An olive branch to the competition

For years, I struggled with whether I should keep writing this blog.

On the plus side, the blog has introduced me to hundreds of people who became brokerage clients, property management clients and/or investors in our deals.

On the negative side, I have educated a whole legion of people who compete with me for deals, which used to drive me insane.

However, recently, I have come to the following realization: Rather than being upset that some of you compete with me, I should instead offer to go into business with you.

Here’s why: When we were starting out, I went around meeting management companies to find one to manage our properties upon completion of the rehab process. I walked away from those meetings unconvinced, and we have self-managed ever since (with a few, minor exceptions).

We built exactly the kind of management organization you want for new / newly renovated buildings: responsive, transparent, totally buttoned-up on the financial side, etc. And it was expensive… for years, until we reached ~400 units under management, Jon and I had to subsidize the management company from our deal fees (ouch).

Now, we’re at ~600 units and we actually like the property management business. It’s no longer a necessary evil; it’s one of the two core things we do (the other, obviously, being buying and renovating buildings). And I am confident we’re better at leasing-up and managing new / newly renovated small-to-medium sized apartment buildings than any other organization in LA.

So, back to you guys out there competing with me: Since we have the team set up already, and since you’re going to need someone good to manage your deal(s), we might as well work together.

(Re)tenanting a vacant building

Regular readers know that we’ve renovated and re-tenanted something like 80 buildings over the past ten years.

If you haven’t done this kind of thing before, you have no idea how complicated it is and how much can go wrong.

Over 80 buildings, we have made every kind of mistake you can think of. We’ve had tenants who couldn’t get internet for months, no gas service, parking wars, washers not connected, you name it.

Because we’re not masochists, each time we screw something up, we adjust our process to try to avoid screwing that particular thing up again.

As a result, I don’t think there’s another property management company in Los Angeles that knows as much as we do about taking a vacant building and filling it with tenants, while minimizing the kind of problems that anger tenants.

If you are building a new building or renovating an older one, and you could use some help tenanting your building in a way that minimizes hassle for you and your prospective tenants (while maximizing rents!), get in touch and let’s see if we can help.

How we think about apartment design

When you’re designing apartment buildings, you need to resolve the following tension: You want the units to be cool enough to attract tenants today, while making them timeless enough to attract tenants for decades to come.

We have settled on what I like to think of as “authentic Socal minimalism”:

  • “Authentic”, because we avoid using any material trying to be something else… no fake wood, no fake cabinets, no cheap hardware masquerading as fancy, etc;
  • “Socal”, because we emphasize informal, open floorplans with indoor-outdoor flow, so residents can enjoy our amazing weather; and
  • “Minimal”, because we keep the stylistic flourishes to a minimum, to allow tenants to put their own stamp on these homes AND to keep the units from looking dated as tastes evolve.

Since we put a lot of thought into this stuff, it’s super cool when we see tenants embrace our aesthetic and use it as a canvas for their own creativity… like these tenants did at a really cool, small building we manage in East Hollywood.

Down on emotional support animals

In today’s edition of Property Management Chronicles:

  • Had two tenants in a unit
  • They applied with no pets
  • Decent-to-good credit, real jobs, etc.
  • After approving them, they showed us paperwork for their three emotional support pitbulls
  • No wanting to get in a huge fight, we let them in
  • For the entire length of their tenancy, they were a nightmare – late rent, other tenants complaining, keeping maintenance personnel from entering their unit, etc.
  • They finally moved out, and their apartment is a disaster – not surprisingly, their pitbulls chewed up the place

Will we ever get made whole? HAHAHAHAHAHAHA. I’m going to sue them, but the likelihood of collecting is pretty low.

Can I prevent this kind of thing from happening again? Not really. California law allows anyone with a doctor’s note to have an “emotional support animal”, and there’s nothing we, or any other landlord, can do to prevent a documented animal from living in our apartments.

SAD.

Unsolicited advice for owners of non-RSO buildings

Owners of non-rent stabilized apartment buildings in Los Angeles with rents below market (eg most of them) ought to be considering their options in light of the likely repeal of Costa-Hawkins.
Two obvious courses of action:
  1. Sell now, while the market continues to (mistakenly, in my view) place a premium on non-RSO buildings; or
  2. Immediately bring rents to market (likely via some kind of re-positioning strategy) in order to avoid being “trapped” with low rents when rent control is inevitably extended to post 1978 structures

To fail to do either of the above is malpractice.