October 8, 2024 · 1 hr 19 min
With Moses Kagan — Principal, Adaptive Realty
The episode in one minute
LA real estate is changing fast, and in this episode of No Vacancy, multifamily expert Moses Kagan reveals how to navigate the evolving landscape of commercial real estate in Los Angeles…
Watch the full episodePublisher notes
LA real estate is changing fast, and in this episode of No Vacancy, multifamily expert Moses Kagan reveals how to navigate the evolving landscape of commercial real estate in Los Angeles, California. As the pandemic reshaped the market—bringing the eviction moratorium and no rent increases during hyperinflation—the rules for investing in LA’s apartment buildings have completely shifted. Learn why accurately predicting pro forma rents is the most important skill for succeeding in LA multifamily investments, and how Moses has built his business by identifying mispriced properties in a competitive market. His insights on turning undervalued assets into high-yield investments are critical for anyone involved in California real estate. Episode 3 of No Vacancy with Taylor Avakian & Moses Kagan 🔥 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/ 🔔 Don’t miss out on the latest trends and tips to maximize your property's potential: https://www.youtube.com/c/TaylorAvakian
Read the full conversation
This 15,422-word transcript is matched to English (Original) automatic captions. Timestamps seek the episode player to the matching passage.
I have lost trust in city government it's definitely a much worse opportunity than it used to be California is like shangry for property but broken is co eviction moratorium has expired there is still a rent freeze in effect predicting pro forma rents is the single most important skill in investing you're very good at predicting and understanding where rents are going to be the way I've come to think about business is like it's it's a it's a
game welcome to No Vacancy where I share conversations with LA's top multif 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 Moses thank you for being here I appreciate it of course to get to speak with you today and I think um over the last shoot maybe five six years we've communicated and first initially on on Twitter and maybe a couple of voicemail Co calls to you in the beginning and uh and now we've been able to get together on this podcast and we're yet to do
a deal but I feel like in the
future someday man uh we can get into it but we tend to buy from from uh much less sophisticated Brokers than you are
yeah we we and that makes it very hard too because um from the deals of what are the best deals and we'll we'll get into that later too is like the off Market or Andor an unsophisticated broker who is not as familiar with the current landscape doesn't know the buyers doesn't know where rents are totally and I think that's where one of your biggest strong suits is coming from the property management side of things and the leasing side you're very good at predicting and understanding where rents Market rents are going to be which I would say is like 50 to 70% of what's going to make a deal work in most areas Los Angeles is a place where it's completely different well I mean I no I I
actually I um things are a little different now but I I would say that accurately predicting pro forma rents uh is the single most important skill probably in uh uh in in investing uh in apartments at least the way that we do it because um you can given all the other inputs whatever purchase price construction cost whatever um you can make a deal look great by OB by being you know 200 bucks over a month per uh per unit or you can you and you can convince yourself to buy something you shouldn't uh and obviously uh the other alternative is you end up like you guess Low by 200 bucks and you you don't buy the stuff you should have bought mhm and um so uh so that's actually always been an obsession of mine and uh to this day I mean we have a management
portfolio where you we manage 1,00 units 400 that uh we own and then uh uh uh 700 uh that we manage for third party owners and I set well there are a few of our customers who prefer to set rents for themselves but for almost that entire portfolio I set the rents personally both for the asking rents and for
um renewals and is that where you just don't trust anyone else or you feel like that's your special superpower there's
a couple of things going on um one is uh the most important reason is that I believe that I am better positioned than anyone else in the company to understand the tradeoffs of rent versus occupancy um on a building by- building basis so I obviously great neighborhood great building tons of demand you're probably willing to push it a little bit and and and risk the vacancy yeah and on the other end of the spectrum probably not and but other things come into play too like um for example a building we we have we manage a lot of small buildings and like small when you say small I think the average unit size is or excuse me the average building size is like eight to nine units okay so we had like 140 tiny buildings and so you can easily get into these situations where um
an owner has had uh a bunch of vacancy on one unit or a couple units up to now maybe you got them filled and now you have another vacancy coming and I feel like I'm best positioned I mean obviously the owner himself or herself but but they're paying us to do it so in our organization I'm best positioned to understand okay this guy has had a bunch of vacancy already this year like maybe let's not push it on this next rent try to get the unit f um so that's so so that's why I set uh all of the pricing but a positive externality let's say of setting all the pricing is that I have a very granular view on what prices can be for all different types of units but primarily for renovated ones in the neighborhoods in which we do business and of course we have always
filtered that information back into
our acquisition process and so because you obviously like you said you you do you have very small Niche Mom and Pop I would say size buildings but Los Angeles is primarily mom and pop small
base buildings like that's the majority of yeah there small building and I should say I mean you know we recently signed up to manage an 85 unit building so we're you know we're definitely um uh yeah we have a uh we'll I'm sure we'll talk more about this but um we have got renovated 110 buildings in Los Angeles since 2008 and um among other things what you learn uh from doing that is you learn that there's a there's a there's a special set of skills that are involved in taking a building from zero occupancy up to 100 after it's been built or renovated um and so we're very good at that and so uh increasingly we are being asked by developers of new buildings to come in and do that lease up and then lease up process and then manage so I think we will ultimately end
up managing larger and larger buildings um but yeah for sure the Legacy portfolio is small ones and the reason is and as we were talking about before um with our acquisition process we were always when we're doing these rehab deals um we were um ruthless about sticking to very high unlevered yield on cost targets okay and we talk about why but the result of that was you the the miss the the the large buildings tend to be owned by sophisticated owners who hire sophisticated brokers who hold sophisticated sale processes and extract maximum price and so you there's there's no Alpha there's you can't there's no extra yield you can get there um the game that we were playing for a very long time was buying these much
smaller buildings that were owned by Mom and Pops who had completely mismanaged them in many cases who hired like some condo broker from r no offense to R who I don't even know if they have condos I've been saying that for years I don't know if they have condos in Rec it works it works uh uh some condo broker from merceda because it's like you know their friend's cousin or whatever and that person uh doesn't have a buyer list right so they just slap it up on the you know they they don't know how to price it they come up with some crazy price they slap it up on the MLS cuz they don't know who to call and our business for a very very long time was basically just picking off those mispriced assets because that's where the the uh the excess yield was coming from why do
you think La is such a sporadic Market when it comes to agents like because in a in a perfect world right if if people were logical they would work with the best agent who had the biggest buyers list who did the most amount of deals and like logically that would make the most sense why do you think La is such a relationship driven slash almost like this a million
one different agents and people I think there's um there's two different things going on at least well one is and probably most importantly like these are for the people who own them these are like very large assets right and so um there is a a large amount of trust that's involved in hiring someone and so it when confronted with the choice between like your brother's best friend from growing up let's say or some stranger who by all accounts is an active broker but like You' have never met this person before it's kind of understandable that people would choose some that some portion of sellers would choose uh the person who they like trust because of that connection um another thing and this is it's so obvious to me that at at various times I've like come reasonably close to trying to turn this into a business is that the the
