October 29, 2024 · 1 hr 13 min
With Bo Drake — Principal, Drake Real Estate Group
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In this episode of No Vacancy, host Taylor Avakian sits down with Bo Drake, principal at Drake Real Estate Group and a seasoned LA investor.
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In this episode of No Vacancy, host Taylor Avakian sits down with Bo Drake, principal at Drake Real Estate Group and a seasoned LA investor. Bo takes us through his journey from brokerage to owning and managing multifamily properties, sharing the lessons he's learned and the strategies he uses to build lasting success in LA's competitive apartment market. Bo reveals why real estate is a long game, how he’s scaled his property management firm, and the importance of diversified revenue streams in today’s market. Whether you're an experienced investor or just getting started, Bo’s insights will help you navigate the complexities of LA apartment investing and grow your portfolio. Highlights: Why you need to think long-term to succeed in LA real estate How Bo went from brokerage to managing thousands of apartment units The hidden challenges of managing multifamily properties and what to avoid Building trust with clients and why it’s key to long-term growth Watch now and discover Bo’s secrets to thriving in LA’s multifamily investment landscape! 1:03 - Bo Drake’s Path to Building a Real Estate Firm in LA 3:03 - Early Career Wins and Struggles in LA Real Estate 6:03 - Lessons from College Sports to Real Estate Sales 8:03 - How Los Angeles Shapes a Unique Multifamily Investment Landscape 10:03 - Creating Drake Real Estate Group to Serve LA’s Apartment Owners 12:03 - Property Management Insights: Handling LA’s Tenant Challenges 15:03 - Secrets to Building Client Trust in Los Angeles Real Estate 17:03 - Dealing with Problematic Tenants in LA 20:03 - Maximizing LA Apartment Value with Cost-Effective Upgrades 23:03 - Los Angeles Neighborhoods on the Rise: Investor Hot Spots 25:03 - The Importance of Transparency in LA Property Management 27:03 - Managing Tenant Expectations in Los Angeles’ Competitive Market 30:03 - Smart Tech Upgrades: Do They Really Boost Rent in LA? 32:03 - How AI and Automation are Changing LA Property Management 34:03 - Cost-Saving Hacks with Virtual Assistants for LA Landlords 36:03 - Insurance Challenges for Los Angeles Multifamily Owners 39:03 - Boost Tenant Retention: LA-Specific Strategies That Work 41:03 - Avoiding Common Investment Pitfalls in LA’s Multifamily Market 44:03 - The Impact of LA Rent Control on Apartment Management 46:03 - Smart Tenant Selection to Boost LA Property Value 49:03 - Market Trends Every LA Investor Should Watch in 2024 51:03 - Long-Term Strategies for LA Real Estate Success 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 Never miss an episode! Subscribe on your preferred platform and rate our show ⭐⭐⭐⭐⭐: 🍏 Apple Podcast: https://podcasts.apple.com/us/podcast/no-vacancy-with-taylor-avakian/id1768889293 🎧 Spotify: https://open.spotify.com/show/0mqgyJK00yivmqfH8zzLQW?si=f5ab2abbbe734fd7 📺 YouTube: https://www.youtube.com/tayloravakian Visit us at 🌐 thegroupcre.com Connect with us on social: X: @TAYVAY_ IG: @Taylor_Avakian FB: https://www.facebook.com/people/Taylor-Avakian-CRE-Broker/61557266265091/ LI: https://www.linkedin.com/in/tayloravakian/
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the housing market is all but collapsed I had the best job during the downturn tenant of ours in Hollywood was shooting off fireworks at 3:00 a.m. from the balcony my word is gold with the people that we want to do business with no matter if you're a broker if you own a management company no one's getting rich overnight real estate is a
long game the end of the day it's just trust I don't want to say it's a thankless job but like it's pretty close welcome to No Vacancy where I share conversations with LA's top multif family owners investors and Visionaries I'm your host Taylor Vin the founder of the group s 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 welcome to the podcast my name is Taylor ven my guest today is Bo Drake principal at Drake Real Estate Group Incorporated is a privately helped commercial real estate firm based in Los Angeles specializing in thirdparty management
of multif family complexes as well as apartment Acquisitions and repositioning Belle thanks for being here thank you man dude I'm stoked this is uh great Morgan was on um earlier which is your partner we were talking about your guys partnership and McMullen Drake Investments Drake McMullen McMullan Drake McMullen Drake McMullen Drake I think sounds better than Drake MC I was gonna say yeah Drake McMullan could be like a actual person's name I think McMullan Drake you know you don't they don't confuse it with a person which might be good for like keeping privacy and whatnot but whatever you guys like deals um thank you for being here man I'm excited to get into it so first off what I wanted to talk to you about Harding
question should you start a real estate company yes why well most of the people I've met in real estate are very entrepreneurial and the real estate is a it's a long game we're all playing the long game so no matter if you're a broker if you own a management company even if you're trying to establish an acquisition company buying deals Etc you know no no one's getting rich overnight and uh unfortunately yeah and you know for the one the one thing about real estate is you're really not going to establish yourself until you do your own thing that's just my opinion I mean there's amazing Brokers you being one
of them that you know you can still sort of work at a company that you don't own but then re brand your own sort of yeah sub company and to me that's you know along the same lines as starting your own real estate company you're sort of trying to differentiate yourself in The Brokerage world and whatnot you're not a Keller Williams or a cold warer Etc um there's just so many other avenues that you can go within the real estate world and in my opinion um you've got to really sort of paint your own course if you will if you really want to be successful in real estate um there's very few people that I know that work for other companies that are you know the guys that we talk
about yeah you know at least in in real estate like tech companies sure but we're not you know real estate is a slow man's game it's a wealth storage of wealth and fortunately you get some cash from it and sometimes they appreciate which is nice as well so it's kind of it's a it's a long game in my opinion speaking of uh real estate and different verticals I know that you've worked and had a hand and been a part of a basically a bunch of different verticals in real estate from The Lending to The Brokerage to the management to the principal side so tell me a little bit about kind of your path to where you are today um with
the management company and then the Investment Company yeah so I got into brokerage on the brok or I got into real estate sorry in the Bro on the broker yeah so when I was 19 years old I got into the business I uh we didn't go to college no I was in during college oh got it so you like interned yeah so my college days so I played football in college and I originally went to Cal State Northridge okay and after our first season I red shirted That season but after the literally the last game the the Monday after the game uh they canceled the program wow so they were like hey you can you know we'll honor your scholarship you can still go to school here um but obviously you can't play football yeah and I wanted to play football that was
the only reason why I was there so and being that I red shirted I really had no options at that point so uh there was no tape of me I was sending you know uh uh practice highlight footage or my old high school highlight footage and to to every single college that would accept it and had no no real four-year opportunities at that point so I went to Junior College and once you go from a 4-year to a 2-year you have to graduate in the in the 2-year in order to go back to a four-year wow so um I had to graduate um from Junior College and I did that early so I had a an entire semester spring semester plus the summer before I would even start start the
