Welcome to another episode of No Vacancy, where we uncover powerful insights from Southern California’s multifamily market. In this episode, Taylor Avakian talks with Kamyar Shabani, co-founder of Optimus Properties, who brings over a billion in assets under management and unmatched expertise in the LA market. From pricing properties, handling high-stakes investments, and navigating complex market cycles, Kamyar provides hard-hitting advice for those looking to build a real estate empire. This episode is packed with insights that every investor needs, especially those eyeing multifamily properties.
Chapters:
0:00 - Introduction & Episode Overview
1:21 - Starting in Real Estate: From Law to Multifamily
2:29 - Building a Billion-Dollar Business: Kamyar’s Journey
3:19 - Is Real Estate Syndication Dead?
4:41 - The Importance of Small Beginnings
6:07 - Raising Capital: Friends, Family & Trust
10:43 - Pricing, Risk, and Building Value in Multifamily
15:23 - The Challenge of Managing Expenses in LA Properties
20:41 - Kamyar’s Unique Approach to Deal-Making
25:13 - Los Angeles Real Estate: High Stakes & Big Rewards
29:45 - Real Estate Investment: Discipline Meets Opportunity
35:18 - How to Find and Vet Investment Deals
39:00 - High Leverage vs. Conservative Investment Strategy
42:06 - Advice for Young Investors
47:14 - Los Angeles vs. Out-of-State Markets
52:00 - Building a Sustainable Investment Business
55:30 - The Power of Networking and Philanthropy in Real Estate
Highlights:
Why investing through all cycles is key to real estate success
The role of trust and transparency in building investor relationships
Kamyar’s approach to navigating unpredictable markets with strategic planning
How his transition from law shaped his unique investment philosophy
Tips for scaling a billion-dollar portfolio in multifamily and commercial real estate
Tune in to discover Kamyar’s essential strategies for thriving in Southern California’s dynamic real estate landscape!
This episode is brought to you by Henry AI (https://hubs.ly/Q02ShzRW0).
Henry is the first AI copilot built specifically for commercial real estate brokers. Henry automates the entire deal deck creation process for OMs and BOVs helping brokers win more deals without doing more work. Henry builds every slide including the market summary, executive summary, comps analysis, aerial markups, and even abstracts leases. Sign up for Henry today at https://hubs.ly/Q02ShzRW0
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is real estate syndication debt you need private Capital to take risk developers are not the enemy start small start with what you know small deals small mistakes big deals big mistakes we have about a billion assets under management a million square ft of commercial space do you feel like it's a buyer Market they're about to start feeling pain these lenders are spooked Savvy investors invest through all Cycles you should always be buying and selling it's not been an easy market for the last few years it is not [Music] welcome to no
vacany where I share conversations with LA's top multi family owners investors and Visionaries I'm your host Taylor ven the founder of the group SI and I specialize in the sale of apartment buildings in Los Angeles on this show we cut straight to what matters Market insights and real world strategies straight from LA's multif family icons to help you navigate one of the most complex real estate markets in the world Southern California enjoy [Music] ladies and gentlemen welcome back to the podcast I'm Taylor ven the founder of the group SII we help investors buy and sell multif family buildings in Southern California and yes I had to read that um I'm so lucky to have my guest here today Kim R Shani Cam and I have known each other for as long as I've been in
the business I think one of the first cold calls I ever made and he was very nice and kind of me and so he was kind enough to come in and and speak to us today very excited to have him on here um cim give me the 30 seconds why are you
in this chair um because you called me and asked me to be but before we do that I did before we do that one thing I want to say is you're a stud thank you and we got to like cut give you a little shout out one you're 28 years old right yeah you're doing this you're you're thriving and I think in a pretty tough Market honestly we'll probably talk about the market but it's not it's not been an easy market for the last few years it has not you keep yourself in shape you got great ideas D you're killing it I did not pay him to say any of this he did not pay me to say this and are you dating you have a girlfriend oh you know yeah work we're working through it you're
working through it all right I mean you have a line of women that probably have to do it yeah know hey look my I work a lot I appreciate that I work I appreciate that you do and they'll pay off
bit of background yeah yeah so I am one of the principles and co-founders along with my brother Joseph of Optimus properties we started it in 2007 um fast forward to where we are now we'll kind of get to how we got here we have about a billion um assets under management we have about a th000 multif family units a million square feet of commercial space um 38 employees and still looking to higher people not not easy job market I'm sure people are experiencing that still um yeah we do deal bills we do a fair amount of multi- uh retail medical office office in Southern California and then we're also in Portland Seattle and New
syndication dead no I don't think it's dead at all um you know it's an interesting question like when when when CDs you know like historically nobody was buying CDs right because they were paying nothing paying was you and then when rates shot up and CD started paying 5% one of my investors called and like I was having a conversation about syndicating and he goes is your deal going to give me 5% day one I said no we do value ad right it gives you zero day one like you know depending on the number of factors they give you better cash on cash or we have a equity pop at the end and he said why would I invest in a deal when I can get 5% on a CD and at that time when CDs were paying 5% it made kind of made sense right and and that's why
that's one of many reasons you didn't see a lot of is getting done for a period of time now the answer to that question is yeah CDL pay whatever it's paying now like four and a half or whatever it is but that's all that's going to pay you and you got to get back into the game and and to me smart investors invest through all Cycles good markets bad markets you always invest right maybe not the same velocity but you you definitely do if if your business is real estate 100% And and speaking of your business being
in real estate I know you came from a different back background prior to real estate which was law tell me a little bit about how that how how how it started really cuz you were a lawyer first and then you transitioned in the presel side like what was that
Journey like yeah I I I grew up in a household where my dad was in real estate my brother was in real estate and they would like over dinner talk about cap rates and stuff at the dinner table um I kind of wanted to strike out on my own I went to law school I started working at a big law firm and I was there for six years at the six year mark they put me on the partnership track which what kind of w did you do transactional real estate it was real estate stuff yeah it was just transactional stuff so like you know like purchase and sale agreements leasing JVS loans that kind of stuff um they put me on the partnership track and I was like great like this would be an incredible career but I don't know