data about who the best brokers are is not available to regular people and so it's not even available to to us really well I mean but for me like when I'm thinking about who to sell a building I'm like particularly like on a small building it's like I'm going to go on the MLS I'm going to figure out the geographical area I'm going to uh search for transactions over the last couple of years for this size building and look at who's the mo the most actively selling these things I'm like that person probably knows who the buyers are right but um I have access to the information because I'm a broker and I know how to use the MLS you obviously you can do the same
uh thing on co-star for larger buildings um but like that information is just not available to a regular consumer um and so how do they even know that they're supposed to call Broker X if they have a building that's that's that guy's specialty or that woman's specialty and I think a lot of
Brokers it's like rap my professor um except without the tenure where it would be like a true I don't think Brokers would like that very much to be open book of like hey you haven't sold anything over here you haven't performed you don't have the track record right when everyone knows you know there's the Brokers out there who say one thing and the reality is another yeah no I
mean it's uh you know and I I toy around with as with with making a website to do this and obviously you'd have to take for for houses and small apartment buildings you'd have to get the information from the MLS yeah it's actually an open question whether the MLS would allow you to use the data in that way for the reason that you're uh that you just gave um but it is I mean it's it's in my opinion it is absolutely crazy if you're you know it's good to buy from brokers who great as investor right yeah from an investor for as as an investor you obviously you want to buy from people who don't know what they're doing but when you when it comes to selling you for sure want to pick the person who is uh most active or one of the people
who is most active because again
they'll know who the buyers are and I so you're very well known for having a Blog and we're kind of one of the first people in that space to create this almost real estate um Community I I would say and very early 2013 2012 when you started that yeah roughly so you know early on I remember seeing either a tweet or a LinkedIn post or something from you about how you built that business because I know that you basically worked in the meantime when you you and your brother were were doing the initial businesses you guys were making money to stay alive through Leasing and doing actually brokerage stuff right yeah
yeah early on this is actually after I stopped working with my brother uh so working with my partner this is yeah in 2012 we were um we just we had just started adaptive we had uh yeah we had we could raise a tiny amount of money yeah um and you know not enough to like feed us and whatever so um yeah we were doing we did a number of things we did um a bunch of buy side brokerage and actually built a fairly active little brokerage primarily which is hard and and difficult especially when you have exclusivity yeah it was a it was a um I'll I'll tell you more about it if you're interested but it it was uh it was a kind of an interesting Niche I'm not sure if it's possible to build that business anymore given the changes in the um the recent yeah the
recent settlement um but uh so we did a lot of biset brokerage that led into a lot of what I now would describe as feed development um which was I would find a deal for someone to buy i' be like you should buy this building and what you need to is renovate this unit and this unit you fix it blah and but if you do the Yi's going to be this and the person would be like dude like I'm a dentist like what are you like obviously I'm not gonna do that and I was like well what if my partner who is a GC like he what if he does the renovation and you pay him or he overse not um not does the renovation but what if he designs and oversees the renovation we' still hire a GC yeah um uh so and would you pay him
a consulting fee and and people were like yeah that makes sense and So eventually very quickly with the idea my partner and I were like okay look we'll just you know we'll pull the buy side brokerage commission and that consulting fee and that effectively became like a oh and then um that we were managing our own stuff so we were like okay well these buildings as we finish renovating them should just go into our management company so the buy side brokerage the fee development and actually eventually our business of like raising money from from MPS and buying our own deals all kind fed into the property management business so it was like this
vertically inte integrated flywheel that compounded and you looked up and five years later you guys had a big man portfolio
yeah but I mean I should say like that sounds much more like rational and strategic than what was really going on what was really going on is like I had uh a young family and there were no jobs uh that I was at least no jobs that pay were willing to pay me as much as I would have needed to get paid to go work for someone else yeah um and I had the ability to monetize uh the knowledge that I had in various ways like by said brokerage and go whatever um and so I was just like I need to feed my family like like P like trying to just generate opportunities and Pac-Man them and I I had um I had I guess a Northstar which was I wanted to own a large portfolio of control but minority positions in um welll
well renovated uh Los Angeles apartment buildings and to self-manage because I really do think that that creates um that's very important uh for returns and so I had that as like sort of the North Star but like as in terms of how we got there there was a lot of like just you know kind of just taking whatever
moved us in that direction a little bit and figuring it out and and kind of adapting to what changes and and Los Angeles is notorious for changing things all the time so you really have to be adaptive which you know no no pun intended or
pun intended yeah well I mean it's actually funny the name of the company uh the reason we called it adaptive this is people laugh about this um in 2011 when we were choosing names a name um we felt like the opportunity to buy cheap apartment buildings was already passed and the likelihood was that we were going to end up doing a lot of adaptive reuse projects that we thought we were going to be like going and buying Office Buildings downtown okay so we called ad little do we know of course there was like another 10 years of Runway exactly u in the in the apartment we actually have never done an Adaptive reuse deal although I've looked at a million of I would love I you know would love to do them yeah but but anyway that's why adaptive is called adaptive wow
yeah that's awesome I love that um so we talked a little bit about on the the prep call um Los Angeles there's been a lot of changes you've been in this market this area for I would say over a decade plus yeah we've been doing I've been doing real estate deals here since 08 I've lived here since 07 so what is the current landscape of Los Angeles versus what it was previously and how do you feel like moving forward if the same opportunity is there or if the risk versus the reward of owning investing buying in Los Angeles is everything that it was
once was yeah I mean it's definitely a much worse opportunity than it used to be like the way that uh the way that it used to work when we got into the business it was so beautiful I used to I think I have a blog post about this at some point it's about like how Cal California is like shangry law for property owners a lot of people have this really negative impression of California have always had a negative impression of California is this place it's a crazy taxes blah crazy regulation yeah but for property owners California it still is pretty good but it was amazing and what I mean by this and specifically in Los Angeles what I mean is okay so uh first of all uh it's changing now because of the embes and rightfully so but for a long time you couldn't build anything it was very
very hard to build okay so very hard uh for Supply to grow tons of demand like the city was getting richer and there more people want to live here whatever okay so you got all this demand you got no okay then um the property tax because of Prop 13 your property taxes which is your largest operating expenses expense were were fixed at uh one and a quarter roughly percent of your acquisition price and could only Rise by 2% a year so that's your largest expense item could only Rise by 2% a year meanwhile the way that uh the RSO the rent stabilization law used to work is that um the minimum legal annual increase was 3% MH so even if you did not like turn over any units as long as you took your 3% increase every year and by the
way like many mom and pop owners didn't and they're crazy people but because you can't get it retroactively um over time your uh even if all you did was get the 3% your Revenue was growing faster than your most expensive um your your most important uh cost line and the result of that was that your margin was expanding and that's why people are permanent holders in California in general and and specifically in Los Angeles see this like amazing situation and you can for a while there uh particularly post GFC you like interest rates were really low and you could buy like real six Caps or something so you could like without doing any work you could buy a building that was in reasonable shape as a six cap you could Finance it more cheaply than that and you didn't have to