next school year which would be my junior year in high school I won a scholarship um several of us did student athletes um there was a small monetary aspect to it and then the secondary piece was um you could get a job at one of the board members companies and there were several other real estate um guys you know CEOs of real estate companies that basically they didn't guar guantee any any job or internship but they basically were you know call us when when you're you know ready for an internship so I basically took them up on both those offers I I got a job at chick Sporting Goods which is not no longer anymore and I was is it like a precursor to Dicks Sporting K dicks bought chicks no way yeah Dixie Chicks right there man let's go so all of the dicks locations here in
SoCal former chicks location okay and um at chicks you work basically they would pay you minimum wage but then you work off uh commissions so if you earned more than minimum wage you were making more so I was selling shoes and sporting equipment and stuff and it was my first intro into sales and I loved it it was awesome but then during the day I I took an internship at a real estate very small real estate company near where I grew up in um the Inland Empire and that company was a little unique so half of their company was a development company and development in the Inland Empire was basically taking farmland and entitling it and selling it to a home builder that was like in a nutshell what they were doing and then the other half of it was I was basically shadowing a few of
their top um Brokers so they had a broker arm and they had the development arm and I literally would spend Monday Tuesday half of Wednesday on working for the developer side and then half the other half of Wednesday Thursday Friday and I would just um work for the broker and I would do anything that they wanted I mean I was working for free yeah and but that's how I learned um the business a little bit and you know contrary to a lot of Brokers that get into the business after college um you know I was able to learn the business kind of on my own paac there was no pressure where I had to pay rent or pay for food Etc it was you know just learn the business Etc and all of the Brokers were ex athletes which obviously I gravitated towards being you know a current College
um athlete and I loved the camaraderie of the group being in the pit um and then I loved the technical side of the development business as well so it was a it was a great intro into into real estate so I did that before I transferred to Claremont McKenna okay where I finished my college career and then um you smart enough to get into clarem well a transfer I don't you know I don't I think the football coach had something to do with kind of dude
that's cool it's like Geniuses I knew a guy and he could literally count he like remembered every deal he's a broker literally remembered every deal by like he'd be like oh yeah that deal I'm like where'd you go clar mcana makes
sense yeah well if you ask Morgan he he calls me Rainman when we started um partnering on The Brokerage side you know I I would remember for every sing that was your and he was like remember that property on this street and I'm like oh yeah 341 you know and he's like you know so dude so that was your you had that Knack yeah but I okay going to Claremont though I was those kids were so much sarter than I was but you were there for football so I mean yes but it's division three and it was I was there for my education got it got it at that point in my college career if you will I was so
much more focused on how can I get the best fouryear education degree you realized than playing football I know it was like um so I was very fortunate to end up at Claremont yeah graduate from there and had had a blast playing football we weren't very good but you know uh in terms of wins and losses but made great friends that I still keep in contact on guys that I went to college with have just gone on to do amazing things and so um when I I graduated I followed my now wife to La she went to UCLA she stayed in LA and so then I started as a broker sounds like Morgan yeah exactly that and I met Morgan um you guys were in the pits together right in the pits together making coold calls and laughing at each other and you know just grinding
away trying to do do deals yeah you know um meet as many people as we could and cultivate any relationships that we could at 23 24 years old which is very very difficult to do yeah so I spent three years uh as a broker at investment real estate Associates and you know this was end of 2009 I left uh it was you know height of the financial crisis and at that time we were trying to do a as Brokers we were trying to do business with with banks so we were following all the money and you know typical owner of apartment buildings you know were really on the sidelines or they are in trouble and really losing control over what they were going to do with their assets and um there were a few banks that were transacting on you know note
purchases and whatnot so we were chasing that in every angle that we could and we were successful in a few um which was unique it's not like selling a you know a typical they're motivated sellers like it's when you get an Aro you're pretty Happ well even prearo we were selling they were selling the the loans oh the notes got it ah which which again for us was completely new totally um so I was trying to do business with um with uh City National Bank who they don't really do that side of the business however um they at the time had just purchased Imperial Capital Bank okay which um and City National's REO Department I think had four people on their team and they only had you know at the time City National had maybe 25 assets that they own so very very little yeah but they
were going on this buying spree of buying other failed Banks and they needed help and they don't they didn't necessarily have the perspective of a broker and being able to hire the right broker to monetize the assets that that they were you know going to eventually own so and then they made the purchase of an imperial Capital Bank and that brought I think at the time it was they owned like 250 assets that owned so I went to go work there and it was anaz I had I I tell everyone this like I had the best job during the downturn because you know it was working for a bank so um people would work really hard and you know but if you were there at 5:15 p.m. you know people would look at you funny what are you
exactly so um and they you know they paid decent and I sold you know every single asset class that you could think of apartment buildings land office retail industrial everything yeah and in TW my portfolio I was in 27 different states Jesus so um it was a great education yeah great learning experience I was able to also learn the banking World a little bit obviously we weren't on the lending side but you know there was a lot of interaction between group and the Real Estate Group yeah who were trying to do whether it would be new business or they had a you know a client with a struggling asset so there was some crossover but I was able to learn the banking world yeah and um you know so I was there for another three years i'
I'd say and you know I I'm not the banker type so I wanted to get on the principal side and at that time there was this was 2012 there was starting to become a more of a ramp up in the market you know that they had cleaned up sort of um everything that happened in 07 89 Etc and you could see that things were going to start picking up and when I was at City National there was a huge emphasis on asset management and that side of the sector on the principal side was becoming more uh valuable so I leverage that to a job on the principal side uh as an asset manager for a small company uh they were small at the time right now they're massive but they were mainly on the affordable housing side
so I you know managed 10,000 units across the country and really learned how to manage buildings so obviously I wasn't in a place where I was doing the blocking and tackling from a you know Property Management standpoint but you know I was to sort of related to sports I was the quarterback getting the play from the owner and then Distributing that to the rest of the team got it so you know loved that I was only there for about a year and then I got you know basically at the time my dream job which was heading up Acquisitions and asset management for uh California landmark a well-known Felman um and owner in LA and and you know that's really where I learned a lot of kind of what I brought into you know now my own company
