36:17
SPEAKER_01: Um so yeah, tenants are, excuse me, uh clients will hire me to do those lease extensions and make sure that everything is okay and and compliant with the law.
36:26
SPEAKER_00: No, that's perfect.
36:27
SPEAKER_00: And and you know, a lot of things that you're offering, you know, someone could say, oh, well, my my property manager does that.
36:32
SPEAKER_00: But in some cases, people self-manage, they don't have a property manager, they don't have access to the forms, and sometimes they just want to make sure now that they're doing everything right.
36:42
SPEAKER_00: So I think that's great.
36:43
SPEAKER_01: That that brings me, I just recently had a client who had a nightmare situation.
36:49
SPEAKER_01: They had um three beautiful properties in Newport Beach, and each one of those properties had a short-term rental permit.
36:57
SPEAKER_01: Um the the client, my client was a little bit older, and the and the kids convinced them that they need to outsource this to a property management company.
37:07
SPEAKER_01: Great.
37:07
SPEAKER_01: You know, the property management company is there to serve you and be the interface with the tenants.
37:14
SPEAKER_01: Well, the property management company that my client hired, um, they completely dropped the ball and they forgot to renew the short-term rental permits on these three properties in Newport Beach that derived the absolute majority of their income from being a short-term rental.
37:36
SPEAKER_01: So now it's such a lot, the the negligence of the property management company has caused such a financial loss for my clients that it's astronomical.
37:49
SPEAKER_01: So who you work with matters.
37:51
SPEAKER_01: If you're not going to be self-managing, which is fine, and you want to outsource that to a proper management company, that's great.
37:57
SPEAKER_01: But who you work with matters.
37:59
SPEAKER_01: So that has cost my clients the entirety of their ability to retire and their monthly income.
38:07
SPEAKER_01: So it's very important to be careful with who you're working with and to stay on top of making sure your short-term rental permits are renewed.
38:17
SPEAKER_00: Um, that's tough.
38:18
SPEAKER_00: I mean, that just destroyed the value of the asset.
38:20
SPEAKER_00: You know, earlier in the video, I said, hey, the higher the income, the higher the value in an income-producing property.
38:25
SPEAKER_00: They were buying this because they were probably paying a premium because it came with the license.
38:31
SPEAKER_00: And they, through this mess and fiasco that happened with the property management company, they've lost the right to do that.
38:38
SPEAKER_00: So you can't go back and get it and it's gone.
38:41
SPEAKER_00: And that was that was your ink, that was your bread and butter.
38:44
SPEAKER_00: That was going to be the income that you were going to be depending on.
38:46
SPEAKER_00: And so now the property could potentially be worth less now than it was before.
38:49
SPEAKER_01: Yeah.
38:50
SPEAKER_01: It's a huge financial loss for the clients in in multiple ways.
38:55
SPEAKER_01: So what are you seeing as far as clients wanting to buy properties with short short-term rental permits?
39:03
SPEAKER_01: And is the city of Long Beach are they regulating or not allowing any more short-term rentals?
39:08
SPEAKER_00: The city of Long Beach has been great with short-term rentals.
39:11
SPEAKER_00: Okay.
39:11
SPEAKER_00: They've been great.
39:12
SPEAKER_00: And so a lot of our new buyers.
39:15
SPEAKER_00: So here's the other thing, too.
39:17
SPEAKER_00: So a lot of the older, the the the older owners, I guess like my current sellers who've owned for 30 years and and they they want out, they they don't trust that they're they're not familiar with Airbnb.
39:29
SPEAKER_00: And nor would they ever want to take a call that someone needs a second pillow or a more comfortable company, you know, like they just don't want to take those calls.
39:36
SPEAKER_00: So so, but the new, I guess the new buyer, the buyer that's gonna own for the next 30 years, they're all about short-term, midterm rentals.
39:43
SPEAKER_00: They're all about it.
39:44
SPEAKER_00: They know more than I do about that specific thing.
39:46
SPEAKER_00: So Long Beach is a place where, you know, 30, 45 days, if you know what you're doing, you're gonna have your license.
39:54
SPEAKER_00: Now, in most buildings, most multifamily dwellings, that they might only allow one.