that I want to be a lawyer for the rest of my life and I don't know that like the people at those firms are the best of the best but they work really hard yeah and I was like man I want to be on the principal side so I called my brother who was doing real estate and I was like hey I'm going to like I'm going to leave the firm and let's do something together and then I I'll never forget like I left my Law Firm on the last day of the month walked over to the new office where my brother was sat down turned on my laptop and I was like I have nothing to do I don't know what to do right I don't know what to do with myself and I realized very quickly like what my my my dad and my
brother and also my brother had another company that he was running they were doing kind of like party pasu Partnerships they were doing you know like four deals a year with a couple other high net worth families um and I was like wow I got to carve out of Niche for myself like this doesn't make sense um and so I pitched my brother on doing multif family and I pitched him on doing syndication because they were doing neither of those right and that was my way of being relevant in in an already EST bus yeah um and so like we the first deal we syndicated was a retail Center which we still have and then the first multi deal we did was like a three-unit deal and it was just to build the platform and like hey
look we know what we're doing yeah yeah to to get the figureing out and too multif family there's so many Dynamics as a broker too right and and you know this from speaking to other brokers who are in the business we don't necessarily know what goes into or a lot of Brokers don't necessarily know what goes into what happens after the transaction right how do you add value to a building how much do things cost to renovate it what are the issues you have to do with the city what are the checks the balances how long do things and permits take and so I think get getting your feet wet from the multif family side too especially in in a market like Los Angeles which is so heavily regulated there's a lot of Hoops you got to jump through and you just sometimes you
got to learn stuff from experience so I think that's that's interesting you guys started small and we like prove a concept now let's go and step it up a little bit yeah which is interesting to me because it's something that I've been asked a ton is like hey if you ever have anyone who wants to invest like you know please share them please share investment decks people always want people who can raise Equity how did you start really ramping it up where did the first Equity checks come from from the syndication for you guys yeah it it
was interesting and I think it's it's the same story a lot of syndicators have it's friends and family right you know you you hear the term friends and it literally is friends and family you call your uncle you call your friend and for my brother and I we we reached out to people and said hey you know you know that you know us from Real Estate you know me from law or whatever it is here's the new thing that we're doing and and the first check started with like $25,000 checks or was a three-unit deal yeah the shopping center was actually a little bigger and that was kind of bigger checks we got um and it's interesting I I'll tell you this funny story of a of have an investor named Steve he's a friend of mine his real name is Steve um I knew him because
we work together at the law firm he I went to him on the third deal we syndicated which was a 55 unit Bricker in Korea Town I called him and said hey Steve he said hey what's up cam I said hey you know can I meet you for coffee we met for coffee I go look this is the new thing I'm doing I'm syndicating deals I'm raising money and he goes I don't know anything about real estate but I trust you you're my friend here's $35,000 and that was like the third deal we syndicated fast forward many years we were syndicating a deal and we got introduced to some high netw worth guy and he wanted to do a pretty big investment deal and he said I want to meet you for lunch I said no problem we went to lunch and he said hey you know
I was reading your package and I you you know I thought your minimum was 250,000 and I realized it's 25,000 and I thought you guys were Schmucks L that's what the guy says to me goes I thought you guys were Schmucks cuz why would you take a $25,000 check you guys aren't you guys aren't real time yeah you guys aren't big time yeah and I was like let me tell you the story about Steve Steve started and our third deal he invested $35,000 fast forward many years later I was at dinner with my wife and his wife and he said to me hey did you know that you have over a million of my dollars and then it started by a $35,000 investment right and over the years he trusted us and he invested more and invested more and invested more right and that's like how to build
that syndication model honestly the mean is trust I know I know it sounds like kiter everybody uses these words but it means something like trust integrity and transparency like communication and that's one of the things that a lot of investors have told us that we do a nice job about is just communicating so like everybody wants their check it's the number one most important thing is the distribution but thereafter they just want to know what's going on with the deal so we set up a platform communicate with
the investors right so we either send we send either monthly reporting or quarterly depending on the size of the deal we we do a narrative and it's the good bad and ugly right and it's like hey in good times it's hey you're all these great things and in bad times it's hey here are some of the bad things that are going on and we we're going to share it with you guys totally no 100% And
I think that's so important too from every side of the business and what I've seen from really successful operators is they just tell it how it is right it's they're not hiding anything and and even if a deal goes bad if you you can have the trust to know hey they were honest with us they did their best through the whole entire situation that is what's important because people can give you Second Chances especially if you've had a track record of of a bunch of good stuff and one bad one goes it's like okay it happens and I think if you've been in real estate long enough like something doesn't always go to plan right we don't I wish we could predict the future but we can't and there's a lot of things that are outside of our control that can completely change
the business model like with interest rates for a ton of people yeah so I think having that as a base for the values not only for yourself and how you treat your employees but also from the investor side is you want to align yourself with investors who fit your model you don't need to take money from every single person especially now you want people who are going to fit with what your values are and actually are going to be on the same pages to you because the last thing you want is someone to just it's just bad business in my opinion there's so much to go around and you guys have done a very good job at at being able to do that so so I commend you on that for sure because you guys have a good reputation within the business um I'm curious to
know because you partner with your brother and family there's a lot of dynamics that go into partnering with family how have you made that work and are there any tips tricks or like what's it
like partnering with family yeah look it's different than having other partners because at the end of the day you're going to see him at like your parents house on Friday night or like at a family party right um and for us what's worked is understanding relative strengths and weaknesses there's certain things that he's better at there's certain things I'm better at and it was understanding it and the other thing we kind of did after we realized like all right like the company's growing and it's getting bigger and we both of us aren't going to be able to make every decision because just it'll be too inefficient we started kind of divvying up responsibilities um for us at the moment we're doing like he's really handling more the commercial portfolio I'm handling more the multif family portfolio but like I would never buy
