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#84 4 Reasons California Apartment Owners Are Selling in 2026 · Own More Doors

• 0:00
  SPEAKER_00: I'm fed up with this building.
• 0:01
  SPEAKER_00: I'm fed up with California.
• 0:02
  SPEAKER_00: If someone's not paying rent, I'm sorry.
• 0:04
  SPEAKER_00: What's an owner supposed to do?
• 0:05
  SPEAKER_00: Just let them live there for free?
• 0:07
  SPEAKER_00: I don't think so.
• 0:08
  SPEAKER_00: That's like uh you own a hamburger shop and you're expected to give out free food because you're being told so by the government and the judges of California.
• 0:17
  SPEAKER_00: You wouldn't think that was fair, would you?
• 0:19
  SPEAKER_00: Neither do I.
• 0:20
  SPEAKER_00: I've spoken to hundreds of apartment owners in California, and there's four main reasons why many are selling in 2026.
• 0:27
  SPEAKER_00: Tune into today's show while I do a deep dive.
• 0:29
  SPEAKER_00: Hey everyone, I'm Juan Weizar, president of Sage Real Estate, and my channel is dedicated to teaching you how to build wealth through apartment ownership.
• 0:36
  SPEAKER_00: The dream of apartment ownership is still alive and well.
• 0:40
  SPEAKER_00: It's difficult, it's a hard one, it's a battle.
• 0:42
  SPEAKER_00: I still believe in it.
• 0:44
  SPEAKER_00: But there are four main reasons why the folks who hire me, this is what they're telling me.
• 0:49
  SPEAKER_00: And I already know, I already know what they're gonna tell me.
• 0:52
  SPEAKER_00: Now, one of them, the main one, is the statewide rent control laws are very difficult to work with.
• 0:59
  SPEAKER_00: A few years ago, they passed AB 1482, and AB 1482 applies to all of California, uh, unless, of course, if your city has its own rent control laws.
• 1:10
  SPEAKER_00: Now, more and more cities are getting their own rent control laws that are making really, really restrictive.
• 1:16
  SPEAKER_00: And so it's really difficult for an owner to um to raise rent.
• 1:21
  SPEAKER_00: Very difficult, very difficult for an owner to give notice to vacate.
• 1:25
  SPEAKER_00: In the past, if you wanted a unit vacated, you could do a 60-day notice.
• 1:29
  SPEAKER_00: Sometimes it was a 30-day notice.
• 1:31
  SPEAKER_00: It was just much, much simpler.
• 1:32
  SPEAKER_00: Every year, the rules continue to get a little tight around the owners and they feel like they're suffocating.
• 1:39
  SPEAKER_00: And so, rent control, uh, knowing how much you could raise rents, it's changing every single year.
• 1:46
  SPEAKER_00: It changes.
• 1:46
  SPEAKER_00: We keep track, we're providing you videos, but for those out there who aren't monitoring the market like we do every single day, it's exhausting.
• 1:54
  SPEAKER_00: There's certain forms you have to fill out, and every time you're being told you're doing something wrong.
• 1:58
  SPEAKER_00: Now, I don't buy the scenario that every housing provider is a slumlord.
• 2:03
  SPEAKER_00: That's not the case.
• 2:03
  SPEAKER_00: There's a lot of wonderful housing providers, landlords out there.
• 2:07
  SPEAKER_00: Now, there's a few bad ones like anything else, but all in all, it's just the restrictions, it's the demands that the government is putting on to these housing providers that's making it very, very difficult for them to own and operate the businesses like they want to.
• 2:22
  SPEAKER_00: This is like you own a business and the government keeps telling you what to do, how much to charge, and how to do it.
• 2:27
  SPEAKER_00: And oh, you we need more paperwork.
• 2:29
  SPEAKER_00: That's what it feels like.
• 2:30
  SPEAKER_00: And so a lot of people who have owned for a very long time aren't used to this.
• 2:35
  SPEAKER_00: And for them, sometimes getting out is is the way to do it.