39:59
SPEAKER_00: Sometimes people try to skirt around the rules and they have their second unit operating, but you should only have one.
40:04
SPEAKER_00: But Long Beach is a place where we sell a lot of buildings and sometimes they the the person incoming wants that license.
40:13
SPEAKER_00: It I haven't had a problem, but now hearing this example, I gotta be more diligent, I gotta be more diligent.
40:19
SPEAKER_00: Here it's not as um the scarcity, it's not as bad as what Newport might be.
40:23
SPEAKER_00: Like here, if anyone wants one for the most part, if you play by the rules at the city of Long Beach, you're gonna get one.
40:29
SPEAKER_01: So, in that situation, let's say those properties were in Long Beach and they lost the short-term rental permits, you're saying that it would only be like 45 days to to apply and to get the permit reinstated?
40:44
SPEAKER_00: We're not at a limit where you you can't get anymore.
40:47
SPEAKER_00: Okay.
40:47
SPEAKER_00: And that might be like, listen, in Palm Springs was a place that was hammered um about a year ago.
40:52
SPEAKER_00: Yep.
40:53
SPEAKER_00: If you had it and you've done everything right, you get to keep it.
40:57
SPEAKER_00: But if you were buying a property and it and they made it where it's no longer transferable, no longer transferable.
41:03
SPEAKER_00: So if you sold it, if you sell the property that had the right to have the Airbnb and that was the moneymaker, which it is, um, and you go to sell it, the person buying it, you need to tell them, hey, I know you want to buy this because it's got the short-term rental.
41:16
SPEAKER_00: This is gonna cease.
41:17
SPEAKER_00: You could no longer do this.
41:19
SPEAKER_00: That happened in Palm Springs.
41:20
SPEAKER_00: So, what did that do?
41:21
SPEAKER_00: Drove the values down significantly.
41:24
SPEAKER_00: So then our investors out there, that's when you come in and buy.
41:27
SPEAKER_00: Now you can't Airbnb it because they had certain rules, but Long Beach is not that strict.
41:31
SPEAKER_00: Long Beach, if you want to Airbnb, a lot of people buying now will come in and they'll say and they'll look at a building and they'll say, I'm gonna short-term rental one, I'm gonna med uh midterm rental the others, and I'm gonna do this with the other ones.
41:43
SPEAKER_00: And why are they doing that?
41:44
SPEAKER_00: It's extra work.
41:45
SPEAKER_00: It's extra work, but they have to do it because why?
41:48
SPEAKER_01: Because our values are high and interest rates are high, and you're trying, you're trying to recoup, recoup your investment and make some money off of it.
41:55
SPEAKER_00: Well, that in in some cases, you're just trying to break even.
41:58
SPEAKER_00: Some in some cases, you put down to half a million dollars and you're like, I'm not netting anything, which is a reality.
42:04
SPEAKER_00: It's a it's a very much a reality.
42:05
SPEAKER_00: It's it's not like there's so much money.
42:07
SPEAKER_00: Money is coming in, money is all that money is going out.
42:10
SPEAKER_00: It's what I'm it's it's the reality of owning real estate.
42:12
SPEAKER_00: And sometimes people would say, then why would I buy?
42:14
SPEAKER_00: But there's a bunch of reasons on why you would get there.
42:17
SPEAKER_00: And it's just the initial 12, 18 months, I think, of ownership is what I call the rough waters.
42:23
SPEAKER_00: We got to figure it out, stabilize the property.
42:25
SPEAKER_00: And I'm in favor of short-term rentals.
42:28
SPEAKER_00: I guess like I'm on, I'm one of the old school people where I'm people ask me if I do it, and I I've not gone down that road yet.
42:34
SPEAKER_01: I'm I'm the same way.
42:35
SPEAKER_01: I'm much more of a security first, and let's do long-term lease agreements.
42:42
SPEAKER_01: Um, that to me has more security in it, but there are obviously more opportunities to make money with the short-term rentals, but it's a lot more work.
42:52
SPEAKER_01: It's a lot more work.
42:54
SPEAKER_01: There is more liability because there's more people coming and going.
42:58
SPEAKER_01: Um, but something that I get a lot, a question I get a lot from clients is, you know, I know that wealth is the common denominator or real estate's a common denominator of building wealth.