and whatnot so I actually started the management Drake Real Estate Group the management company while I was working at California landmark and how did
you do that simultaneously was it like they how did you get your first management clients and what propped you to be like I want to do
Property Management so um back in 2012 I always wanted to start my own company I had but I had no Clear Vision to what that company looked like I mean obviously being coming from The Brokerage side it's like how do I get on the principal side how do I how do I get to where these guys that are buying whatever building they want to buy and how do I get to that place and well you know the easy answer is you just go find a good deal and you raise the money and but that's really really hard it's really hard really really hard yeah than easier said than done yeah and you don't also you just you know what I learned from Ken Kahan at California landmark is you can't really start a real estate company with only one Avenue of
Revenue because you need to be able to weather the storm during a downturn so that really sort of opened my eye into look how do I how do I start a company with no money mhm um but you know a a lot of experience some would say but not um again the ability I didn't have a rich uncle or yeah you know a rich family to to dump a bunch of money so I've got to offer a service so I was obviously in the management space on the asset management side I knew what owners wanted to see and I knew that um I knew that if I could Implement a few things that I could maybe do it better mhm um so and quite frankly I just got I got kind of tired of hiring and then firing management whe whether that be
third party management companies or management Personnel yeah so I knew that there was a a market for this um how our first property came to fruition it was really a a referral from a friend of a friend of a friend somehow got my uh name and contact info and said hey we're we're buying this building in bretwood and you know we own real estate but we we don't own any Apartments this is our first apartment acquisition and we need help so I said okay you know I'll do it and that was the the launch point of our company because it was a it was a decent Siz deal to where um it it made it fruitful for what we were doing and then my wife had just quit her job at Disney to kind of figure out what
she wanted to do and um this is maybe six seven months later after that first uh assignment and we had started to get more referrals from from people that you know again didn't didn't come from um places that anyone would think you know to start and so one building became three and four and five and eventually we had 12 buildings and I was kind of doing it myself and and then my wife Katie you know quit her job and I just said just do this with me yeah for the longest time she was like hell no I'm not getting your poerty management all I hear from you is like how much it's how brutal it is yeah how much you hate management like I know but we can do it better yeah and the whole goal was eventually look if we can establish ourselves and we can make enough
money and hopefully we're making profits that we're establishing relationships with these people that actually own buildings
and you know a relationship between a property management company and the owner is a real relationship it is a real partnership and um unlike The Brokerage world where when you get an assignment to sell a property it is us against the world but there is a you know a beginning middle and the an end to that relationship with us it's it's you know hopefully years and years and years and years so um anyways the the point was if we can establish good relationships then we can co-invest with our existing clients and then you know eventually get back on the principal side and own properties ourselves because you know we want to build wealth and this is what we want to do and this is the life we want to live and yeah what we want to provide for our family etc
etc etc so she would handle basically during the day if anything came came up and I was sort of training her on accounting and you know what to do here and there and and she was great and you know really picked it up pretty quickly yeah um and then I would handle nights and weekends or if there was an emergency during the day and somehow we were able to do that for a few years while I still worked at California and you know um it was it was difficult at times because you know working at California landmark is uh Beyond a full-time job or it can be Beyond a full-time job yeah so um but we figured out and then basically in the middle of 18 I it was the B the management business was no longer a
side business it was I needed to either do this yeah or just be you know content working for somebody else and then having this kind of side gig thing yeah um and so I just I took the the leap and left uh we had like sort of a long uh roll out of me leaving and so basically 2019 I would say was the first like full year yeah and then we hired our first employee uh January of 20 you
know what's funny is uh the first time I met Ken and Ari was with David Harrington and he was friends with you he knew you somehow and I think you must have just left or like there was something where was very recent because I remember that conversation going like oh I know this guy Bo and like you should meet Canon and Ari and y y y because I was the the new guy coming toing multi family and like okay he could dig up some deals for you guys like you should meet kind of situation which I I remember hearing your name literally maybe within 12 months of me being in the business and it had never transacted or wasn't in the point where we went back and forth on deals and then I think I don't even know fast forward like maybe when you
and Morgan were doing some deals or maybe I had co- called you because your name was still on some of these properties or something like that I don't remember exactly but uh and then we started talking deals and then obviously you and Morgan started doing the investing side of things well you brought the management efficiency you had the team you could you know and and we were talking about how operations such a huge part of a deal making sense for your investors that I think you two are very good partners from that perspective of being able to balance each other out and skill sets and and who handles what and stuff like that so I I remember that uh the first time and then um you mentioned me something when we were preparing for this you broke your literal back what was this what's the story with
you breaking your back which then was like was when was this period where you broke your back and it you decided okay I
got to do this um well actually broke my back in high school playing football it was like a hairline it was a hairline fracture in my spine and the doc the doctor at the time was don't play football anymore so I missed one practice just like any good football player would yeah and I sort of always knew I had a back issue in college it was but you're in different shape right you're 20 different different and um so I don't know exactly when it actually broke BR cuz it was It was kind of BL um I noticed it basically in 2011 I mean there was times where I couldn't go to work and this was when I was in City National um so yeah I remember a chiropractor that I used to see and and he was like
why don't we why don't we see what's going on cuz I would see him sporadically you know if my back was out he would just put it back in and I would move on and call him in a few months and he's like man we got to like let's just take an x-ray yeah takes an x-ray I go back the next day I remember walking in and the guy the assistant was like Hey has the doctor talked to you yet I'm like no he's like oh you need to go in that room I'm like okay so I go in this room and I'm I'm looking at on on the thing and I can see that there's an x-ray on the wall and I'm like wow that guy's back is jacked up like you could just tell