• 2:39
  SPEAKER_00: Now, for anyone stepping into the shoes of these apartment owners, because I've told you in the past, what ends up happening is we have older apartment owners, and typically there's younger apartment owners who are taking over the asset.
• 2:50
  SPEAKER_00: So the asset is trading.
• 2:52
  SPEAKER_00: And normally I tell the owners, look, because they will ask me who's gonna buy this, because I'm fed up with this building, I'm fed up with California, who's gonna buy this, and I remind them the younger version of you is gonna buy it because that person still believes that this is gonna provide uh cash flow, a nest egg down the road.
• 3:09
  SPEAKER_00: It's gonna provide freedom, it's gonna allow them to retire.
• 3:12
  SPEAKER_00: Those things still work, but sometimes when you're in the middle of the stress and you have tenants not paying rent, and then your insurance cost is going up, you decide I'm done, right?
• 3:22
  SPEAKER_00: And so that's number one is our statewide rent control laws.
• 3:26
  SPEAKER_00: And in some areas, uh, more and more every single year, we're seeing cities take it away from the state and apply their own.
• 3:33
  SPEAKER_00: That is going to continue driving a lot of people out of the rental market.
• 3:37
  SPEAKER_00: Again, doesn't mean that there's not someone willing to buy the building off your hands.
• 3:42
  SPEAKER_00: They are just the younger version of you.
• 3:44
  SPEAKER_00: That's all.
• 3:45
  SPEAKER_00: Okay, reason number two people are selling is insurance costs.
• 3:48
  SPEAKER_00: Insurance has gone through the roof, thousands and thousands of dollars.
• 3:54
  SPEAKER_00: And and a lot of our clients are calling us and they're saying, one, uh, they've canceled my insurance, and every insurance person that I knew, they're no longer insuring our properties.
• 4:03
  SPEAKER_00: What should we do?
• 4:04
  SPEAKER_00: Now, if you're in that situation, feel free to call me.
• 4:06
  SPEAKER_00: I do have a list of insurance companies, brokers that we work with that we that are still insuring properties, but I get it, it's less and less.
• 4:14
  SPEAKER_00: And guess what?
• 4:15
  SPEAKER_00: It's super expensive.
• 4:16
  SPEAKER_00: And if you have a building that's old, that has an old roof, maybe an old foundation, old electrical, it might be nearly impossible to get insurance on that property.
• 4:26
  SPEAKER_00: So insurance cost is hard.
• 4:28
  SPEAKER_00: And in the situations where someone needs to find a new insurance company, well, the new insurance company is going to come out, and what do they want?
• 4:35
  SPEAKER_00: They want new electrical meters.
• 4:37
  SPEAKER_00: Uh, they want you to put on a new roof, uh, they want certain improvements to the property before they even insurance.
• 4:42
  SPEAKER_00: And so that is very difficult.
• 4:44
  SPEAKER_00: It's increasing the cost.
• 4:46
  SPEAKER_00: So, from the housing provider's perspective, the government keeps telling us, no, no, no, no, you can't raise, you can't, you can't go to market value on your rents.
• 4:56
  SPEAKER_00: You can't do that.
• 4:56
  SPEAKER_00: That's not allowed.
• 4:57
  SPEAKER_00: We're not allowing you to do that.
• 4:59
  SPEAKER_00: But then on the other side, the insurance keeps pushing the insurance premiums uh 30, 40% in some cases.
• 5:07
  SPEAKER_00: It is making it very, very difficult.
• 5:09
  SPEAKER_00: So, how do we combat that?
• 5:10
  SPEAKER_00: We we really can't, but as as brokers, as apartment owners, when we're buying a new building, um, making sure that the major systems are still good.
• 5:19
  SPEAKER_00: Um, I recently purchased an eight-unit building and I knew I knew the roof was gonna have to be replaced, but I was hoping that I would get at least three years out of it.
• 5:28
  SPEAKER_00: I didn't.
• 5:28
  SPEAKER_00: The first rain came in this year.
• 5:31
  SPEAKER_00: One of the tenants upstairs complained that a little water came in.
• 5:35
  SPEAKER_00: I don't want water ever to come in, but it did.