like add any value or anything it was just like immediately it was a reasonable yield and it got better over time and it was just like and that opportunity I mean retrospect I should have just bought more instead of um instead of doing so many renovation projects so we can talk about why like it would the smart thing to do was just go around and buy a bunch of yeah just go yeah in a situation like that um but yeah it was it was really amazing now what happened is co what broke it is co I mean it there there were some changes to the composition of the city council that have been going on the city council has been moving left and in my opinion is now like off the deep end well sure we'll talk more about um but
what happened during Co I mean people focused on the eviction moratorium M which that was bad
okay I mean I I we could talk for three and a half years three years yeah I mean it was insane I mean I you know and and uh we rote off hundreds and hundreds of thousands of dollars of rent where it was just like look uh this person stopped paying they owe us 30 grand and like the best thing to do we don't know when they're going to we're going to get the apartment back so the best thing to do is just like make a deal to like write it off and let them leave and just get the apartment back and R rent it and like which is thousands of units thousands of properties it was just like I mean that was terrible okay but in many ways the other things were worse so um one was no rent increases during an inflationary environment for like four years
or whatever it was three years um hyperinflation yeah so like like real estate which you know there's there's a dispute about whether real estate is or isn't an inflation hedge but like for sure in an environment where wages are going crazy and where your c as an owner where your cost like okay yeah your property taxes are fixed but like insurance is going crazy and your operating expenses you know your um your your repairs and maintenance Etc are going crazy like to have a zero rent increase for that that like in in my opinion um that fundamentally sort of like broke an implicit like Covenant between city government on the one hand and housing providers on the other it was like before there was sort of a sense that you were being treated reasonably fairly as an owner and
like you you can't zero people on rent increases over during like a highly inflationary period and not break that Covenant so basically like I have lost trust in uh in in city government as a result so that's that's one thing to say and then another thing is um it is very much up in the air what future rent increases will be but in my opinion they are likely to end up at something like whatever 2third of CPI in other words to be um to you know to be uh uh locked below the inflation rate um which which is just crazy which yeah so and then there's obviously obviously the you know um uh vacancy control stuff floating in the air about the Justice forers act but yeah even that leaving that aside those actions in my opinion um like dramatically change the
risk calculus for investing specifically in I mean in in apartments generally in Los Angeles but specifically for
older buildings and you were obviously during Co you experienced this firsthand as you mentioned and also during that time and I don't know if this was a year ago or a recent but you started something or were a partner in something called Reed sure yep do you want to get into that yeah sure um so was that an impetus for seeing LA and being like hey I have a operational experience and I have value and a a network which we can get into as well and I can truly add value
and diversify so the impetus for rece that was like the second part of the the um the thought process the first part was my partner Rett uh and my partner in Reed uh Rett Ben is a great guy um came to me uh uh when he was working at his old company he was he was basically managing like a lot of money I think like in with a B Jesus for um one wealthy family wow and and they wanted to build real estate portfolio he was looking around for operators he found me I think he C he actually came to the first reconvenes the conference that that my wife and I run uh we got to know each other and he came to me he came toward toward LA and I was showing him projects and he's like okay like great like can you guys take 50 million
bucks I was like dude like I have nothing to buy like there's just like there like there's nothing there so that must have been hard yeah and so well yeah but I mean it was like very obvious I mean I had given back a fund we had raised you know because I couldn't put it out um and so Rett sort of that was like okay that was a light bulb moment for him and then he sort of went away and then he came to me with the receed idea more or less fully formed he's like look you have this uh audience you can probably attract operators and you know how to do this business and in a sustainable way um I can bring capital and I'll like I've got this Capital basically raised uh will you come help me and by the
way o have all these like amazing people who I've also convinced to join the company um we have other people who are working with us who are fantastic um and so for me like that that was it was obvious like I like teaching people anyway and it was a cool way to but but you're right like um purely from a financial perspective um it it has been nice to sort of start not that I'm making very much money from recent yet but the idea is to to build a business that is not uh so geographically dependent on
Los Angeles do you from in terms of percentage of of like wealth and net worth do you feel like cuz you have also a successful uh Recine which is a conference as well which does very well brings a ton of like incredible operators owners things together which I think is in itself really really cool thank you do you feel like looking forward you have an idea of what you want your time/ portfolio allocation to look like do you want to see yourself more on the teaching coaching slash the reced side of it being the majority do you feel like this conference thing could be something you want to expand or the principal side I mean look the best business is the principal side yeah like by far why do you say that it's
just like I mean the the economics for the GP are so good uh they're particularly in the way that we that that we have it sort of set up so we have done enough deals with enough investors and done well enough and treated them fairly and everything such that uh we don't need to put up any material co-invest if we don't want to into deals so like the the economics just gets stupid and there's a reason for that we can talk but but it wasn't always that way but so if so so if if you have a if you have a business where so so the way you don't have to put up a co-invest you get a fee and then you get an ownership stake after a after return of capital and and a and the Prof um that's like a perpetual motion machine like if you turn
that crank you should keep turning that crank as much as you can the but the problem is that the reason that we can turn that crank is because we have always been pretty disciplined about which deals we do and so it's this Catch 22 where it's like yes in theory I have this great setup where I have investors who are willing to let me like do this perpetual motion thing but um if there aren't deals there aren't deals and um I suppose I could there's always obviously the temptation to kind of squint and maybe like hope that you see a deal in there that doesn't actually exist but you get away with that a few times and before you've like lit all this investor Trust on fire and like view um when you're thinking about a career and Investment Management this is very important for
young people like you really the the value of investor relationships properly understood is so high because it's the investment management is an amazing business you can you can do it for 40 years or something and you can make a ton of money and people are happy for you to do that as long as you as long as you like keep the faith at them as long as you don't lose their trust right the second you lose their trust it's like screw you you're out of business yeah right and now you've lost this like incredibly lucrative opportunity so um so anyway so my view is that like I I have those investor relationships because I've you know I've I've behaved in a in for the most part in a restrained way and uh and by by uh behaved in a restrained way I mean
not done dumb [bleep] and so the problem and the reason that we haven't been buying much in Los Angeles recently is because when I look around at the numbers it's like this is dumb yeah and if I brought this stuff I I honestly I'd be embarrassed to bring the numbers that I'm we're running we're looking at deals every single day we're underwriting stuff like I would be embarrassed to bring those deals to to um and they would lose respect for me if I did bring them to them so um so anyway so that's why we haven't been doing we haven't been very active over the last couple of years um so the answer is I would like if if you if you gave me the choice of all the things I could do with my time the thing that I would like to do most right now is to grow
the principal side of our business um BEC in in Southern California um currently I do not see an Avenue for doing that that is that would generate sufficiently high risk adjusted returns to make it make sense for me and the investors um that could change tomorrow like we might hopefully not going find a great deal um uh uh in the absence of those opportunities I'm not going to as I said try to jam deals down people's throats um so I'm I have time to explore these other things so we are growing our property management business like we are which it's another one it's like um we only want to work with a certain kind of owner like we're looking specifically for owners who intend to own their properties indefinitely and want to take care