or sell a deal without talking to him and vice versa right would kind of agree on all that stuff first but day-to- day and then if there's issues questions or like you know like hey we have a couple loan quotes like I'm not feeling it on this guy how about this guy right we'll just sit down and talk like that was the email that just came over I was like hey here's some quotes on the deal we're buying let's let's catch up and talk about it yeah figure it out do uh who handles the um raising the capital we both do um so when we have a deal we launch it right we have a a platform we launch it out we have a director of capital you're under contract at this point or you're you've closed on it no we we always raise
the money once we've gone hard or if we know we're going to go hard for sure we'll start that process but we like to have all the money raised before we close the deal um and one thing we do is we we raise the entirety of what we believe we need for the capital stack so meaning acquisition construction cost what whatever it is Reser day one um so that we don't have to Capital call the investors and we have actually I will say um we have never Capital called investors on a syndicated deal thus far and the last couple
years have certainly been challenging I was going to say everybody even yeah the last that's very impressive over the last couple of years do how much um e Equity do you typically as the lp excuse me GP bring in to the deal on these structures how do you guys structure
it yeah we are we're really opportunistic so it just depends on if we have a dollar and like there on average we were doing eight deals a year so there were some years where like we'd be 60% of the capital stack we'd be 10% we'd be 0% and it wasn't because we didn't believe in the deal it's because we were like we just bought seven deals in a row and like we need to go make some more money to go you know invest in equity um like we're closing a couple of deals now will probably be 20 25% of the capital stack and again for us it's just liquidity Yeah the more we have the more we'll put in and it's not that we don't like believe in the deal right we treat every deal like it's a deal we would be buying ourselves totally 100% what um so
let's talk about the current market right now because I know you guys did you end up finding that exchange property or you still working through that we yeah it's interesting right we you sold an office building in Torrance correct we yeah we um sold an office building in Torrance it was a massive return um what's the story on that uh we bought and I give my I give credit to my brother here he had found a like 55,000 foot single tenant single story office building in Torrance but it had 5.5 acres of land and the Tenant was a like County lease right so you know you're getting paid it's the government there's some hoops you jump through with County tendance and stuff like that and your government leases but he was like Wow cash on cash we you
get cmbs debt and we have 5 and a half acres of land and this is a covered land playay as well and like he got it really quickly B we bought the deal cash flowed found a developer who wanted to tie it up we gave him a long entitlement period and he paid us a massive massive number for it interesting yeah okay so that's it worked out like and and my brother like kind of lined it all up really it was very difficult for him but he lined up like all the pieces beautifully yeah so we closed and now here we are in a market where we're sitting on like $19 million in exchange proceeds and we can't place it I we have some deals identified in all it'll all work out yeah you'll figure it out and
we're maybe we might find one I'm working on that as well so we'll see I'm curious so that is an interesting view of a plan B plan C plan and I always say like the best investors I know if a plan doesn't go right they have B plan if B plan doesn't go right they have C plan they they kind of have these protection mechanisms in place how do you look at deals how do you look at opport unities and the the actual deals that you want to buy versus the ones that you
pass on you know for us we're I I I like to say we are disciplined but we're also opportunistic so we look at every deal and go hey can we make money out of this deal right so even though it's like great to have like we're only going to do X Y and Z this the day we say that something a curveball comes like wait can we make money out of this deal and let's do it um and I think the difference for us is like we have we have a one of the part in our companies they director of Acquisitions and he's looking at deals but Joseph and I are also looking for deals too right like I think where we add the most value is finding deals and raising Capital interesting okay so
you guys all kind of it's a collective yeah we're all out there all at the same time we're all looking for deals just trying to see as many as we can yeah and
figure out where the opportunity is and and it sounds like really you're pretty creative when it comes to unlocking value when others Maybe don't or can't see the value in something like what the the office building was that
a competitive bid or was that off Market how did you guys it was it was competitive actually um and the way we got it we like you know you got to lean into your strengths right what are the strengths that we have so I'm a former lawyer my brother's a former lawyer and one of the things we did was like we went to the broker and said give us all the diligence up front give us one day we're going to bring everybody through so we had our own maintenance crew come through we had our plumbers Electric Ians everybody walked through we did all the diligence said we'll go hard day one right and like that was how we won the bid because at the end of the day we're not going to necessarily win the bid
by being like we can't close all cash we don't have that kind of cap sometimes we do but not always um right so that was our strength was like hey we can we we can understand the risk really quickly on this deal got
it okay have you found Are there specific um terms or conditions or what allows you to get a deal done like that where maybe in other circumstances you're competing against a lot of other investors what are the things that you use in your tool belt to get deals done where it's competitive in the process whether it's going hard day one um or you have some sort of you know carryback incentive you guys can have a longer escrow period like what are some of the things that you do when it is a competitive process to make sure that you could have the best chance
of winning that deal you know in competitive times where that and I don't think we're necessarily in competitive times now um but you know when times were good speed and efficiency right like like when you talk to sellers right and they're valuating buyers what do they want to know how quickly can the person go hard so I know that they're there what's their track record right and like for me I I always like to say like I say what I mean and I mean what I say and if I tell you something in a deal like I like it it has to be that case and when the lender comes like we just had this recently lender Community was like we need another week to close I was like no because I told them we're closing on this date and I don't like