he like wow that guy's spine is broken so the doctor comes comes in like 3 minutes later turns on the light the backl and it says Christopher Drake that's my real name Christopher Drake and I'm like oh [bleep] my spine is fully broken so yeah and he tried to talk me into look we can work through this you know it's kind of a common uh injury um breaking your back well the way that it was not to get too technical like there are ways around it' be very painful at times uh anyway I saw six spine surgeons then you know so from there then it was like oh sh I no longer need to see you yeah I need to see somebody else yeah so and five of them were literally like I'll I I would operate on you tomorrow and um the
sixth one is like I just have a policy you have to be my patient for 30 days and then and but yeah you need spine surgery so then I was like figuring out who who's the right surgeon Etc so I had surgery February of 2012 okay and then I had to go on disability so I I couldn't work obviously but I couldn't like no access to you know anything work related and uh you know I was at City National and so I had five weeks of basically just sitting with myself oh my gosh recovering of course sure yeah but then it was really like what do I want to do in the F you know it really gave me that time to like think about planning and um and there were different
Avenues of what I wanted to do and what you know okay I want to start a real estate company but what does that actually look like you know so then I'm like okay well 25 years from now what do I want and then I kind of worked backwards from there and I wrote this story in my head of I did this and then I did this and then this led to and that's how I got to 25 years into the future and the common denominator was you know to provide the optionality I needed I needed a broker's license whether because whether I wanted to start my own brokerage firm yeah or if I wanted to start a management company which you need a broker's license in the state of California to do that um so that's what I did so that was kind of the starting point of got
it providing me the optionality that I needed at the time to go you know potentially do my own thing and when
you started doing the management stuff cuz I hear stories I seen them on tours I've you know managing tenants is one of the reasons I'm still in business because uh if you've ever done it if you're an owner and you don't have third party management and even if you do have third party management it like you're still you know there's still stuff to do what's the craziest situation that you've
come across managing Define crazi where like you had to go home
and tell your wife of like you will not believe what happened there one
story that comes to mind is when I was um when Katie was handling the dayto day MH she was six seven months pregnant with our first kid and it was a building in Brentwood so our very first property and it it's a very we still manage it today it's it's a great building it's a family building they're all two and three bedroom units but very large and um everybody knows everybody and everybody you know for the most part is very respectful uh of of us too just not just their neighbors so we were on a first name basis like with everyone yeah and there were there was one tenant in particular that started to have some personal issues and um we
started Fielding calls from Neighbors about them being worried about this particular tenant and you know in management you're like okay well you know we're not friends you know I'm not going to engage on in that capacity and whatnot but we're hearing stories like look she she uh drove her car into the garage at two two 2 o'clock in the morning you know the garage wasn't open she just sort of plowed her car into it did no damage or anything kind of weird stuff she was passed out in the garage um so you know us
and a lot of people were worried about her and I got a call in the afternoon from Katie and she was like you got to go to the building Something's Happened and she's like I'm not going you know so you have to go yeah and unfortunately this tenant had passed away a drug overdose oh my gosh yeah so that was like I didn't see the full body sure but I had to be the one to enter the unit and then you know deal with the fire department the ambulance the police and that was like I'll never forget that just because of how close-knit the community is and that and um but aside from that I mean we deal with crazy situations all the time the thing I like to relate it to is um like road
rage on the freeway yeah you know it's like whoever's cutting you off or or if you cut somebody off or whatnot and they're like flipping you off or cursing at you it's like wow that person's having a bad day yeah you know the management is in the middle of a lot of situations where tenants are having bad days they're just you know plowing it coming after you and so but that's one of the reasons why you hire a management company we're the ones blocking and tackling and keeping the ownership away from these gnarly situations that can occur and you know look we we manage on the third party side about 3,000 units and there's about 20 of them that really don't like us yeah you know but so of the 3,000 unit that's a pretty good ratio yeah 3,000 units there's probably 4,000 plus residents as the roommates and
family and whatnot and um yeah 25 of them are Super Active online and will last you for and it's very irrational yeah um the Google
reviews you like for management companies I don't think there's ever been a management company above three stars and most likely three is really good three is like you're do you're doing something to like have all these people hey we'll give you a free month's rent if you give it like there's some crazy [bleep] because the only people who post about management companies are the ones who don't yeah have a good time or or they're they construe this situation and it's this one off and it's like they didn't you know do this or the the my toilet wasn't whatever it's just dumb stuff so like it's actually kind of funny you look up any management company the worst Google reviews I think of any any business across the board like there's no one outlier everyone is tough and like management is I don't want
to say it's a thankless job but like it's pretty close it's pretty close to like a thankless job right you're the the owner is expecting you to run your building smoothly not call them as much as possible deal with situations you're the one who has to break the bad news of oh this pipe broke here we got to pay for this you're coming typically with them with bad news and then the tenants really only contact you with bad news so you're just dealing with bad news all day every day which must take a toll on like the you the company the team H how do you manage just being the bad news you know conduit yeah
I mean I will say growing a management company one of the most ult things you know the most difficult thing is finding the right people for your company and for your portfolio who's going to se ey with you and SE ey with our owners uh that's very difficult um like the people doing that are actually like the our property managers the accountants um and further from that it is a thank thankless job and the property managers don't really receive a thank you right so that's got that wears on you as a human yeah so that's my job I need to build them up I need to say great job here great job there um because unlike a broker there's you know a
transaction it's like whether or not you crushed it or not you know you still sold it so somebody's going say hey thank you great J whatever you get to move on for us it's a series of issues and there's no real start stop it's just start and you keep going yeah so uh it's very difficult but again that's my biggest job now with the company that we've sort of grown and and you know it's it's taken us a few years uh to get the right team together and we're still growing but we still we do have a really good foundation of people now um early on I would say I don't know that we made you know dramatic mistakes with hiring people I mean we hired the right people at the right time of
our company right so it's like you can only afford so much then you're only going to get so much out of them so you can't really say well that person sucked or whatever that was a mistake I mean it was the right person at the right time yeah everyone grows you get you