• 5:37
  SPEAKER_00: And so we quickly hired a company, pulled permits, and we put a brand new roof on it.
• 5:42
  SPEAKER_00: So that's good, but it's it's getting tougher.
• 5:45
  SPEAKER_00: It's getting tougher to get insurance on buildings.
• 5:47
  SPEAKER_00: And so um make sure that you're keeping up with your properties and uh make sure that you have the right connections when it comes with insurance agents.
• 5:54
  SPEAKER_00: What I've been told is that in a few years, the insurance companies, after everything settles down, will come back.
• 6:00
  SPEAKER_00: Hopefully, that will give us some reprieve.
• 6:02
  SPEAKER_00: Insurance costs could come down.
• 6:04
  SPEAKER_00: Let's go on to reason number three why people are selling, apartment owners are getting out of California.
• 6:09
  SPEAKER_00: Reason number three is um it's getting harder to evict.
• 6:13
  SPEAKER_00: Now, if you're watching this channel, you might say, Well, why would you ever want to evict someone?
• 6:17
  SPEAKER_00: And I understand we don't want to evict anybody.
• 6:19
  SPEAKER_00: I never want to do that either.
• 6:21
  SPEAKER_00: But this is a business.
• 6:22
  SPEAKER_00: We own a building, we are allowing someone to rent that property and we expect them to pay rent.
• 6:28
  SPEAKER_00: And now, in some cases, they they don't pay rent for a very long time, and we have to uh start an eviction.
• 6:34
  SPEAKER_00: But more and more, it's really hard to get that eviction.
• 6:38
  SPEAKER_00: So judges in California are giving the tenant a lot of leeway, they're letting them not pay rent for a very long time.
• 6:45
  SPEAKER_00: In the past, we would go to an eviction court and we would settle on when they had to move.
• 6:51
  SPEAKER_00: Now, judges in California are allowing uh the tenants to request for a jury, for a jury to sit in on this.
• 6:59
  SPEAKER_00: I mean, talk about wasting California taxpayer resources over an eviction.
• 7:04
  SPEAKER_00: If someone's not paying rent, I'm sorry, what's that owner supposed to do?
• 7:07
  SPEAKER_00: Just let them live there for free?
• 7:09
  SPEAKER_00: I don't think so.
• 7:10
  SPEAKER_00: That's not the way it should be.
• 7:11
  SPEAKER_00: I'm all in favor.
• 7:12
  SPEAKER_00: If the person qualifies for some type of subsidy, I'm all in favor of that.
• 7:17
  SPEAKER_00: If the government wants to step in and pick up where they haven't paid, that's fine.
• 7:23
  SPEAKER_00: But if you own a business, that's like uh you own a uh hamburger shop and you're expected to give out free food because you're being told so by the government and the judges of California.
• 7:33
  SPEAKER_00: You wouldn't think that was fair, would you?
• 7:35
  SPEAKER_00: Neither do I.
• 7:36
  SPEAKER_00: And so it's getting tougher.
• 7:38
  SPEAKER_00: It's getting very tough.
• 7:39
  SPEAKER_00: Uh, another thing that's happening is if someone gets evicted, they're no longer, that's not longer part of their um their credit score rating where it notifies the next person, hey, they just got evicted.
• 7:50
  SPEAKER_00: Probably not a good person to rent to.
• 7:52
  SPEAKER_00: Uh, they're probably not gonna pay you either, which in most cases is gonna be the truth.
• 7:56
  SPEAKER_00: And so these types of difficult situations make it worse for an apartment owner, make it worse for that housing provider.
• 8:04
  SPEAKER_00: So again, evictions are getting tougher.
• 8:06
  SPEAKER_00: I'm not saying that this is happening a lot, but it happens enough for someone to say, I'm out of this game, I'm gonna go somewhere where I could avoid it or where they're not really catering to the tenant base.
• 8:18
  SPEAKER_00: And that's what's happening.
• 8:19
  SPEAKER_00: That's just the reality.
• 8:20
  SPEAKER_00: Reason number four is right now, if you have an apartment building that's five units or more, values are down.