to play that game why do you need another week to close I was like well you know this I was like that's internal to you guys you guys are making excuses and you're going to damage our reputation right now look in the market right now you got to work with your lenders they're they're they're having their own issues right and like you're happy for your lender to actually close on time or like close near on time but when times were good that was really important to me to be like this broker is somebody I'm going to do three four five more deals from that seller
is going to ask that broker how did those other deals go what's that broker going to say if that broker says he [bleep] around if he ret traded he did this he did that the other thing right like you lose the edge so to me like like it's one of the things like one of the things we'll never do is like ask a broker for a piece of his Commission because I think that is like Pennywise and pound foolish right because that broker will never bring you the next deal and people got to get that right they're your they're your gatekeeper the deals that's the funny thing right so to me it's just like those things like just like how we treat with the investors it's like with the Brokers and if there's a problem
just calling the broker very early and saying hey I just want to let you know we've got this issue with the lender we're working through it but I want to bring you into the loop now so you understand so I don't tell you this two days
before closing and you freak out totally no it's it's so important because we you know we talk as Brokers right if if I don't know the buyer necessarily and I know someone else who does I'm going to call that broker and say hey how was this transaction did they did they jerk around do you know what's their reputation amongst the brokerage community and that that affects our decisions because at a certain point right clients hire us and they trust us with our judgment that's why they they want to work with us right because we've dealt with a lot of these situations and we know what comes up and we know what kind of buyer they are and um part of my job is saying hey when we have multiple offers or scenarios like this person may be the highest offer but here's the likelihood of this closing here's
the how much cash they have here's their background actually another deal they retr us multiple times right or there's this guy who's a little bit less in terms of price but he's closed every time we've done a deal and he's he's got a 7-Day DD I know he's going to get it done like that is very important from a reputation standpoint and something that we talk about internally as well so I think it's it's it's insightful that you have that understanding right now because a lot of people for whatever reason don't seem to I they don't get it right they want to take your commission hey throw some money in here it's like all right dude sure but like I'm not sending you another deal right you're not getting especially a good one right and it's not about this deal to me it's always about the next deal right
like it's a machine and you make the in my opinion the most deals you make the money on the buy right because you have to execute but if you can know that here's where I am and this is how I get to B right the end game I think that's where you can make a ton of money and have to that just that safety net because investing it's it's a risk reward play payoff and so if you can have a good buy and a good basis and you're protected on your downside then you can try to get as much upside as possible from that perspective which the best ones do like yourself um I'm curious to know current market today La you're in in exchange last 18 months interest rates have been pretty crazy where have you guys been focusing and why have you been focusing over
there yeah so like historically we really focused on two asset classes we did a lot of multif family deals like probably done like 60 or so multif family deals and then we've done a lot of retail deals um we are at the moment right now where we're pivoting back from multi to retail um for a number of reasons I think expenses on Multi have kind of gotten out of hand right so trash like to me that City of La deal that they cut with Athens was like you know this is I'm not going to my total personal like personal thoughts on that but it it was a really bad what was that what so like you know it's it's a monopoly right so before you had the choice of going to
a couple different trash companies right and then the city said well no no no you know this is not good for the environment there's too many trucks coming and going so we're going to give everybody has to use one company think about that what did they just give to the company so then what happened our trash expenses tripled right and so they charge you a long call Fee so if the bin is at the back of the garage they charge you to pull it to the front if it's locked they charge you to unlock it if it's full over full right the lids open they charge you because it's over full so you can lock it so that people don't fill it up but then they charge you to unlock it right you can move it
into your parking lot so that people walking by can't use it and fill it up but now you pay for long there's no winning right so you got that you got insurance that everybody's going yeah um you've got the regulatory environment which to me I think is uh disastrous and it's not going to have the intended effect that our politicians think it will have um so we're looking more retail and so are a lot of other people right so the folks who were buying office deals now nobody's buying office right if you're owner user sure you're going to buy an office deal but most people are aren't buying office so there's a lot of money kind of flooding into retail and in particular you're seeing a lot of money flooding into like grocery anchored retail believe it or not so
you're seeing CPR compression on those deals pretty competitive why do you think that is um because I think grocery anchor centers kind of fared Co really well and people are like wow this is really interesting and their margins have gone a little better than they used to be and it's kind of like it's coming back right interesting yeah it's all a cycle totally
right everything comes and goes and well in retail you know rank control um they're trying to they were trying to put something on the ballot to control commercial rents as well I don't I
don't see that going through that seems very yeah there's there's noise right right I think that like the most extremist of of politicians who really don't live on this planet that's a good idea yeah um yeah so then that's Los Angeles
and California yeah that's La we're dealing with that consistently all the time which I think is another reason why there's opportunities because there's so hard to break into this Market if you're not from here or know the intricacies of Los Angeles and so the barriers to entry are something that that I have a conversation with investors for hey like we had a a a family from Chile come and they were asking about California and investing as an LP in a a company and I sat down with them and they asked me like California like why should we invest in California and I think the fundamentals which make it so attractive from the multif family side as well and also the retail but it's so hard to build here the supply demand fundamentals we have a shortage of housing there's
a ton of people here we're the fourth or fifth largest economy in the whole entire world it's it's thriving for having a great fundamentals for investing in real estate and as someone who you you're from Los Angeles um grow born and raised you've done some stuff you said in other markets too what do you see as the draw to Los Angeles the benefits to Los Angeles and maybe some of those other markets or or was your experience being comfortable with Los Angeles and going to those other markets did that open your eyes to other investment types and where you want