know different things change you got to upgrade like stuff like that you know no hard no foul it's part of part of the growth process yeah um did now given you guys are continuing to grow and there's obviously a ton of management companies right it's it's like brokerage I feel like you're building management almost is like a brokerage but because you got to manage people like Brokers manage the other Brokers to like that they got to make them happy and that's their real clients not necessarily the transactions which is kind of you know funny when you realize what the actual business model is how how do you differentiate yourself as a management company like how did how did you think about it when you were wanting to start this of like okay I don't want to be like everyone else what am I going to do to
actually differentiate myself and have that you know X Factor to be able to get clients and grow
this thing that's a good question I think it I mean in our business it comes down to trust number one um my word is gold with the people that we want to do business with so so if we're sitting in a room and they've got a building and they want to hire us to manage it you know I always tell them like look I'm going to manage your building as if I'm the owner it's impossible because um you're never going to meet that Mark right yeah it it that's just an impossible Mark however um we're going to bring a different skill set to meet your business plan and I'm going to do everything in my power to execute your business plan uh at the end of the day it's just trust the The X Factor at this point
is really um I mean look we've gone up against the big boys in town and have won a lot of business um we've uh in terms of you know pitching against others um we've I think we have a pretty decent record mhm um and we've won business you know where clients get rid of a really well-known company that are managing 15,000 units and they hire us that we're you know a cockroach compared to that yeah um so it's it's just trust it's personality it's you know because there is a certain just a level can you do the work yeah and then at the end of the day you know when I was on the asset management side there were some buildings where we would do surprise visits cuz you know stuff wasn't adding up you know if
we announced that we were coming you know all of the sudden the the curbs are being painted there's new fresh flowers in the entryway and whatnot it's like this isn't really the the true picture how the property is being run so at the end of the day the owner needs to feel comfortable that when they're walking away and they're leaving the property that they're going to trust us to get the job done MH so that sometimes takes a while mhm um but look we're being a little more selective now a lot more selective with who we're doing business with early on it was like we were taking everything yeah you know let me eat yeah and we've we've I've learned some lessons on that and should have been
um so actually that's a great segue what makes like a good client and what makes a bad client like now that you can choose who do you like to work with and who is like a no thank
you first and foremost I think um ethically I want to be on the same page yeah if there's a if there's an issue on ethics it's a non-star yeah at
this point and that means like either doing some shady stuff to get tenants out or like cutting corners on certain permits or taxes or I don't know like a bunch of things where it's a gray area or it's blatantly not legal and they want you to do it anyways and you're like no I don't think we're going to do that yeah
more more towards the blatant obvious type of examples not necessarily you know look we'll we'll be as aggressive as we can yeah and we'll use every tool in our belt that we to to get whatever job or whatever issue that is uh accomplished but yeah if you're you know Towing the line on Breaking the Law like nonstarter yeah and not to say that we've gotten in into you know business with people that I thought were breaking the
law but there were clear signs early on that like you know this is going to go a little too far yeah and um also you know when they're firing what I believe to be a pretty reputable management company that's a red flag yeah you know cuz a lot of these other management companies that are the same size of as us um you know they're colleagues yeah I could call them up they could call me up and we trade information and so um if you're firing one of the bigger guys you know that's an easier story to yeah like race star you know moss and I don't know the big ones really FBI Sirus yeah you can understand why you know and that leads to I mean we can talk about what those issues would be but um I'm not here to bash
our competitors but at a certain size right there's there it loses that kind of touch 100% so um yeah and then the other thing so that's number one yeah in terms of like who we want to do business with um number two would be a little tougher to pinpoint um but if the owners don't really have um like a clear process that can be very very challenging so that doesn't mean that we wouldn't take on the business but that just means like hey guys this could be pretty challenging and we might not be working with it you know but like let's just see you know so ethically no issues yeah but process is you know a little hairy yeah and the reason I say that is because you know look the average
size building in La is 14 units maybe it's 15 units it's either 14 or small it's small and from manager perspective you can't make money on a for one 14 unit building not one but also so you don't have an on-site manager you don't have on-site maintenance you don't have um the on-site staff that you would of a 200 unit building yeah because in La 60 units and above requires either keyholder on-site mostly yeah but even if it was a 16 unit building and you have a key holder you know really that person is just like paper a keyh holder maybe they're getting a couple hundred dollars totally um to check the box and be our eyes and ears they're not actually doing work you know so all of that work gets Consolidated to our office so the challenge then becomes if we have you know X number
of owners and they all have different approaches and it's like hey you've got to use my guy for this or you've got to use my guy for this and I don't want to use your vendors even though you've spent 15 years developing these relationships far before you even started your own company I don't care you have to use this person okay so then tenant brings in a maintenance request and is screaming at maintenance for you know I need my toilet fixed and y y y and your pigeon hold that I can only go with this guy and he can't get there for three days you know so it puts us in a really difficult spot got it um that so that's like the challenge yeah um yeah and we've got to you know work around that you know maybe I step in and I
have a conversation with the owner and um we figure it out but you know those are just normal challenges that they let you do your job they let you so the best clients would be the ones that let us just operate they trust us fully we do have we have a lot of clients that literally throw us the keys and we hear from them you know once a quarter once a month and um or they hear from me for bad news yeah yeah yeah right um
what makes it good so like you're you obviously own and are doing renovations and figuring out what amenities make sense what kind of level of Renovations make them most sense for the renters the area like what are a few things that um actually make the difference from like if if an owner was watching this and they own a you know 12 unit property right like what advice would you give them on tenant retention tenant uh you know renting them for the highest amount are there little things that you've realized or right now that are in
I would say now in real time that analysis is becoming way more scrutinized than it's ever been what do you mean by that meaning if this was four or five years ago um we have clients that literally would buy a deal and not even really go inside the units because they're like hey it's 640t one bedrooms I know if I spend xll I'm going to get hex return and more times than not they they are achieving that nowadays um that's not necessarily the case it's way more um involved uh meaning you know tenants nowadays right now in real time tenants are way more pickier than they've ever been so you've got to think about okay I've got a building in sort of Hollywood that