of their buildings like we're not gonna we're we're just not going to in this slow more business so it's like but for the for the kind of owner who just like wants to run a good building and have it forever and have people do a reasonable reasonably good job of taking care of it and doing a good job leasing we're very happy to work with those owners and we've over the years sort of managed to put together a small group of sort of professional owners who tend to own lots of buildings and trust us to run them
and uh so we add those owners slowly like uh because our criteria for who we're willing to work with is quite narrow we turn away a lot of business which mean has the effect of inhibiting the growth rate of that business but like fine like I don't care like I'd rather I want to have like a good Sean Property Management business not something that's going crazy so we're doing that and then there's I have other this time to explore these other opportunities and you know there's different risk and reward profiles for each of them and I'm kind of enjoying it yeah I mean
it's it's cool to have your hands different things too and and get ideas from different people as well that you can Implement into your own business
for sure yeah no i' I've um it's actually really cool so Reed we've seated uh eight operators we're in the process congratulations thank you we're in the process of adding like four to six more I think in the second Cort um and they're in all different markets all over the country and it's so cool to get to see what the returns look like in these different markets and what kind of we're in contract I don't know if we'll do it but we're in contract to buy a pretty you know nice sized uh affordable deal in Northern Virginia right now and I've never bought an affordable deal before yeah I have never bought a deal in Northern Virginia and but it's so interesting I've like learned a ton and actually like from a risk adjusted reward perspective that's a that feels like a very nice deal compared to
the stuff I'm seeing in La for example so yeah it's been amazing to to to
learn from those people I've noticed to and and someone else sat in this chair and and had a similar sentiment in Vin he goes we're looking at other markets but the biggest key for us if we're deciding to go into a market a new market is we need to have boots on the ground presence we need to have someone who understands the lay the land and where I think a lot of people got in trouble and we're seeing it a little bit on you know in the news the headlines of these big companies who are giving these properties back is like there wasn't that deep knowledge understanding and especially for Angeles and I'm sure it's similar in other markets like Street by street block by block neighborhood by neighborhood things are different yeah I mean
that that so you have a choice I mean I could have tried to grow adaptive for example into like a regional or national business where we would invest all but um I am so aware of how much I know about LA right and I don't even like there's all kind there's been recent changes to the zoning code the various St like I don't even I'm not even really an expert in the in the Z I'll tell you it's going to take you about a PhD to figure that [bleep] out so so I'm not even so like I would I went from me you know I would have said I was like an absolute expert like prior to like three four years ago in Los Angeles and even now I'm like a little less of an expert particularly when it comes to ground up stuff than
I was previously um but I really know a lot I know I know not only do I know the current rules I know like the history of the rules and why they change and all that stuff um and so the idea of like walting into another market and being like you know just I have some some like Acquisitions guy who sits with me in LA and is like hey that looks cheap um uh that's crazy to me yeah so uh and that's and and that is to a large extent the or one of the um ideas behind Reed was to say look um we want to be in these other markets we need to have boots on the ground rather than trying to create an organization where those people are we are our employees um we would prefer to try to attract more entrepreneurial type people uh
who have a have real skin in the game and therefore we're going to set up an organization where they have their own freestanding GP businesses and we have sort of the right we we own a small piece effectively of G GP businesses but we and then we have the right to provide Capital to the dealers they to the deals they find uh not the obligation the right um and the result of that is is hopefully that you've got a bunch of like freestanding people with skin in the game local boots in the ground going around and
finding the smartest ways to deploy capital in their markets interesting so I feel a theme like in terms of the businesses that you start there has to be operational values that are just like almost in stone and and in terms of what I mean by that is you know what you're good at and you know what you're maybe not as good at and you know where your strengths are and you know where your weaknesses are and the businesses that you seem to to go into and again not without its risks and uncertainties and figuring out along the way which being an operator and owner and a a broker and a manager like you deal with that all the time it's constant but it seems like you've figured out where your Niche is and have been able to really lean into that and through the relationships
which I'd be curious to talk about too how the social media has impacted because I think you one of the the broadest in terms of networks specifically even from a principal side in the in the country um and so how is that Network effect and being so connected to everyone else how's that impacted your business and how do you leverage that I guess you could say to to be a better owner
or operator everything yeah big question um so the first thing to say is that the reason that I have been build been able to build the audience that I have and the audience is like originally in the blog and then leave on X I guess we're calling it now yeah to to much lesser extent on LinkedIn my email list um the reason that I've been able to build that I think is because I because we were and are very deep in the weeds of actually buying buildings and renovating them and managing them um I was able and continue to be able to write with uh a lot of specificity about those things right and and then there's some ancillary things too like building a small business because effectively that's what a GP business is and also we also bootstrapped a property
management business while we were doing the GP thing which was really crazy and hard and I'm not sure I would recommend anyone to do it but we did it um and so I think that those actual experiences um came through in the writing yeah um and that is why I've been able to build the audience and there are some byproducts of that like when you every day about the specific issues that you are dealing with in your business and how you're thinking about them and how you're solving problems Etc one of the things that you're doing is building trust with your audience like anyone can kind of like fake it for five posts or 12 post you can get some like Ghost Writer whatever you know um but if you keep showing up like I've been writing on Twitter every single day for
five years and for the most part like very you know pretty detailed post all aspects there's thought behind it
like if anyone goes and checks out Moses's at Moses Ken like you'll know this wasn't just like a you know I'm on the toilet and I'm writing some maybe you know sometimes but like there's thought there's there's actual you're thinking about not only the content itself but how it's going to resonate with the audience which I think is a skill and and I know your history and and writing and kind of for the creative side so it definitely shows from the care well
I appreciate you saying that I mean I think uh look I I uh this is going to sound like bragging but I'm just I'm when I was in seventh grade I took the SATs right because IED yeah I wanted to go to nerd Camp there was this I saw this poster for nerd Camp uh CTI from the east coast and the deal was you would like you had to take the SATs in seventh grade if you scored highly enough you could take a college class uh in three weeks uh in the summer on a college campus and like I I at particularly at that point in my life I was a very competitive person particularly academically so it was like okay wait a second there's like a contest to get into nerd Camp uh
I'm going to sign up for that and so I did and I like I scored really highly on the verbal Ines when I was uh in seventh grade and it like basically um I am whatever there one of the talents I've got in my life is I'm good at communicating and writing um and so what one of the things that I think has been weird about my career is in some sense like I'm devote like I think I have a very good brain for that I I'm not like you know whatever I'm not I'm not going to write the Great a novel I'm certainly not like an academic writer but I have a but I'm a good writer but I've applied um those writing skills and also I think I'm a pretty self-aware person and I think about things a lot whatever um to this like weird
thing like like buying like crappy little apartment buildings managing them in that's like not something that people who have like a lot of writing skills typically have devoted their Cru effectively like a professional writer writer who writes about this like weird business um and I think that but I think that that like it comes across and resonates and it builds trust and that has led to um all the different things we talked about I mean our largest investor we met through our old CPA so um I can't take credit for that one but the vast majority of the rest of the capital We've Ever Raised is people who found me originally from the blog or from Twitter um and then the the the the the brokerage business that we had we've stopped now but we were doing buy side brokerage that was pretty much