to look in the future yeah and so raised here but not born here but but I'll tell you it's it's an eternal um struggle that we have because let's talk about some like facts about Los Angeles and California Los Angeles is the ninth largest economy in the world California like you visit it there we go Los Angeles the nth California is the fifth wow Jesus right in the world we produce 25% of the agriculture culture for the US right we have Silicon Valley we somewhat Hollywood not not you know not what it used to be so it's too big of a market to ignore right the the what people don't like about California what you hear from institutional um investors really really frequently is they do not like the regulatory exposure and I have talked to people who serve in the
California legislature about this conversation I had lunch with somebody and I said you know you guys are driving money out right and he said yeah we know we know and he goes what you have to understand like there are two sides of the democratic party there's the more conservative Democratic there is no Republican party in state legislature like unfortunately um and then there's a super liberal side and he goes you'd be surprised the number of laws that come up that we shoot down that would be even worse but he's like we understand the governor's office understands we understand how we're how we're perceived on the flip side of it again we're too big of a market to ignore right to your point it's expensive it's really expensive to build and it's expensive to live here right so those those are those are fundamentals we have to address I
do not think the current policies that are being passed or this being discussed are actually going to help those because they you can go look at other places they've done rent control and and and um um uh bacy control thank you yeah it never works look at the market where it has it it does not work and there is no mainstream Economist who will tell you it actually works yeah that's the crazy thing like Economist left and right will tell you these programs do not work to solve the problems you want to solve how do we fix Los Angeles look I I think it it's tough right because there're more renters than there are owners um there's an income imbalance here um to me it's about like educating people and looking past the political expediency right because like rent control sounds great right and like
yeah it would be nice for your rent not to increase 10% every year but let's think about the consequences of what that is right and to me it's like like look at all the taxes that we've passed for building homelessness housing nobody can tell you that homelessness is not a real issue it is a real issue we have to deal with it look at how much money they're getting through taxes look what they've built HHH alone mhm have they built the 10,000 units
think is what was came out in the news where they they could not track where $34 billion was spent they didn't even know where it went yeah it's like it doesn't make any fundamental sense at all when there we pay such high taxes and not that taxes are an issue we need taxes to have infrastructure and stuff but they just don't know what to do with it they don't have the the people in place private the private investors the private community so much more efficient like the million dollars per unit they're trying to build in Santa Monica they're trying to build 176 units it's going to cost $176 million for homeless housing a million dollars per unit yeah like and then the one in downtown yeah downtown right it's just it's very inefficient from solving the issue I'm part of this Uli Housing Council as
well and um in February of next year they're coming out with a whole new community housing plan so they're changing zoning they're changing Toc they're changing a lot of development standards in the city on menu off menu incentives and we sat down and this was a a bunch of real estate professionals we were looking at this the draft and we're like it's just like moving pieces around nothing really fundamentally changed that made it that much more creative or that much more exciting to want to build it didn't make it that much more that easier much more easier excuse me to to build um apartments and you're thinking to yourself you're like you know you need to build 350,000 400,000 new units and yet you still aren't really making any changes it just kind of confuses
me to me like I think like ed1 was a good start yeah right because it helped developers cut through red tape mhm right and anybody who's ever tried to entitle a project and dealt with SQL understands like how difficult that is and 81 I thought was a really good start and then like what what's the city council doing now they are considering requiring ed1 developers to use union labor right the moment they require that it will that market will stop again poof right so it it it's kind of like looking past the things that are politically expedient right we know what the problems are right but we got to look back like we got to look pass like this like we need rank control okay let's really understand what that means cuz it's not going to pay off and it hasn't right and the places have passed it
they see their starts drop precipitously right because developers like well I don't want to build in this market I'm go build in right and you keep hearing red states red states red States now again the counterbalance that is we're too big of a market to ignore but we we we're not doing ourselves any favors what um so I don't know if you saw
this in Argentina I think in article came out how they had super strict rent control the person I know this is four five seven years ago they got rid of rent control completely and the rents actually came down 30 or 40% because everyone started building again and it's like wait a second uh if you don't put restrictions then people will build and then the supply and demand fundamentals will be there and then the rents come down surprise right right how crazy is that a great example of that yeah which is just I mean you talk to a lot of high net worth individual and and people um in the space you know some of the biggest companies in in the country from Real Estate perspective and I'm sure other firms too what are they saying what are their thoughts on what's next economy-wise and also from a real
estate perspective I I think most people are one a lot of people have gone to Red States right um now look there's there's a there's a benefit for the people who stay because if you think about it you have less competition on deals MH right m mhm um two I think people are hoping that our like how we view these issues or how we solve these issues kind of returns to Center in terms of how we approach these got right they believe that um I think they believe it's possible right and like developers are not the enemy yeah right you need developers you need private Capital to take risk that's the truth of it and I think ed1 kind of got that a little bit was like hey we'll make this easier for
you and go build mhm yeah exactly that's a great point they need to make it easier for people to take risks cuz that's what it is yeah it's it's private money looking to make a return and on their investment and they have to take a risk to do that and if the risks are too high they're not going to take it they're not going to take the action needed to Spur what you actually ultimately want which is more housing more uh you know know support this more houses for homeless people all that kind of stuff so I agree with you it's it's figuring out a way to get back to closer to Center where the risk is worth