• 8:28
  SPEAKER_00: Okay.
• 8:29
  SPEAKER_00: And so I got it back four or five years ago.
• 8:32
  SPEAKER_00: It was our heyday, and the cap rates were low, which meant your property was worth more than it's ever been worth.
• 8:38
  SPEAKER_00: And brokers were calling you every day to let you know how much it was worth and how much equity you had.
• 8:43
  SPEAKER_00: That has come down.
• 8:44
  SPEAKER_00: Values are down between 25-30% in the five plus market.
• 8:48
  SPEAKER_00: And so now you're thinking my property's worth less.
• 8:53
  SPEAKER_00: It's hard to get possession of my unit, it's my building.
• 8:57
  SPEAKER_00: I you still have to pay the mortgage, but yet the judges are protecting the tenants, they don't have to pay you.
• 9:02
  SPEAKER_00: That's the reality.
• 9:03
  SPEAKER_00: I'm sorry, but that's where we live.
• 9:05
  SPEAKER_00: The other thing is insurance costs is going up, and the other thing, uh, you're limited on how much you could raise rents.
• 9:12
  SPEAKER_00: It's a lot.
• 9:13
  SPEAKER_00: And so this, um, although I teach people how to build wealth through apartment ownership, it's not all easy.
• 9:18
  SPEAKER_00: It's not all easy.
• 9:19
  SPEAKER_00: Yes, do real estate values go up?
• 9:22
  SPEAKER_00: Yes, but it comes at a cost, and these are the costs.
• 9:24
  SPEAKER_00: So if you're if you're someone out there who's fed up with your building, give us a call.
• 9:29
  SPEAKER_00: You're not alone, by the way, because a lot of people give us a call.
• 9:32
  SPEAKER_00: And sometimes we tell them, look, based on what your property's worth, you're gonna lose money.
• 9:37
  SPEAKER_00: We suggest that you hold on to it a little longer.
• 9:39
  SPEAKER_00: Maybe we bring in some management, maybe we help you find the right attorney to help with those tenants.
• 9:44
  SPEAKER_00: Maybe you just need better insurance, help lower that cost.
• 9:47
  SPEAKER_00: So let us come in and step in, let you help.
• 9:49
  SPEAKER_00: Given all this, you might think, geez, Juan, uh, who's gonna continue buying?
• 9:54
  SPEAKER_00: I am.
• 9:55
  SPEAKER_00: Cody in my offices, Jack is, and Teresa, everyone in my office, they're all investors.
• 10:00
  SPEAKER_00: They still believe people still need housing.
• 10:03
  SPEAKER_00: Uh, there could be a good balance between tenant and housing provider, and there is for the most part.
• 10:08
  SPEAKER_00: Just like I said, sometimes you're gonna have some bad landlords and sometimes you're gonna have some bad tenants.
• 10:13
  SPEAKER_00: And that's just the way it's gonna be.
• 10:15
  SPEAKER_00: But it's not that prevalent.
• 10:16
  SPEAKER_00: I still believe that investing in real estate is still the number one way to meet your financial goals, whether it's to create cash flow someday, probably not day one, by the way, um, retire someday, leave your family a nest egg, pay off that debt.
• 10:34
  SPEAKER_00: Uh, we know that people need housing and we know that rents for the most part will trickle up in most cases.
• 10:39
  SPEAKER_00: Every now and then we do have a period where rents do come down, but for the most part, rents keep going up and it keeps up with inflation.
• 10:45
  SPEAKER_00: So, all in all, is it difficult?
• 10:48
  SPEAKER_00: Yes.
• 10:49
  SPEAKER_00: Am I still doing it?
• 10:51
  SPEAKER_00: 100%.
• 10:52
  SPEAKER_00: And like my mentor Mark Milan said, it's not get rich quick, it's get rich guaranteed.
• 10:56
  SPEAKER_00: Hope you enjoy the show.
• 10:58
  SPEAKER_00: Hit the subscribe button, folks.
• 10:59
  SPEAKER_00: Let me know you appreciate the value that I'm bringing.
• 11:02
  SPEAKER_00: Until next time.