43:10
SPEAKER_01: And I know and I would like to have rental income, but it's so daunting.
43:16
SPEAKER_01: So, Juan, how do you, what advice would you give to somebody who says, I really want to own rental properties, but I'm terrified.
43:25
SPEAKER_01: I don't know where to start.
43:26
SPEAKER_01: What how do you how do you guide someone like me who's you know never been in the business of being a landlord, but I would love to be?
43:35
SPEAKER_01: Like, what is the best piece of advice and how do you start you know helping people with that?
43:41
SPEAKER_00: I get that question also.
43:43
SPEAKER_00: I I I get the the um, I think we both get the same questions.
43:46
SPEAKER_00: But so so I would say three things.
43:48
SPEAKER_00: One, and this is not a shameless plug to this channel, okay?
43:51
SPEAKER_00: So don't be commenting that this is shameless, but one, if you're just someone, you're at home, or or where should I start?
43:57
SPEAKER_00: I would say start with our channel.
44:00
SPEAKER_00: So our this this this channel was built to teach people how to build wealth through apartment ownership.
44:05
SPEAKER_00: It's not how to buy your first house, it's how to build wealth through apartment ownership.
44:10
SPEAKER_00: So that's what our channel is dedicated to.
44:11
SPEAKER_00: So I'm interviewing people just like Sarah, um, professionals, people who've done it, investors, contractors, and so you're gonna learn a lot of uh on on how to go to buy your first property.
44:23
SPEAKER_00: We've done videos how to buy your first investment property.
44:26
SPEAKER_00: So the first thing is I would say watch and subscribe to our YouTube channel.
44:29
SPEAKER_00: The second thing is if you're near Long Beach, I do monthly meetups.
44:36
SPEAKER_00: So one Saturday a month, I open up our doors, we set up chairs, and I and I present and I answer questions.
44:44
SPEAKER_00: And why is that good?
44:46
SPEAKER_00: Because you get a lot of people that are just like you sitting next to you.
44:51
SPEAKER_00: Someone may have just bought their first one, someone is currently working with me, someone owns eight buildings, and so you get to like talk to them and build a relationship with them and not necessarily like work with me, but maybe be inspired with them and be part of a community.
45:05
SPEAKER_00: So I would so the the YouTube channels, my monthly meetups that are here.
45:10
SPEAKER_00: And then also I would say if you're someone who's thinking about it, the really, really first step is to go speak with a lender, someone that you trust.
45:20
SPEAKER_00: Um get a referral from Sarah, get a referral from me, and you you have absolutely nothing to lose.
45:27
SPEAKER_00: You're not gonna lose any money, like not a dollar, it's not gonna cost you anything to go find out.
45:30
SPEAKER_00: Like, the lender's gonna say, okay, what do you do for a living?
45:33
SPEAKER_00: Give me W-2s.
45:35
SPEAKER_00: If you're self-employed, this is what I need.
45:36
SPEAKER_00: We're gonna have to run your credit.
45:37
SPEAKER_00: Let them run your credit.
45:38
SPEAKER_00: This don't run my credit.
45:40
SPEAKER_00: If you don't run your credit, we don't really know if you're qualified.
45:43
SPEAKER_00: Give yourself a chance.
45:45
SPEAKER_00: Like, do I qualify now?
45:47
SPEAKER_00: And in and by doing that, Sarah, you've you've crossed over this this bridge, this road, this river, and you're on this other side now.
45:56
SPEAKER_00: I qualify.
45:57
SPEAKER_00: Do you have to buy something?
45:58
SPEAKER_00: You don't have to buy anything.
45:59
SPEAKER_00: But now you know.
46:00
SPEAKER_00: Because a lot of the people that I talk to, they don't know.
46:04
SPEAKER_01: I think the biggest barrier to entry is believing that there's no way I could qualify.
46:11
SPEAKER_01: Like I don't have enough money, or I don't have enough assets, or there's no way financially I would be able to buy a two, a two-unit, a four-unit, a building.
46:22
SPEAKER_01: So what I'm hearing you say then is is educate yourself, right?
46:27
SPEAKER_01: Like you have tons of videos on YouTube educating people and teaching them how to become landlords, how to own rental properties.