the reward and also to me it's like the frustrating thing to me is like people who try to make money are vilified nowadays in some respects it's like you have to understand that everything you see was built by somebody who decided to take risk they took money out of their pocket or friends and family whatever and took a risk yeah right and they should be rewarded for that risk they shouldn't be demonized for it 100%
now it's I know we could probably talk all day about Los Angeles and the climate because that's what we talk about with our peers and everything because it's just such a a big uh part of what we're dealing with I'm curious to know cam from from your perspective what is something that a lot of investors miss that you think gives you an edge from execution perspective or maybe something that people under Overlook that they shouldn't be overlooking in terms of investing
yeah and I oftentimes I have like friends or my investors who will show me other people's deals or show me package like Brokers packages and one I always like to tell people like have sober expectations to like really understand the expenses because sometimes Brokers will drill in sometimes they don't sometimes you know whatever things can change like really understand what those expenses are going to look like and do some diligence and dig in a little bit don't take it on faith um and to me I think like there are deals that we have done where we've looked at expenses and gone we know we can do better or there is like there's expenses in here that shouldn't be in here um so to me I think that's a Competitive Edge and and the way we do it basically is like we have enough data from all
the deals that we run that we've broken everything down on a per unit basis on a per square foot basis and we kind of have an Excel right so like Janitorial should cost this Landscaping should cost this sweeping whatever it is we've broken it all out so we just have kind of an easy data set to compare to and go hey you know what I don't know that we can do anything Topline because the income is the income but I think we can kind of shave some of the expenses and hey there's our Competitive Edge got
it so you really understand the data yeah the data is very important to the decisions that you guys make not only from a gut feeling of like okay I feel like this is a deal but also from no I feel like this is a deal and the data supports that we can go and execute
or we can do better do better than what's and then on the other side it's like have sober like be sober about how you look at deals because I've looked at deals where it almost seems like the cash flow is coming off the equity right so it's like they'll raise a large Capital stack it's like May off I don't want to say that you look go hey just be sober about like yeah you know yeah so how do you mitigate the downsides to investing what do you do to protect yourself so for us and me in particular I tend to be more conservative um and I I will say like these periods of time everybody's gone through distress right so nobody can tell you that we've had no distress that's [bleep] um I think we fared it really well for a number of reasons
one we typically try not to do bridge debt we typically try not to do debt fund debt now again people do it they're super successful for me personally I don't love it we personally we try not to do really short-term debt and it paid off in this last cycle right because we only had a couple loans where we had to kind of fight through the process o over over a large portfolio as opposed to having a lot of loans coming due at once so we're still sitting on loans with a 3% interest rate or io on deals and we're like ah thank God we have some breathing room um so that that to me is really paid off we typically don't love to do high leverage right now you think about it like there are folks out there to
do super high leverage short-term debt and that fuels a lot of growth and success right but when that music stops how do you maintain it some have fa fared better than others right I think a lot of the folks you see who are in trouble right now or had incredible growth but did it by doing like floating rate debt super high leverage so for us we're typically like 65% LTB feels nice to us yeah um raising the dollars day one sort of having that having that reserve and then like look if the world's going to [bleep] we're going to stop construction we're not turning units when this world starts going to [bleep] and the rents drop like all right let's just pause let's just do quick flips let's just paint and carpet for now and figure things out um so I
I think to us and now I kind of feel Vindicated right like our growth was probably slower than some of our peers because we weren't doing high octane stuff but right now we're like all right we can play offense we're not playing defense yeah and it's so important
too cuz I think right now is one of the best buying markets I've seen in my career which has been you know seven years so it's not been forever wasn't around in
08 2010 whatever do you feel like it's a buyer Market do you feel like if you had more cash you'd be on a bring spree or do you still think there's it has the market hasn't reached equilibrium
where it makes a bunch of sense it's not a buyer Market because we're out there buying we're out there buying deals now and I'll tell you like average we bought eight deals a year on average since 2007 last year we bought one deal this year we bought one deal in Beaverton we just closed on a retail deal on Sunset Boulevard we are we just went hard on a retail deal on largemont Boulevard um so I would say it's not a buyer Market because we have Capital to deploy um I think a lot of people are sitting on the sidelines in terms of sellers I think right like you know and you guys talked about on your podcast like where the debt Market is right it's not a great place right now um and I don't know you know there's always
this conversation of like have we hit bottom are we in a recession like we're definitely in a real estate recession that's not kid ourselves the the general economy is a different issue um but it doesn't feel like it's a buyer market right now it's different in 200 2008 and you learn something new for every cycle but like 2008 I remember sitting on my hands at the office so it'd be nothing like nothing was going on you'd work for a couple hours and you s on your hands and I was like younger then so I was like well I'm not going to go I'm not leaving the office I'm going to sit here and read the newspaper for 4 hours cuz that's what I'm supposed to do yeah this time it's it's not a lot of deal volume but we're super busy just just everything's harder to deal
right now interesting so if if someone wanted if there was a 20year old or young 30-year-old and they wanted to start and get in the real estate and investment and syndication business what advice would you give them and how would you tell them to start to have the best chance to actually succeed
in it a lot of different things right um start small you smart start with what you know small deals small mistakes big deals big mistakes right so do a few and learn um own up to your mistakes right and to your point earlier like if you're if you're transparent with the investors they'll give you a second chance uh um to me like I actually like a lot of people have asked me like hey where do you think I should start like you know I really like that the model do home flipping but like buy an old house renovate the inside don't add square footage don't add a second story because then you start you get caught up in City of La permits and that's a nightmare but do like an aesthetic cleanup because people don't want to do that do a few of those you're going to learn a lot