all people from the blog uh and then the property management business is almost has been fed by the other parts of our business but like when we get new client it's almost always because of my writing um and the the event the conference reconvene that we uh that we run is the same thing yeah so it's like that that that the the the audience is there because there's a bunch of writing skill and effort that's being applied to this super Niche topic and then there's sort of various ways in which I use the power of that audience to build businesses that I find interesting do you
think about when you're writing posts or blogs or newsletters do you think about like what is your process and like this needs to be said Andor I want this to have X outcome or you're just like this is interesting I'm going to write it eloquently exoteric as I as I um had said previously like do you have process behind that is there is there a why a reason a it's a good it's a really good question I and I
I've tried actually been thinking about this a lot we're one of the things that we're doing at reconvene at my event this year which is at the end of September um is we're going to I'm going to lead a breakout I did this last year doing again this year on Capital raising modern Capital raising and it touches on a lot of the Social Media stuff um and so I've been uh in in in preparation for that sort of starting to try to think about because a lot of what I do is not that conscious and I'm like okay what is actually going on when I'm writing this stuff and there are a couple of things one is and this is I think very important for anyone who's writing for an audience um well first of all the the the observation is that it is not one audience okay anyone's audience
on social media if you're going to be like if you're going to write for a niche is it's like think of it as like a ven diagram okay okay like you're you are at the center of a a number of different overlapping sub audiences okay and um so for example for me like obviously multif family real estate in Los Angeles is probably like the core center of it right but I also uh have effectively like permission from the audience to write about investing in other kinds of real estate and in other markets in part because of receip and part you know um I have permission to write about um uh bootstrapping our our property management business I have permission to write about Capital raising right um I have permission to write about local politics because of course real estate is totally in mesed in in fact in
local state and federal from a tax perspective uh uh politics so so so that's the first um observation is to say that like you're you you're you need to think carefully about who what those sub audiences are and then each uh post or blog post or LinkedIn whatever um is going to hit one or more of those sub audiences right MH and so and it it's sort of important like you don't want to like if I suddenly started writing about politics all the time for example right like I would alienate all the other sub audien they would be like dude I'm sick of hearing about California [bleep] stop it I'm not you know um uh so you have to kind of think about okay well how what have I written recently and how does it like uh appeal to those different sub audiences so that's
one thing um that's like in the weeds but like more philosophic L um I'm interested in writing about things where some problem has emerged in our business and we have come up with some way of solving it that is novel so or or if not novel then at least different from the way most people do it so um as I've said and written plenty of times I've never worked for anyone else in real estate and uh there were a lot of bad things that came from that like I made so many stupid mistakes that like if I had had a mentor they would have been like you [bleep] idiot don't do that yeah um uh and we we didn't know so we did it but we also because we didn't have uh a mentor saying this is how
you do this when we were confronted with a challenge we just like solved it in the smartest way that we could solve it okay and without really knowing or caring how that like how that related to how other people had solved problem was that the right way or wrong way yeah and it and again it led to some real stupid stuff and mistakes and whatever but it also led us to some fairly differentiated ways of both seeing the world seeing deals and operating and everything and I think that um and those and those I think for people who are actually who are investors and operators um they are familiar with those problems like everyone knows that there's a problem with pricing get Apartments like that is a problem that owners and managers face everyone knows that there's a problem of like how do you incentivize
leasing people right um so and there's a million things we can talk about so one of I think one of the the best kinds of posts that I do are where I like hone in on this specific um technical problem in the business talk about how other people maybe have solved it why I don't think that that's smart and how we have instead solved it and I think those really resonate because it's like again because a lot of people are facing the exact problem they're like oh huh that's smart and so I love that because I'm the there's like a number of effects right like one is um it's helping people yeah right it's like it's like you know you helping them avoid yeah I'm effectively being the mentor that I didn't have I love that there's like separate from the money I just love I'm teacher in some
in some ways um by temperament um but also it it like has the side benefit of developing trust from prospective partners because they're like oh that is smart and you they hear you they read you write a bunch of smart stuff over and over and over again for years and they're like this guy's pretty smart and I would if he comes to me and says hey you know we I've got a deal I want to do would you capitalize it like
you're probably gonna say yes yeah yeah and so which I think it's such a I can tell you whether recently being able to quantify or qualif uh verbally state that which you did clearly I think you had a natural inclination for doing this over the years even starting the blog which you can see throughout the growth because I've I've went back and I know a lot of people do this too is they'll go back and read your old posts and like see how you were thinking about situations and what I uh am very interested in because I've kind of hopped on this social stuff as well and really it was actually to more follow people like you and owners that I wanted to kind of build relationships with but learn from and and I was struggling with this fact that I was not from La I didn't know
anyone yep I I was just like how do I earn business yeah how do I earn business and building trust and be able to share because I I cared so much I was obsessed with this thing that was multif family in Los Angeles how can I how can I get that message out to more people without picking up the phone every day and and leaving a voicemail which 95% of the calls go to and so I think understanding your audience which it sounds like to me are you riding towards operators owners Brokers like anyone who touches real estate or is when you're thinking about like okay this post is going towards X Y and Z this I want this post to resonate with wealthy high- net worth individuals who might contribute Capital like does that ever come across and how you word things or organize things
I definitely um it's not the case that I'm like that I um I think oh I'm going to write today's post is going to be to a try to attract investors and tomorrow's post is going to be try to attract Property Management clients yeah it's more like I'm inspired by some problem in the business that I'm currently facing or one which I something has triggered a memory from something problem we faced previously and so I'm going to write about it but one um the way I I do think about when I'm when I'm ring it I'm thinking about how to make the writing itself as impactful as it can be and also with an eye towards having it be accepted by the audience to which it's most likely to to to with whom it's most likely to resonate um so I've got that going on
um but and then but then I'm also thinking like as I said before I don't um I'm thinking about the mix of things that I write about so as not to alienate any particular part of the Audience by overly focusing on something that they're not interested in if that
makes sense absolutely no it does so curious to know because I'm a big proponent of studying like one of my favorite podcasts to listen to is Founders because it studies the history of I'm a I'm a history guy David CER does a fantastic job I don't know how he does that podcast so well but it shows
he's an obsessive answer if you it's funny I've got I've been fortunate enough to get to know David uh and um if you meet him in person like you sit down for with him he is exactly the way he is on
that podcast which is so amazing and I love it it it like speaks to me I'm a big like obsessive Kobe Michael like tiger those guys again not everything but the the focus so focused on one thing so if you had to start with the knowledge that you have but zero today zero no no properties no management company you are transported from the middle of you know Europe and you're like hey I'm planing my flag kind of like what a lot of people did back in the you know 50 60s what would be your strategy what would you focus on would you focus on La and how would you try to make that as successful as possible and when do you think you could do