46:35
SPEAKER_01: So educating yourself, number one, number two, the meetups, amazing.
46:41
SPEAKER_01: That's more education.
46:42
SPEAKER_01: Right.
46:42
SPEAKER_00: Both of those things, by the way, all three things I just gave you, you're not buying my course.
46:47
SPEAKER_00: I'm not selling you a I'm not selling you anything.
46:49
SPEAKER_00: I'm saying do these things, all of them are free, and then from there.
46:52
SPEAKER_01: But you're providing a foundation of education to to allow people to understand, you know, what does that process look like and and how do people do this?
47:03
SPEAKER_01: So that that's really powerful.
47:05
SPEAKER_00: Um, I had these two brothers.
47:10
SPEAKER_00: They watched the YouTube channel.
47:12
SPEAKER_00: I have a family of eight, they have a family of eight.
47:15
SPEAKER_00: I used to wrestle in high school, they used to wrestle.
47:18
SPEAKER_00: They said, can we come meet you?
47:19
SPEAKER_00: So they came.
47:21
SPEAKER_00: Um, them with their parents bought their first property, investment property.
47:26
SPEAKER_00: Okay, so and these guys are young.
47:29
SPEAKER_00: Um, one of them served in the military, and you know, they convinced their mom and dad to do this, and they bought their first property, and then they came to the meetup.
47:38
SPEAKER_00: And then I brought them up to the office and I just gave them kudos for doing it.
47:42
SPEAKER_00: It's risk-taking, it's not easy.
47:45
SPEAKER_00: If it was easy, everyone would do it.
47:46
SPEAKER_00: And later I get a call from a guy who's retired, and you know, he owns this house, and he literally just retired from law enforcement.
47:53
SPEAKER_00: He said, Juan, I was so inspired seeing these young men pull this off.
47:56
SPEAKER_00: He's like, I've always been kind of afraid or didn't know.
47:59
SPEAKER_00: And I think sometimes, you know, to your point, the belief of I can do it, sometimes it's just looking out to who you'd be.
48:08
SPEAKER_00: I I think the perception of who's doing it, people are imagining this like super wealthy people who were given everything and everything's been easy in their life.
48:15
SPEAKER_00: I I think that might be the perception.
48:16
SPEAKER_00: You come to my meetups and I I get a lot of people.
48:19
SPEAKER_00: Sometimes I get people that drive from San Diego.
48:21
SPEAKER_00: It's it's amazing who shows up and I let them introduce themselves.
48:24
SPEAKER_00: I don't sell anybody anything, I don't take down your email, I don't take down your number, I'm not gonna bombard you or sell you anything because I just want people to connect and see, oh, they're just like me.
48:34
SPEAKER_00: If they could do it, I could do it.
48:36
SPEAKER_01: That it's possible.
48:38
SPEAKER_00: Uh I did it and I didn't really start with much, you know.
48:41
SPEAKER_00: And and so someone taught me, Mark Milan taught me.
48:46
SPEAKER_00: And a lot of the things that I teach come from what he taught me, but someone taught him.
48:50
SPEAKER_00: And you know, all of us kind of pass this along.
48:52
SPEAKER_00: And um, and to me, you know, I always think if I could do it, I could teach other people to do it, right?
48:59
SPEAKER_00: And so, and so that's a that's a very that that part of the business I love.
49:04
SPEAKER_01: Um I I know you had a mentor growing, you know, in this business.
49:08
SPEAKER_01: Do you now pay it forward and mentor mentor other people in this business?
49:13
SPEAKER_00: Yes, yes.
49:14
SPEAKER_00: People call me all the time.
49:16
SPEAKER_00: Uh, people watch the channel.
49:17
SPEAKER_00: You know what's interesting?
49:18
SPEAKER_00: You know what the most interesting thing is I believe there's people that I'm mentoring now that I don't even know who they are because they've never reached out.
49:25
SPEAKER_00: And that's okay.
49:26
SPEAKER_00: There's people out there watching this channel that are probably and I'm nodding right now and saying, you know what?
49:30
SPEAKER_00: I'm in Idaho.
49:32
SPEAKER_00: I bought this because I watched your video.