is tough parking street parking is terrible if I get a vacancy my my go-to renovation which is what I've been doing for the last five years in all of my buildings is this and it costs me $50,000 to renovate that one-bedroom unit we're adding washer dryers and we're putting in split split mini systems hpac and we're doing this you know hardwood floor Etc it's going to cost $50,000 we're doing it but then on the leasing side it takes four or five months and what I thought we were going to get nowadays is you know 5 10% less so should I really spend 50 maybe I can get away with spending 30 so those analysis now in real time are being way more scrutinized than ever
before interesting so yeah it's it's much so the tenant seems to have a lot of Leverage and do do you think that that is a function of the marketplace and the demand in Los Angeles or do you think that's a function of tenants just being having no more n like there's not not much more new construction so like what is it that's driving that
the economy for one started driving in this about 18 months ago 20 months ago and 2020 end of 2022 2023 yeah right when the interest rate started to creep up is when you started seeing this well we started seeing this on the more expensive side units got it you know if you have more disposable income you were um I don't want to say you're smarter than you know than the rest of our pool of of uh tenants or whatnot but for some reason when we were trying to rent two-bedroom units it didn't really matter where the building was it was taking longer and we were still getting the rent but it was instead of a week two week leasing time frame now it was four to six weeks so I started seeing that about 20 months ago I want to say 18 20 months ago and it
is trickled down now to basically any price point really um again we for the most part generally speaking still rents are still pretty strong obviously we have a supply demand issue um but it just is taking way longer a tenant walks into a building and if you or I walked in the building we think wow this is great but they are just way more um nitpicky on every little thing you think it's because they
have access to you know you can see these 3D models these walkthroughs these there's so much information on every single at what's available oh this property had you know this setup in washer and dryer and this one's too like too small and the parking was tandem here but I get two separate parkings here so it's like there's just it's like almost a you know you go to a Chinese restaurant and there's 35,000 things the menu it's like hard to choose what you want right so you feel like there's maybe with technology and the way it's going and all these things that people just have so many options at their disposal that their expectations of what is available they're they want to get that
perfect fit yeah I think it's a little it's it's that and then um you know I just think we're in a weird sort of micro time time in the marketplace where you know normally leing is tough in the fourth quarter but it's been it's been tough for the last year yeah um so you can't really pinpoint it to one thing it's it's kind of it's building so if an owner called me I would really honestly say like that's a really tough question yeah I'd have to go and meet you there and really talk about like what is your business what's your strategy here and how can
we yeah this makes sense here for these rats you're going to get you shouldn't do this because it's going to cost 10 grand it's not going to get that much more rent based upon the tenants all that all that kind of details and stuff like that where um where are people where's the next pocket of La I have my you know people always ask me that question all the time they're like what's the next Hot Market where's where's where are the hipsters going where's you know do you feel like there is a new market in LA or you're surprised by the rents you're achieving in certain Pockets or does it kind of feel like there's not that next you know Highland Park there's not that next Silver Lake there's not that next West Adams or what's your thoughts on that
I don't think it's in the city of La to answer your question I think a lot of those micro neighbor Hood markets that you mentioned we've
we've already seen the sort of Boom you know Highland Park being sort of the best example in my opinion boom and best uh yeah maybe yeah um you know I think you know Highland Park too I mean you go even further to like boil height boil Heights should be that next one but I feel like we've been saying that for a decade it should be but the the um impact that that neighborhood has the historical neighborhood just won't allow it m um so I personally do not think the city of La so that doesn't mean got it you know unincorporated La um like I'm I love Hawthorne I think Hawthorne has a great story to it and I it's really sleepy still very much so
so um you know Morgan and I own a property in Hawthorn we want to buy more there's just a lot of small stuff in Hawthorne um Hawthorne reminds me of what real estate sort of is it's like kind of this um you know Cowboy sort of you know if you want to get something done you kind of got to roll up your sleeves of yourself so I like those types of cities there's a there's you know again so I think if I had to say like one specific area I would say Hawthorne yeah um I think the areas in La just um you know have either already seen it or we're not seeing it because there's just a lack of investing in the city of La for obvious reasons of what's coming down the pipe in November and then you take like
Santa Monica for example everyone you know when I first got into the business everyone wanted to own in Santa Monica what's going on with Santa Monica man it's not safe what what the [bleep] happened it's not safe why because of who runs the city yeah it's it's you know why is Third Street prominade 40% vacant you know it doesn't and it's it's it's sketchy yeah you don't want to um so going back to you know tenants and what they're looking for I mean tenants if there's a homeless issue you know near the property they won't even consider it yeah you know and in La it's that could be every single street right totally at at any given moment and I think La you know has done a decent job since bass has gotten elected and you know I don't agree
with a lot of things that she has stood for in the past but I will say that she's done a really decent job on the homeless side um I see that too and where I live cleaned up the all the streets are cleaned up it's like [bleep] okay yeah but that being said there's a lot you know we've got a long way to go yeah yeah um and people notice that tenants notice that you know if there's graffiti on on any of our buildings I mean we we hear about it you know and it's you know you got you
got to take care of that like immediately because it's has this weird stench on the building and the tenen see it and then it's just not doesn't feel safe it's it's a strange thing because uh my age bracket I guess you'd say you know 20s early 30s um West Side you know Venice Santa Monica uh SEL Brentwood everyone's kind of moving you're either there or you're in like West Hollywood hwood is and it just kind of depends I think what industry you're in um Finance all the tech companies are kind of down here and then entertainment and stuff is up there people still the rents are are pretty crazy still in those Pockets but you don't know how many people who would rather live in satel which from like a pure perception or things to do around there is not as robust as I would
say Santa Monica Venice you know closer to the ocean but like the rents are maybe I don't know 10% less 5% less maybe 15 depending on where you you going there's plenty of parking it feels a little more neighborhoody safe right it's like I don't know when or what needs to change for the coastal markets to really kind of become what they could be because there already so in my opinion it already is so expensive and there's plenty of people want to live there it's just if you have to choose between you know this and that and one's going to have the chance of your car being broken into multiple times and homeless people and you can't walk home you don't feel safe or you have kids like I'm not pushing a stroller around and in those markets you know it's just not so