that well man there's so many uh that's an interesting question so one thing to say is it dep it sort of depends on whether like uh whether you mean are they sure that they want to go into real estate yes okay so you want to be in real estate I would say that La is not the place that I would go into real estate from just like
from a standing start for sure um there are some things about it that that are very good um I maybe I'll go into that now what is really good and what allowed me to get my start about La is because of we have this stupid zoning code that um there like Suburban zoning code that limits the size of the buildings for most part um the bite the deal size the bite size is quite small so there are apartment buildings that you can buy in Los Angeles for a million dollarars they're cra little whatever 2 million whatever um so you can get in the like there there's not that doesn't really exist in New York in the same way maybe in the far outer Burrows but like so um you obviously can't be like um unless you come from an spectacularly wealthy family or have other
connections like you're not going to start buying buildings I it had when you start your career like just doesn't work like that um so la is just this like it's very good place to start in that sense because there are a lot of smaller opportunities both from a brokerage perspective and also on the principal side like you don't it's not as a new broker you're not trying to convince someone to like let you sell $40 million bill like you can get them to sell you a one million they'll let you sell a $1 million bill2 million I wish someone would have told me that in the beginning so that's um so that's I think La is good for that but um in general I think that so la is not growing but California is not growing like um we as a state
and maybe this is going to change I hope it does um we have made a ser of decisions around land use and Regulation and everything else that um have the effect of kind of like calcifying our our civilization our society in California such that it's very hard to grow the pie is not growing right it's it's like it it's sort of I mean the econom is growing but like the number of people's not growing the number of unit building um and so it as a new entrant into a market if the market is not growing like the only way that you can build a business and get market share is to take from existing incumbent players and that is very hard because they have they establish reputations and relationships and track records and everything if you contrast that with a place like I mean the craziest
example would be like the North Dallas suburbs right North Dallas suburbs like fast it's growing the way well growing The Way Los Angeles grew in the 60s right like just exposive okay so um when you have like a civilization that's growing like that um the opportunities you can start a business whether it's brokerage or principal investing or development or whatever and you can you can grow a business and you don't have to necessarily take share at all from income players you're it's just like new business you the Market's pulling you because there's people moving there and it's and that is going on in like uh it's bidirectional but like that's going so the regulation is it's low regulation so that so there's that growth and it's easier to do business which is why there's the growth and it's it's so it's like if I were a young person um
for sure I would go to one of these places that's growing really fast and go try
to do business there and how would you grow that business because with your same skill set like you you know how to write you know how to communicate you know how to like you know what I saying yes
okay so um I think that building an audience is uh extremely valuable I sort of think that anyone who is ambitious in almost any field uh would be best served by building an audience um it just like it just creates opportunities for you that that don't exist if you if you don't have one U and not the thing is that most people are not suited to build an audience so it's like there are a bunch of people who like that's just not their thing and it's totally fine and God knows I'm very happy because I would rather be able to hire people who like work all day and like being on Twitter yeah um uh and like so anyway so but if you are the type of person who is like excited about the prospect of writing or speaking or whatever in public um
it's it is it's a force multiplier so um okay so that's so people should do it if they if they're suited to it um as to how they should do it specifically um what I would say is the following um there is enormous um the way it works is uh you can write a blog the way that I did okay and the problem is that you don't get distribution right I spent years banging my head against the wall with the blog and I got some you know eventually Google started sending me people and stuff but like the blog I don't think the blog ever had more than like a few thousand readers concurrently you know in a month or something like it's not like it was a very small now because it was so Niche all 2,000 of those people were like likely to buy apartment building so
it actually worked out great for me yeah like but there's no distribution contrast that with um the social networks which like you know originally Facebook and then but then Instagram and Twitter and and uh and snap and whatever else those uh networks give you enormous distribution like enormous like before on Twitter we could talk more about this but you used to have to have like build a follower account um Tik Tock revolutionized social because actually the Tik Tok Tik Tok algorithm does not really care how many followers you have so it just it it prioritizes is the content good and that it just will you so you could have no followers you had you make a great little video at like boom okay and uh more and more social media is going to move in that direction so it's amazing they're giving you free distribution
now the problem is that they if you are dependent on their distribution they can take it away from you and that is what has happened to a large extent on Twitter over the last couple of years since Elon Musk bought it um the uh the the before I could write something and I could be reasonably confident that all that roughly all of my followers would or my readers would see it um as the uh musk sort of ticktock ified the uh the X algorithm and the result of that is that only a very small fraction of my audience is going to see any individual post okay and which is annoying for a lot of reasons but um the result is that effectively the value of my audience has declined um and so the the what I
think the lesson of that and it's stupid because I knew this lesson and I still screwed it up um out of laziness mostly yeah the the lesson is you cannot be dependent on the platform because there's just platform risk so you have to be driving people to a a a form of communication that you can control which is probably wants to be an email list maybe it's texts or something but like you have to you have to be you have to so you have sort of Leverage The distribution that they give you to grow your own list and the problem is of course that um they don't want you to do that right exactly they're like No And so in an example of that is like um uh if you go ahead and post a link yeah
on X and all yeah exactly it's like I mean it's like the algorithm like effectively like laughs at you you know it shows it to three people yeah you thought you were get them off no um and it's understandable from their perspective the incentive of course is that they want to keep people on X so they can keep showing them ads they don't want them going to your blog or your mailing list whatever um so uh so anyway so that's a long answer so so so as a young person I think um it's it would be good to experiment with a number of different social channels social platforms to find the one that fits you best okay okay and I think it kind of doesn't matter so much if it's YouTube or whether it's snap or whatever um I mean obviously those are all going to have
different audience so you have to think about that a little bit but um so you have to you kind of want to find the one that is that works best for you uh invest there like just make a lot of content for them but be ruthless about making sure that you are extracting the email addresses such that like they're getting from you you're get you're you're like full-time job providing them free content that's what they want right so fine okay they're going to give you the distribution and exchange for the content great but like the other piece of the puzzle is you need to be getting an ability to contact your investors or excuse me your um your audience off uh off platform got it
and you have uh and I want to take the flip side of that so remind me to to talk about the older generation but you have some kids and I'm curious to know young young boys um what are you
telling them um you mean about like career and future and stuff yeah um it's not one message like basically I drive so I have uh 13 11 and four um and you know I spend a lot of time in the morning I I drive the older two guys to school every day and um and then and the old the younger guy is not really he's just started to be old enough to get these lectures yeah um but I've been lecturing them their whole lives on but it's not it's on all aspects of the business um so I'm not they're not any they're not anywhere close to like needing actual conrete advice about should I go in this field or that field but I am consciously trying to educate them about business and investing and like be uh for a number