49:34
SPEAKER_00: You'll never know about it, you'll never be compensated because of it.
49:36
SPEAKER_00: And it's perfectly fine.
49:38
SPEAKER_00: Like, that's part of like, like, I'm doing it now.
49:41
SPEAKER_00: You're probably doing it now.
49:42
SPEAKER_00: Someone's gonna look at that and say, wow, Sarah's an attorney.
49:44
SPEAKER_00: Wow, look who she's representing.
49:46
SPEAKER_00: Well, that's impressive, you know?
49:47
SPEAKER_00: And so that there's there's these other benefits of of uh of, but yes, I mean, if someone comes to me and says, Hey, will you do this?
49:57
SPEAKER_00: Um, I'm gonna demand some level of commitment from these people because I don't wanna just, I don't wanna just talk to someone and them not have take action.
50:05
SPEAKER_00: Uh, because that part of life.
50:07
SPEAKER_00: I I I want, I like, I'm a doer, you're a doer, and I want people to do something.
50:12
SPEAKER_00: Like if you're gonna talk about it, we're gonna go do it.
50:14
SPEAKER_00: Otherwise, then let's not talk about it, you know.
50:16
SPEAKER_00: So I am pretty firm, but um it is important to me.
50:19
SPEAKER_00: Like I I still have mentors.
50:21
SPEAKER_00: I have mentors that they don't like to that where I I look up to them, I I'll go to their events, I'll listen to their podcast, and they don't know that I'm a follower or someone who's who's maybe made better decisions because of what they taught taught me.
50:34
SPEAKER_00: You know, maybe I should send a thank you note, but for the most part, they don't know, and kind of in a similar way is kind of the way that I that the way that I do it with the video.
50:41
SPEAKER_00: So it's very interesting.
50:43
SPEAKER_00: Um, Sarah, I'm gonna ask one last question.
50:45
SPEAKER_00: You do a lot of mediation, there's a lot of lawsuits, I represent a lot of sellers.
50:50
SPEAKER_00: Um give us, okay, from a seller perspective, it could be from a buyer perspective too, like how can the sellers protect themselves when they're selling a building?
51:01
SPEAKER_00: I tell them, hey, all these forms, they're disclosures.
51:05
SPEAKER_00: Tell me everything about the building.
51:07
SPEAKER_00: Hey, Juan, do I tell them that every year I have to um snake the main sewer line because it backs up?
51:13
SPEAKER_00: Yeah, you do.
51:15
SPEAKER_00: Yeah.
51:15
SPEAKER_00: Uh, because if you don't tell me that and they find out that you withheld that, you're now liable.
51:20
SPEAKER_00: So I tell people, over disclose, I've never seen a buyer back out of a deal because we told you too much.
51:28
SPEAKER_00: Hey, Juan, do I tell them that the roof caved in one time because I didn't do the roof?
51:32
SPEAKER_00: And since then I've I've repaired everything.
51:34
SPEAKER_00: There was an insurance claim.
51:36
SPEAKER_00: I'm like, let's tell them all that.
51:38
SPEAKER_01: So that's a really that's a really great point about over-disclosing.
51:45
SPEAKER_01: The biggest reason real estate agents and brokers get sued is failure to disclose.
51:52
SPEAKER_01: And I'm not sure people realize that that is the biggest pain point and the biggest uh source of litigation with real estate transactions.
52:00
SPEAKER_01: So knowing that should give you ammunition and motivation to for us to encourage our clients, disclose, disclose, disclose.
52:10
SPEAKER_01: Like you said, there I have people, you know, they're selling real estate and they're like, oh, should I should I disclose that there was this water leak five years ago, but everything has been patched up, everything is good.
52:19
SPEAKER_01: Yes, absolutely.
52:21
SPEAKER_01: If you know about it, you need to disclose.
52:24
SPEAKER_01: Every material fact needs to be disclosed.
52:27
SPEAKER_01: Um, I recently um had a client who the they're on the my client's a seller, they're under contract with a buyer.
52:39
SPEAKER_01: The buyer didn't disclose that they used to own this property.
52:44
SPEAKER_00: Interesting.
52:45
SPEAKER_01: And and that to me, that's a material fact.
52:48
SPEAKER_01: Um, that's something that you you have to disclose.