it's it's so interesting to see what the politicians are going to be able to do in California I think is trying to do that but it's it's the local people Santa Monica is its own you know City and so if they don't start changing stuff right I mean nothing's it's just going to become worse right it's easier to live and sleep on the beach than it is you know on the sidewalk over there so I don't know it's it's I'm sure you have clients who you know buy properties everywhere and your perception of different neighborhoods and markets and what's going to have to be dealt with I'm sure you have
thoughts on those in those situations I mean the smaller the City the more issues you could have like Santa Monica and West Hollywood if you have an issue with a building and you're dealing with the city yeah it can be a nightmare and we've dealt with all of them so we can convey what the issues or the issues that we dealt with um it's a yeah it can be very very challenging those those markets I um I Heard a story actually
on the group chat are you on the group chat mhm so yeah you are because you you put some good stuff in there about the owner who uh the sidewalk was broken it was like maybe a tree stump or something like that it was broken someone tripped and fell right they sued the landlord for the public sidewalk right and they sued the city so they sued both of them I think the landlord's insurance company paid like 50 Grand or something and then the city paid 200 Grand $250,000 to settle a trip and fall from a tree branch case like that that can't be the outcome of situations like that because it just it's like such a bad signal for wanting to have Investments and people to grow and like it's insurance has gone insane as you know
um I mean you look at any of these expense ratios you as a principal and as a management I'm sure you're seeing both it's just like man alive and you can't you're not going to not have well most most owners are not the luxury of being able to insure themselves so you're gonna have to pay it and it just eats away you can only raise the run a couple percentage points like just super super tough do you feel like La has a chance at turning itself around or is it just a matter of time like or is it just kind of the norm that we're going to have to deal with as investors and Brokers and people who own and live in
the city yeah I mean I think there's always going to be issues in LA um in the state of California yeah and they're you know they're run by a certain group of people that are not pro business and that trickles down to the cities and I I think for the most part there's still going to be amazing opportunities in La um the the challenges might be different you know um over time but they're always going to be there the opportunities are going to be there if more if people want to leave the city then you know more for the rest of us you know I'm not you know being on the management side and having you know at this point somewhere upwards of uh 95 different owners you know you you do have 95 different perspectives on
this Market uh in terms of LA and you know outside of LA and uh I I can make sense of all of those strategies uh me personally I just you know I I believe in LA from uh from the standpoint of our business being a part of the apartment World um fortunately unfortunately it depends on what side of the aisle or who you're talking to but um we have you know a supply demand issue so as long as prop 33 doesn't pass um we're always going to have the benefit of there's more demand than there is apply so then it just becomes you know how are you differentiating yourself versus your your competitors from you know other owners and what you're offering absolutely that's the basic you
know analysis the insurance side you mentioned and you mentioned earlier the Google reviews I used to never look at Google reviews I I ignored them all yeah however I don't anymore um and partly because um we had owners call me and you know they understand that like the review but they're like hey I think you should like clean this up but we had buildings you know insurance carriers are looking for every opportunity to not renew and um they're doing due diligence as well and this wasn't a case with us but it on it was on a new acquisition that one of our clients was buying and we were heavily involved in the acquisition or the due diligence and whatnot and that particular building that particular management company had really bad reviews and we were
struggling getting an insurance carrier comfortable with ensuring the building wow and that wasn't the obviously the main reason sure but that was one of the reasons and it would kind of like sparked my uh there and and so now I focus on it uh quite a bit and you know hopefully we can get Improvement on our end just so it just doesn't become another excuse for somebody not to write a policy brutal when they're using like oh my gosh and the reviews were from like seven years ago you know it was
pretty wild just that's so insane I mean everything is going so digital nowadays anyways where you know even for um the hiring Brokers right like people Google you the first thing they do they're going to Google you see what's on the internet you know are you a repal person is it worth my time sitting down with you um it's a trust thing like you
said and but you do the same too for sure if you get a lead or if you get somebody who says like you know yeah I want to meet with you on a particular building I'm sure the first thing you do is research how many other buildings
do they own oh yeah 100% if I don't already know it in the beginning I'm looking up what they own I'm actually looking up like a lot about them and you know this too right it's like Rapport it's trust you you owners hire you because they trust you owners hire us because they trust us and their expertise and like if I can talk about how the his son went to Northridge and played football at Northridge right like if I actually spend the time to do that and genuinely want to build a relationship with him and it's I I don't see it as manipulative at all because I genuinely want to I know I'm good at what I do and like if that's the difference between me versus them and I can't convey because a lot of
owners have in their mind and maybe on the management side it's like you know all Brokers are you know just salesman transactions whatever right and like I'd rather hire my nephew and yada y y even if I leave hundreds of thousands of dollars on the table and so I think from my perspective when it comes to the digital side of things as well as the in interpersonal when I'm meeting with them it's like how can I sit on the same side of the table together and like let's let's be cons I'm going to consult like let me let's figure it all out let me get on the same page to you let me see if we're a good fit right which for most most people it is I don't you know I'm fortunate enough where I can kind of be a chameleon in certain C circum certain
circumstances excuse me but like everything is important th those Google like every little thing someone's judging you based upon every interaction so I think it's interesting that it's actually affecting the business plan and the business model from an investor perspective um so yeah I'm sure there's G to be companies and maybe this is a business opportunity for you is like you're really good at getting good reviews for property management companies or buildings like you guys come up with some you know software I don't know some program it's already there it's already there okay all right I was going to say like that is we integrated into our you did yeah which makes a bunch of sense you have to keep up with the times there's AI like from AI from the management perspective we haven't talked about this and
i' actually be curious to know if you're implementing any AI right now in the system but like that seems it's like it's going to be a game Cher
for management yeah we've tried um or we are trying yeah uh just from a communication standpoint totally you know just getting back to people faster there's a lot of times where it's just kind of the standard response which would be great if it was just automated yeah um it works here and there but again I mean our business is so there's like you need a human um a lot of times totally so um but we're toying with that one thing I I never or I sort of existed for a while was um um virtual assistance and now we're heavy in that let's go um there's a lot of our bu business that is like $10 an hour work and yeah why am I paying somebody $30 an hour to do you know $10 an hour work myself included so uh