of reasons um I I I am very um I share wins with them I make it a point to share losses MH like I want them to understand understand that For Better or Worse their dad is engaged in this thing that's
like it's on him how much money he makes every year is on him and he's going to have good years and bad years he's stressed out sometimes and he's elated some other times and like because for me when I was growing up I I actually came my grandparent like I have business people small scale entrepreneurs in my background yeah my parents were had a tiny real estate business but they were full-time employees a professor and a New York City government worker I somehow for my for almost my for basically my entire upbringing like missed how exciting business is okay I started reading the newspaper uh at nerd Camp when I was like 12 or something or 13 um and I would like read the front section and then I would like throw the business section out because it
was boring and then I would go to like read about International Affairs and sports and whatever and what's crazy about and I think a lot of people are are like that they're like like eyes glaze over whatever and it's like once you like once you start once you understand what's going on the business section is by far the most interesting part of the newspaper right it's like huge fortunes being won and lost like catastrophes huge failure frauds just like just the most interesting dramatic stuff and it' be like you know this like dry language about like a you know an acquisition by one company by another and it's like someone just had made like a multi-generational fortune yeah right and it was like describing this like dry language about an acquisition and like the sixth page of the business section and it's like when you understand
what's really going on what the stakes are it's just like it's so exciting like I let me let me say another thing um the way I've come to think about business is like it's it's a it's a game right it's a game and but it's a game and that can be played like it it the could it can be it's being played by like people running like a newspaper route or like a little neighborhood coffee shop or something and it's being played by like Mark Zuckerberg and Warren Buffett whatever but it's the same game right and there's nothing literally nothing stopping you from wherever level you enter going up pretty high I mean a lot of it's luck and there's you know there's all kinds of things you know then obviously it helps to come from a privileged background of various ways but
like plenty of people who came from a lot less than me have done way better than me plenty of people who have worse educational backgrounds have done way better than me and some of it's luck but like some of it's just skills skills and you know and determination and whatever and it's like it's so amazing this this is a game we all have the same like or not the same but like roughly same equal access to the the people and the capital and the and you're just kind of like reconfiguring those ingredients in different ways and sometimes you hit it and and other times you're stuck running a little coffee shop for a long time you decide you want keep running that coffee shop or sell it start something else like it's just endlessly fascinating and in my opinion it's by far the
most interesting thing that like a like a a a motivated person could devote their life to because the reward is like multi bajillions and like you know
like fantasy superheroes yeah yeah it's the skill stacking that I think a lot of people in our industry too because it is very much like a independent contractor entrepreneurial principal side entrepreneurial and like we're we see or at least I notice and see and track what other people are doing in different Industries and try to figure out okay can that be and the answer is yes most times can I take what they're doing in that Niche and transfer it over to mine right and how can I do that and what's the most economical way or what's the most creative way or what fuels and fills me and I I I think people who don't feel that way CU there are people who just you know they don't have that bug inside of them like they don't get it when you're like no like I'm
working Saturday because I really enjoy it and I have this complex problem that I'm trying to solve and like it's incredible and I love trying to figure it out and I'm going to study this and that and that and I'm going to try a bunch of these different things and some of them are going to work and most of them are going to fail but like that game once you realize it's a game it
becomes addicting it's an addicting things it's awesome and I mean like like I just want to be very clear that I'm not even very good at it you know what I mean like I'm you know okay you know I I think I think I'm pretty good at describing it so I think that I think that that's where like I think that that's where the audience and I think I don't think there's anything wrong with that like I think that the audience it's funny you know I have people who who read what I write who like uh have never bought a building before or they own like a couple little rentals but I have a lot of people who read what I write who like are way more successful than I am you know what I mean like they're
they're like you know and it's in some ways it's kind of funny they'll reach out and be like this is exactly how I feel and you're like uh thank you Mr guy who owns a billion dollar five billion whatever stuff um it feels very cool and validating to have that a you know to have both that that audience but I just want I do want to be really clear that like I'm okay at this game not not even that great and it's super exciting and then and but getting to watch people who um who are playing it you know several levels about it's just like um I'm going to drop his there's I've got to know Moyes Ali the F founder of native deodorant pretty well and uh and his brother sulan Ali and the way that they think about business is like it's like so much
more sophisticated than the way that I think about it like they they've I've learned from and and and like obviously there are levels above those guys too but but just even see like what they think of as possible and what can be done and how to think about a problem and how to think about buying or starting or whatever
a business she just like whoa and when you experienced that firsthand and those guys are fantastic su's a a good buddy of mine as well and it's just like I think that is another factor of the social and growing the audience and stuff is you get to get in rooms that you should not be in right from just like a pure skill standpoint and that's that's one thing The Brokerage I think brought to me too and and the calling which you know on the surface seems like an annoyance or whatever but I'm so grateful for it because I got in rooms and to meet people who were so much more successful than me because I had something of value to be able to share with them which were were deals right and I think it is a great path to be able to meet significantly skilled
and highly highly successful people in their field and especially if you want to grow and be that person like that's your North Star per I mean for
me specifically Twitter which was what it was called back then what is so amazing about it is you literally can write your way into a room with your Heroes like it's like I at one point like i' I've become friendly with um Sam hany a little bit yeah and like you like I'm a major basketball nerd like that's like I like set one of my hobbies is like I've been following like a statistical Nicks blog you know for 20 years and um I mean that is really the saddest thing I could possibly say probably on the podcast um but so like I and and hinky is like the the the the personification of the like nerd GM to the point where they ran him out of the league because his he was exploiting the
inefficiencies of the of the the the in the the market in the league to to such a great extent they were just like all right stop that guy here but so like this guy's like a in some sense like a hero of mine yeah and then uh to be like X to start writing on Twitter just writing dumb stuff in the morning while I'm drinking my coffee and then to look up in like two years and like Sam's in my office and we're having a conversation and it's just like it is just incredible it's and it for someone like me who I mean I got I went to good schools and everything so I got access that way but like my family was we're like from the from Troy New York my dad's a immigrant was born in a refugee camp like like you know what
I mean like you kind of like you just buy it's such a in some sense an intellectual free market or democra it's like you can write like a you can be an anonymous account with like a rabbit as your uh your pfp and like just write smart stuff and within X number of years you're like in rooms with Your
Heroes it's amazing which is so incredible and um yeah I think everyone should at least explore it right like you said figure it out you know some people write better some people like to do videos some people like to um dance on Tik Tok exactly dance on Tik Tok and they get their their clients honestly we were talking about that in terms of leasing like some strategies regarding that which um I guess we'll wrap up on I want to talk to you about the the property management stuff because I know you're trying to grow that um but just figure it out like test it out do stuff try