52:51
SPEAKER_01: Um and the buyer didn't want their real estate agent to reveal to my client that she was a former owner.
52:59
SPEAKER_01: She was trying to be um protect her name and and be more anonymous, but but that's a material fact.
53:06
SPEAKER_01: I mean, this particular buyer in the situation, she had lost the home and had to sell it in a divorce.
53:12
SPEAKER_01: And now she was bringing in an investor and another person to buy the property with, and that's a liability, right?
53:21
SPEAKER_01: If you don't want to disclose that information, that is a reason why you can get sued.
53:27
SPEAKER_01: So protect yourself, over-disclose.
53:30
SPEAKER_01: If you're the buyer, do your due diligence.
53:33
SPEAKER_01: I mean, that client I had who bought the fourplex in LA and they didn't know it was under rent stabilization ordinance.
53:40
SPEAKER_01: Shocking.
53:41
SPEAKER_01: So who you work with matters.
53:43
SPEAKER_01: You need to work with someone like Juan who's super experienced, knows their stuff, works in LA County, would absolutely disclose that information to you beforehand because you don't want to end up in mediation.
53:54
SPEAKER_01: You don't want to end up in litigation.
53:56
SPEAKER_01: It's not a fun place to be.
53:57
SPEAKER_00: You don't want to be on the opposite end of Sarah.
53:59
SPEAKER_00: Okay.
54:00
SPEAKER_00: You don't want Sarah.
54:01
SPEAKER_00: You don't want to get a letter from Sarah.
54:02
SPEAKER_00: Sarah, so um, thank you for being here.
54:05
SPEAKER_00: I'm gonna give you the final word.
54:06
SPEAKER_00: Um, you know, whether, you know, if you want to just give us a rundown of kind of the services that you provide or or anything that you want to um end with, I'll I'll give you the final say.
54:16
SPEAKER_01: Thank you, Juan.
54:17
SPEAKER_01: Um I think the biggest takeaway that anyone watching this could have is who you work with matters, work with trusted professionals, work with people who know their business, and it's always a good idea to have an attorney who can review everything, who can give you the peace of mind that you're buying this investment property or you're selling this property, and all your bases are covered, and you're not going to be exposed to any frivolous or potentially, you know, merit-based litigation.
54:50
SPEAKER_01: So who you work with matters.
54:52
SPEAKER_01: It's very important to pick a trusted team of people whenever you're buying or selling real estate.
54:58
SPEAKER_00: Sarah, thank you for that.
54:59
SPEAKER_00: Two questions.
55:00
SPEAKER_00: Um, people watching this channel, some of them are out of state.
55:05
SPEAKER_00: They're gonna ask, is can I can can Sarah help me out of state?
55:09
SPEAKER_00: Is that that's a great question.
55:10
SPEAKER_01: So I'm only licensed licensed in the state of California, so I can only work with people in the state.
55:15
SPEAKER_01: But California's a big state, we're the biggest state in the the country, so I'm happy to help anybody in the city.
55:21
SPEAKER_00: Anyone in California you could help.
55:22
SPEAKER_01: What about you?
55:23
SPEAKER_01: Are you able to work with people anywhere?
55:26
SPEAKER_00: I I refer people out, but for the most part, we're licensed in California, and it's kind of similar to you.
55:32
SPEAKER_00: The second question is um, people watching, how how can they reach out to you?
55:37
SPEAKER_00: What's the best way?
55:38
SPEAKER_00: You want them to email you, you want them to go to your website?
55:40
SPEAKER_01: That's a great question.
55:41
SPEAKER_01: So um you can check out my website, uh Sarah NahitiLaw.com.
55:45
SPEAKER_01: I also have an Instagram channel and a YouTube channel.
55:48
SPEAKER_01: Um, those are also linked to my website.
55:51
SPEAKER_01: So yeah, thank you.
55:53
SPEAKER_00: Awesome.
55:53
SPEAKER_00: Sarah, thank you so much.
55:54
SPEAKER_00: That's all for now.
55:55
SPEAKER_01: Thank you for having me.
55:57
SPEAKER_00: Make sure to like, comment, and subscribe.
55:58
SPEAKER_00: And until next time.