right so start like start something like that that's why you see a lot of guys buy a 3unit deal right cuz it's manageable and you can do it and you get the practice and you understand what things go and and yeah and to me and to me I'll say it's also investing is longterm like you know like with Bitcoin and all you buy Bitcoin at 16,000 it BEC it becomes 34,000 the next day and you're rich right but that's not how I like made money like it took it took a really long period of time to investing when uh when do you know to buy and when do you know to sell look you you Savvy investors invest through all Cycles right so you're you should always be buying and selling but like let's talk about right now
we wouldn't really necessarily sell a deal rates just got cut so now things are kind of picking up and we're actually like looking at selling some of the deals but like you have to understand where that market is and if there are buyers out there and I think you could ATT test this if somebody put a deal on the market let's say a year ago the impression was probably they had to sell when you have the Imp if somebody believes you have to sell right they're going to go like wow I'm gonna take advantage of this guy right I'm I'm gonna lowball him right so we tried to avoid that period of time but at the same time there just wasn't a lot of deals to buy right things have
slowed down a lot and and part of it frankly is has to do with Ula we kind of I know we we talked about La but we'd be remissed not to talk about like Ula and the the chilling impact talk about that oh God can we not that's more money that's just going to get wasted honestly I know single single worst uh thing they could have done to the market and just look at deal velocity right so so explain to the listeners what is Ula and what impact has it had on Los Angeles yeah so so Ula was a was a tax that was passed but it was called The Mansion tax right and it was sold on the idea that we're only going to tax Mansions so if you're above $5 million you pay uh what was it
like 4% 4% above $10 million 5% um or is it the other way around I can't remember now it's so painful you don't want to think about it but it applies to every deal it's not just houses it's not just Mansions right it's anything so you can buy a medical office building for 20 million bucks sell it for 11 million bucks and still pay that tax right now ostensibly this taxes were to pay for homeless programs we we've already agreed that yeah we been there done that where's all that money what are they doing with it they can't even like said they can't even account for the money that's the funny yeah so as one of my institutional Partners kind of put it was like what the city did is they made themselves a partner in your deal if you think about it right it's an interesting way
of looking at you get a 5% Equity piece and if you sell which broker is a partner too from that perspective because you're getting a percentage of the sales price but yeah but you you earned it yeah I mean ideally ideally some sometimes I feel like I didn't I'm like damn I got overpaid on that one and other times I'm like holy [bleep] man I had some sleepless nights getting over that one um so then the effects of that have have been what on the investment community and
what you've seen from Ula um the effects to me have been driving away some more of the institutional dollars right so some people are like why why are we going to pay this like so that's one two it's definitely reduced deal volume you just look at the data right there are less deals trading when you ask people it's like I don't want to pay the Ula at this point like why right now some people thought go away I never thought it'll go away cuz he pass a tax and it sticks um I don't know if there will be city council or mayor comes who has the courage to say hey we know we have a problem we know we have to fix it but this is not the way to do it I don't know it may be here to stay um and
then there's there's a theory that people are like now that people have seen it successful it's not successful in LA because if you look at the budget the amount they thought they were going to get from Ula and the amount they actually got from Ula it's like you know it's not even apples and oranges it's apples and shoes or whatever um yeah but it's but over time I think people will just build it in right to build you're going to build it as an expense into
the deal and it costs the people who have owned properties for a long time Andor the kids have who passed down the properties they're just paying it right it's just like you have to price it in the deals because no one's going to there an investor new investors is going to price it on their exit or the ref you know on that position which I'm curious to know if that causes more refinancing from the position but because it's getting so much harder from a to manage and own buildings I think that's where a lot of our clients come from on the sales side is they're just fed up with with dealing every with everything that's going on and it just becomes not the juice is not worth a squeeze which I want to talk to you about going out
we're probably like I think you meet a lot of guys who are based in La who are doing deals in all these other markets right Florida Texas like kind of the red States everybody talks about I guess we kind of had like a counterintuitive approach to it which is like we're the local kids we know this Market we grew up here we know almost every street almost every corner and that's a Competitive Edge for us is just to be like and like you know you can call me on a multi- deal and I'll just I'll know immediately I'm like I don't want to be on that street right cuz I know that street I don't want to be on it and it's 30 second conversation so we lean into what we knew well um I think the guys who went to Texas and
Florida whatever also smart like great decisions to make but you lean into what you do well and what in your strengths um and I think for us it's a conversation we're always having um we are we're super deep in Southern California multi- retail will continue to go deep in it um but you know we've done deals in Seattle we've done deals in Portland we've done deals in New Mexico we've done deals in um carmell California we're opportunistic right are you looking at any markets in particular that you like we're looking at markets we're trying to understand markets um you know and the thing about like doing a deal in a new market is you got to do a deal in a new market to understand it that's just the truth of the matter yeah and and to build a reputation right so how did we build our reputation in La
we bought a multi- deal and then some broker called and said hey buy the second one we bought the second one we bought the third one right you got to start somewhere but for us also we are pretty entrenched here and we're doing deals here we know it pretty well um and like you know one way of diversifying is geographically and another way is by asset class right and so that's kind of how we're doing it so we're pivoting a little bit back to back to retail so
as someone who runs a big company you know 38 employees I'd say it's pretty big a billion asset Center management you we we talked about this how you've kind of wanted to put the pieces in P place to be able to take a step back and focus on doing things that you enjoy which are different aspects of
the business how do you think about setting up a business for you to kind of be in the background versus all 17 years of of this investment you have been front and center dealing with everything why did you decide to kind of build it this way so you could take a step step back and what do you plan or what is the future plans for Optimus and the company