do just do yeah I would say actually um that's very good advice like um I think a big mistake that I made that I have made as a business person and part of it has to do with the nature of real estate but I have not tried enough stuff in general like one of the things I've learned from uh from Moyes and suly I mean others too but watch of them is like I Moyes actually wrote this amazing piece he's he founded a business called caskers which is like some liquor delivery business yeah and it like it sort of started it did okay and I think he sold it and he wrote about it and it was like what he wrote about specifically was his choice to like to sell it it was like it was the business was doing okay it was growing he
was working really [bleep] hard to Growing it was but it wasn't like a monster like you could tell that it was like it was a grind it and what he did is he sold it and went and looked it for other opportunities and then like eventually hit on something that boom like I think Native was the I think they like took I think I'm sure he's had other successes too I think it was like 500k of Angel
investment they sold it for 100 million yeah right boom yeah and uh Marshall HW actually is another one the guy who started uh support Shephard somewhere I don't know him well but he's had a number of like mostly entrepreneurial failures uh a few sort of like things that sort of worked a little bit and then for him the the the offshore Talent this like turn out okay I don't I have not not done anywhere near enough experimentation in that regard like I found a thing that worked and I was just like let's just like keep turning the crank and it worked pretty well and I'm happy that I did it and everything but particularly for young people I think having that like looking for some looking trying some stuff until you find something that is explosive uh is very good advice
like you like don't if something's like really hard if you don't feel like the market is like pulling you a little bit like maybe consider trying something else like either a different strategy in what you're doing or something else entirely but like there are opportunities out there where like the where the right idea and execution hits the right demand it's like and as a young person particularly when you're unencumbered with like f you know a family and Twi bills whatever like it's worth like not getting stuck in a particular route a little bit like it's worth looking for one of those rocket ship opportunities you don't
have exactly the tuition the family all you have is your time I tell because I have a younger brother younger sister as well I'm like just do a bunch of stuff and see what you're really passionate about but also what the market will pay you for what what they see value in and keep trying and keep doing it until that perfect combination of this and timing and and your skill set and just like boom right cuz who cares if you're 30 and you got to start over like there's a I mean I think the guy Dyson was like 60 years old or something right before
he did that yeah it's funny I'm giving this advice and now I'm like but meanwhile I'm like turning the crank of my property management business slowly growing this thing um actually it's
a great I want to I want to talk to you about that property management business because I know you are trying to grow it and continue which one I'd ask why why property management and two how do you plan how are you planning on doing
that well I mean the reason that we're in the business is as we have to be like we we promised a bunch of investors in these buildings that we were going to own them and manage them kind of indefinitely and that's what we're going to do uh and I would like to buy more buildings and manage those too um so that's so we kind of have to be in the management business once you're G to have to be in the business what you realize pretty quickly is that it's a scale business you want to be bigger rather than smaller for various reasons um it doesn't have the economies of scale that many businesses do that's why a a lot of people think of property management as a bad business and one of the reasons that it is not great is that the margins do not
get much better as you get bigger like it's a people business so you just like you're leverages people yeah and there's just not that much you know you know it's not software margins or or Pharma or whatever but what's good about it is a couple things one recurring Revenue um two um you don't unlike in other businesses you don't have to negotiate for price increases so like as the rents grow your Revenue gets pulled along with it so there's like as long as I mean over you could have bad years but like over the long term if rents are going to grow then your revenue is going to grow you don't have to go back and renegotiate with your customers yeah there's low Capital intensivity like you don't have to go buy more tractors or open more stores or whatever um and so because of those
things because of the recurring revenue and the revenue growth and the low capital intensivity It's relatively an easy business to manage I mean there's it's there's a lot of complexity and like I I'm kind of like laughing at myself that CU there's a lot that goes on under the H and we screw up all the time just like I mean it's a hard business in that way yeah but like compared to for example like selling consumer package Goods on Amazon or like running a restaurant or whatever um it's just an easier business like you don't you're not you don't have to man manage the balance sheet very much like you're not worried about working capital you're not like oh I've got all this inventory that's depreciating cuz I bet bet on the wrong jackets for the summer um so uh so so it's like a
good um we need to be in the business it's not super hard to run and there and it's and it's synergistic with what we're doing on the principal side so I'm hap I'm very happy to continue to be in it to be in that business um I think there's going to be more and more apartment buildings in Los Angeles we're loosening up the zoning so there is is sort of starting to be more growth so that's nice um and uh and so since we're going to have to be in it as long as we can find owners who again uh want to own stuff longterm and want to take care of their buildings and therefore be able to get good tenants paying Market you know Market leading rents that like sort of hangs together and that's a
nice business and we're happy to be at it so it's it's really the perfect combination of it only adds to your scale and ability to continue what you're doing which is also kind of vertically integrating a lot of things which I think is is really important when you think about it from just a longevity perspective being able to control the controllables and again it is tough when you have politics and things
outside your control yeah I mean and part of I mean honestly what like I had like 10 really good years or something like that and then it's been between Co and the weather and all this stuff over the last couple years has been pretty bad but the yeah the management business you can you control what you can control it it there's a source of recruiting Revenue so you don't like we haven't had to like lay off everyone not we don't have to go do deals we don't want to do it it it is kind of like the ballast of the organization so while it was very hard to build the business while we were also doing deal What U I'm very grateful
that we did it yeah yeah and now it's just continue to be able to provide the services you've mastered over those you know 10 20 years and be able to to share that with people who align with what you're doing and I think you got to a place now too where you can like you said turn down people who don't fit this and that is totally okay and You' have Diversified and like that's that probably feels like a really
good position to be in uh yeah it's like look uh a lot of other people have done have made a lot more money than I have I think few people have t i I think I took very little risk like along the way just I I think I played a very lowrisk game um which I don't think is widely appreciated um so I think I I think I did pretty well given how little risk I took um but yeah it's what it would it really affords like a pretty nice lifestyle like I'm not uh there's a lot of people like I said a lot of people would be more money but like I have a lot of control over my life you know what I mean this morning I sat down
and had breakfast with like a really close friend of mine and a new guy we just met and like talk for an hour and a half about stuff that had nothing just like interesting stuff like totally made my day and I can do that because because of the way I set my life on you set up
your systems to be like that Moses anything else you want to leave the audience with before you wrap up anything
worth mentioning well first I want to thank you having me hon a great conversation I feel uh uh like my brain has been drained um and uh no I I think I think I just want to I think I hope that this Comm this conversation has communicated particularly the young people who are watching like how exciting this is and it's like it's not always fun exciting sometimes it's on the principal side like sometimes it's like terrifying exciting um but like you only get to live once and like what are you going to do like I don't know anyway whatever people could choose whatever they want but for me like sitting out in your little boat in this like stormy sea and like hoping to get to the you know the promise on the other side is like that's a pretty exciting way to spend one's life I
agree Moses thank you very much for being on here I appreciate it I hope you guys enjoy check it out go check Moses out he's on all the social medias um post incredible content very useful I think in for whatever business you're in um I'm trying to grow anything and I highly recommend you go check them out but thank you sir tayor thank
you 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 one