We've outsourced um through a company that I think you know they started basically assisting real estate agents side whether it be like scheduling or you know whatever and that evolved into now there's a number of companies that you know have a good Property Management ba base interesting and are familiar with our programs yeah and um yeah so we utilize uh a few on the like maintenance side scheduling and then closing it out and then sort of having a customer service relationship um and and then on the accounting side just you know accounts payable stuff like that and bills
and whatnot so I mean I think you're going to see it too and I don't know how fast someone's going to these management companies are going to adapt to it I see it on the sales side broker side too it's like these these communication systems are going to be so realistic to a human on the basic level of stuff that is just kind of like moving pieces around scheduling getting a few confirmations you take a photo here it sees what's wrong with the plumbing okay hey we're going to send the plumber out it schedules it all automatically like we do that with um you know Communications automatic someone requests some information like we can send it to them and mostly for me it's on the follow-up but I really think in the next 24 months there are going to be some technologies with the how fast this thing is
learning where I mean it's going to be almost like you just got to make sure that you train the model the right way to be able to have because it can see images it can it can you know talk on the phone soon like it's it's going to be very very robust these these agents as they call them I think um agents uh property management agents AI agents basically how they do it where they can talk to each other and communicate is going to be super interesting to see and I'm curious and I'll I'll you know talk to you in 12 months to see how that's coming across other management companies but it's GNA be everywhere yeah like you're not gonna ever have to talk to a tenant I I I genuinely believe
you're not going to have to talk to you're going to have to deal with [bleep] right and communicate but eventually maybe not 24 months but eventually it's going to be the point where these things are quicker faster they know more about the they know the whole tenants social media they know what they care like they can make them happy like if if they're you know they'll talk about some Rapport building thing that they got on their Instagram like it's crazy when you think about it so I don't know I'm excited to see it but I'm glad that you're at least messing around with it because
it's going to be yeah I mean the other stuff that we more focused on implementing in real time now um has to do with uh tenant screening so we've we've invested quite a bit on that front because basically during covid and postco I mean I haven't seen this much fraud really yeah it's it's terrible terrible so um whereas our normal property management software uh doesn't pick the stuff up you know they just kind of gather the information and then they still rely on a human to review it got it U unless it's blatantly obvious sure this goes way deeper wow so you're doing full background like well You' always do a background just to make sure sure you know the person's not a criminal um
this has more to do with like income verification and um yeah so we've seen a lot of fra on pay stubs and stuff and you can catch a lot of that wise but like you know there's really so much time in a day and like you know if you get a pay tuub from ADP on you know you think it's legit but wow it's not so that's way more what we've been focused on just because you know again in our business like you have you have a problem and then you uh or a new let's say a new problem then it's like I don't want to repeat this across the portfolio so now that let's use this as an example and how do we you know portfolio wide not you know not necessarily make this mistake no one made a mistake in the example I'm referring to but um
just being cognizant of what's going on well it's another selling point for
why working with you because we have all these systems in place and we you know we really care about making sure your building does not have One Bad Apple in there that [bleep] it up for everyone right because you know all it takes is one bad tenant and the whole building
is just not the same yeah I got a call two days ago tenant of ours in Hollywood was shooting off fireworks at 3:00 a.m. from the balcony normally I probably wouldn't even believe it but they sent video so like what dude live next to you man come on but I'm not talk like I'm not like I'm I'm talking like real fireworks like like the yeah big you know in the air crazy so that same apartment how to how to um had a safety pole that they installed no way in the uh in the living room a safety pole yes in quotes man it's I we could go into some in-depth stories of property tourism but I don't know if it's R I know and you guys like you
guys go into buildings and you don't really have a history of anything so and you know you you may not even have a management represent representative like with you so
we've had gon pulled on us we've had fully frontal nude people just like yep come on in come tour and you're just like okay hey so go check out the sink right there like we don't know [bleep] really um in terms of the tenants makeup and mix and let a nice owner manager tells us hey unit 6 like you know watch out um but crazy crazy stuff where I never thought doing what I do that I
would have seen some of the stuff you see a lot of crazy stuff like that but then also it gives you Insight on like how people live oh I remember way back in the day when everyone was saying the economy was great and it was like I don't know I mean I've seen a lot of apartments and like I don't agree oh yeah like everyone has a flat screen of course yes sure but like you know there's eight there's eight people in the studio like you know they we
can't be it does it is kind of it is weird where you you start to see that too and it it it breaks you out of um at least for me like people down the street for me or neighborhood you know a few streets over or something like that people live very very differently and there's such a diverse group of people in La that like you do not know if that person has 75 cats in their you know apartment building and just like disgusting or they're hoarder or like they haven't changed the carpet in 15 years and they won't let the owner in because of X Y and Z or they put their ass tray out on the wall like people are disgusting and um it's very interesting to to kind of have an inside track of oh wow okay there's you know there's more people in these apartments that
were touring now interest like it's almost like you're seeing the econom me before it actually you know comes out in the news and stuff like that which
is interesting to see yeah it is very interesting it was more beneficial when the buyout world was more active they first started doing buy I mean I used to walk into apartments and try to figure out what magazine subscriptions they had um any insight into their like who they were yeah um to help try to negotiate and it did work but nowadays you know that that Market's basically
dead buyouts are not what they were you can't you can't bet on buying a building and doing buyouts and expect that to be a viable business plan just doesn't work anymore not right now no no and and with prop 33 if that ends up going soon I think we're going to see a lot of changes but we'll deal with it
we're doing the same stuff make it happen Bo thank you
for being on this I appreciate it man this is great we'll have to do round two and we'll go I'll make sure we go deep into these stories CU I know they're probably some juicy ones but thank you man I appreciate it yeah appreciate having me [Music] on 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 guest 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 and Southern California and I look forward to sharing more of these conversations with you see you in the next one