in general yeah you know I don't I definitely don't want to take a step back from anything from the company I do to stay back take a step back from like day-to-day things um and we built an incredible team of people um we and we had somebody just recently join us who's with us he worked for us for 10 years his name was Jerome Mickelson he just joined us as of last week as the president of our company so he's going to do thank you he's gonna he's great he's going to do day-to-day operations um for me I really still am in growth mode like I enjoy it the things I really enjoy that I think where're like we do really well with my both my my brother and I is like finding deals and raising Capital that to me is the most
accretive thing to do um so now that Jerome's in place and we have Jesse Lou Who who's A Partners well and runs Acquisitions and he's great we just like we have a really good team like like we like the other day Marcel she's a head of RR she was singing in the office and I at first I thought somebody was like yelling or something I opened my door and I was like [bleep] going on I'm singing I'm sorry I was like oh that's great um but I like I totally am in growth mode right now I I I haven't said any hard and fast rules but like wouldn't mind trying to double the size of the the portfolio two billion yeah who knows I mean you know what valuations to me are like I don't know they don't mean they don't mean a ton to me um but but
I I want to be in growth mode I am very much now kind of talking to friends and people and that's one thing I like to do is talk to other people in the industry and just learn from them like you never stop learning no right and figure out where growth opportunities are I had a great conversation yesterday with with our institutional partner who gave me some Sage advice and kind of like ideas that he had for us and so it's
something I'm working on right now that's amazing I love to hear that because as someone who is building a team myself um it's hard it's it's really hard to manage people and there are certain people who do it better and I know my skill sets and I try to put people in place who feel my weaknesses and I think from an investor perspective Ive if you're trying to build something that you want to be significant you're going to need to have people helping you along the way and knowing what you're good at and knowing what you're not so good at and finding people who can do those things that you maybe don't love to do maybe you're good at it and you don't love to do it but finding that support system I think you build really big things together you don't build them solo
my experience and that's that's honestly the hardest part as an operator is like when you self-manage which we do it's the people part of it is the hardest part finding enough people and finding the right people and managing the people that is really tough yeah and I think it's like I think it's tough in California I think it's tough because it's it's an expensive place for
people to live right yeah so everything everything gets exacerbated from that perspective yeah and one bad thing and you know you're looking at there I want to talk about uh networking and then philanthropy because I know you're you're big in both of those so um you said you're really good at raising capital I imagine that's through the network that you've built how have you done that and built that and then also how are you helping on the backside from the philanthropic perspective also
yeah so look networking just like anything else it takes time right it it and it's it's reaching out to people who you know and who trust you that's like the most important thing to me and like to me like our reputation really matters now does that mean sometimes we don't make M of course we make mistakes sometimes we have sharp elbows we say things we shouldn't say whatever of course um but that really matters and communicating with the investors being transparent with them reaching out to them and just calling so like we used to blast the deal and then I would kind of wait for people and I was like I don't think that makes sense I should pick up the phone and call these people and I realized like duh that's obvious you should call and talk to him and
I'm not huge on like sales like I don't like you know oh this is the greatest deal in the world that's [bleep] there's no great deal in the like the greatest deal in the world like a Deal's a deal right like it's a widget um but just reaching out building trust with them and just communicating with them and like to this day like investors will text me or call me and be like I'm so sorry I'm bothering you have a question I'm like why like you should call like you need to reach out to me yeah that is my job like you have a question always reach out to me right whatever it is I Mayan somebody in the office may get back to you but always reach out to me um and I think those things paid off um and
then you mentioned philanthropy yeah like philanthropy to me is a big part about like what I believe in and what I do I'm super involved in it I'm I'm you know my personal decision was to be involved in Jewish causes um I am I'm on the board of directors of the Jewish Federation of Los Angeles I've served in a number of leadership roles um I support a number of philanthropies and part of it honestly was to teach my kids those values it was really important to me we talk about it at the dinner table um I think it will help them to be better adults and be better World citizens um makes me feel good to give back and I I really do think like I'm lucky like I'm like I I honestly mean that like I think I'm I'm a really lucky person I still have both
my parents with me like I'm you know I'm married to a great woman you know she still tolerates me two incredible kids you know I've got a good business I've got I'm surr Ed by people who are much smarter than me so I feel lucky about it and I just kind of want to share some of that when I can it's it is
a gratefulness is a very powerful yeah thing and I'm glad uh I'm glad because I've been recently evolved not being from SoCal and some of the the philanthropy and like sometimes you have a shitty day man and sometimes stuff doesn't go your way but when you actually help people or do something you know teach your kids or a lesson or I don't know do do something that gives to other people it always makes me feel better selfishly I guess but I think that's the right way to to do business and also from investing perspective people align with people have similar values and if you want to be involved with other people who are also a believer in your cause and has values aligned with with yours there's opportunities for there from networking perspective and just just making a
bunch of people's lives better and so I think you've done an incredible job job at doing that and I think the jfed is is really fun I've enjoyed spending time and doing that the dinner last last week or two weeks ago was really fun too so um anything you want to leave the audience with or anything you want to where can they find you or they want
to learn more about Optimus anything like that yeah I mean everybody can reach out to me my email is Kamar k y r Optimus properties llc.com um email me anytime or call me my office is 310 432 5536 um and you know like I do get young people reach out to me now and I kind of like it because I had mentors who helped me and I want to help people in Industry um yeah I love it I appreciate it
it thank you for listening to this episode if you enjoyed the podcast it would mean the world to me if you could rate US five stars on YouTube Spotify and apple podcast it really helps us get our name out there and helps us get fantastic people like our guests to share their insights and knowledge with you again my name is Taylor ven I specialize in the sale of apartment buildings in Los Angeles in Southern California and I look forward to sharing more of these conversations with you see you in the next