Taylor Avakian
everyone knows we have a housing shortage in Los Angeles La has some
November 26, 2024 · 1 hr 7 min
The Truth About LA's Housing Crisis: A Developer’s Perspective with Paul Schon
With Paul Schon — Real Estate Developer
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What this conversation gets into
There aren’t enough apartments in Los Angeles. It’s simple economics, the fewer apartments available, the more expensive they’ll be.
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Episode show notes
There aren’t enough apartments in Los Angeles. It’s simple economics, the fewer apartments available, the more expensive they’ll be. Skyrocketing construction costs, climbing interest rates, and zoning nightmares have made LA one of the most difficult markets in the world for real estate development and make the housing crisis worse. In this episode of No Vacancy, we talk to Paul Schon of Schon Development Group, a leading multifamily developer, about the data behind LA’s housing crisis—and what it means for apartment building owners and investors. Discover where opportunities still exist in Southern California’s multifamily housing market and learn how developers are adapting to these unprecedented challenges. Chapters: [00:00:00] An in-depth look at why LA’s commercial real estate market is so challenging today [00:01:20] From Real Estate Brokerage to Multifamily Developer Success in LA [00:06:32] Why Developers Refuse to Build in LA Despite the Housing Crisis [00:09:00] Skyrocketing Construction Costs: Hard Numbers Impacting LA Development [00:11:19] Los Angeles Housing Crisis: Why Multifamily Supply Can’t Meet Demand [00:15:00] ED1 Zoning in Los Angeles: Affordable Housing or a Barrier for Developers? [00:20:00] Finding the Right Development Site in LA: Zoning, Parking, and Pitfalls [00:29:34] Vertical Integration in Multifamily Real Estate: A Cost-Control Strategy [00:34:16] Development on Pause: Why LA Real Estate Projects Are Stalling [00:42:00] The Future of Southern California Multifamily Real Estate Development [00:46:00] Political and Regulatory Risks in California’s Real Estate Market [00:52:00] Martial Arts and Resilience: Lessons for Real Estate Investors [00:54:00] Real Estate Lessons for the Next Generation of LA Developers [01:02:00] Habits for Success in Real Estate: Health, Productivity, and Business [01:06:08] Optimism and Core Fundamentals in Los Angeles Real Estate #LosAngelesRealEstate #CommercialRealEstate #MultifamilyInvesting #RealEstatePodcast #ConstructionCosts #HousingCrisis This episode is brought to you by Terrakotta AI (https://www.terrakotta.ai/?referral=taylor@thegroupcre.com) TL;DR: Terrakotta is a web-phone that uses personalized AI voicemails to double the number of contacts you can engage over the phone. Voicemails left using Terrakotta are personalized to every contact and generate more callbacks than generic scripts. 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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Episode transcript
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0:00–10:00
Paul Schon
new proposals to tackle the city's affordable housing crisis California is the pain of the a to Bill change of zoning in La it's almost impossible to develop right now in today's market interest payment that you're paying property taxing what you're paying and you're seeing no cash flow you can't give me the land for free and I won't develop it why why are they saying that so the interest just shot up like crazy so now each month you're paying double what you anticipated that you would be paying everyone always asks me yeah how much is it to build I brought some notes I want to know this will answer your question welcome
Taylor Avakian
to no vacany 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 welcome to the podcast host Taylor Von I'm here with uh a very good friend and guest today Paul shown Paul let's start off with uh why are you sitting
Paul Schon
in this chair today sure uh I'm in real estate in Los Angeles I uh more of a developer but also an investor I build multif family projects across la my company's shown Development Group and we started as developers and in the multif family space and now we We Do It All We invest we're a general contractor we're a property manager and that's the business I love it um how did you get started in development I started well I started my real estate career brokering so I was telling you markat brokering in the worst time ever still funny man but dude Pete we were talking about earlier
Taylor Avakian
Pete started as a broker he that's why he told me he said because I wanted to be a developer and he's like go be a broker first learn the business once you make the connections once you understand everything what's a good deal what's a not you know like where to get financing and all that stuff then you can go be a developer so like was that did you have that in the back of your mind when
Paul Schon
you started bro symbol so my dad who's been an awesome uh Mentor for me the inspiration for me he he I told him I want to be a business owner how to this was in college how do I be a business owner and he said go work for a company learn the business and then you can go off and start your own thing and I noticed my friend this is pre the Great Recession making a lot of money selling industrial at Marcus s map in San Diego I'm like okay he's making a lot of money so I started brokering to really understand the business and Marcus millichap gives you a great education so started the career there in the meantime I met my old previous business partner and he had just moved to LA and while I was brokering we were flipping homes on the side because 2009 2010
Paul Schon
everything was for sale so we just started buying houses just initially just doing remodels kitchen bathroom remodels flooring paint cell and flipping them really fast and then we started doing additions to home so learn how to talk to Architects engineers then started um doing bigger additions to homes because the margin started getting really squeezed for just a regular flip so we started adding square footage and then we started building homes so that's how we got into development so from flipping to doing additions to do Building Homes ground up built a couple duplexes and then so that was 2009 2010 we scaled it we were doing like 15 Homes at a time so we were start going South Central uh the valley got some good pockets in the areas got some West Hollywood hanock Park that we're just doing
Paul Schon
volume Gardina Hawthorne Westchester all over the place and then we bought some land in 2012 to build our first building and we built our first building we're like go this better because we were we were making good money but it's ordinary income we were just paying lots and taxes and we're like all right let's get into but it was awesome we we learned how to deal with the Architects Engineers we learned how to do construction in house and we we really understood the construction when we felt like we could do our first apartment building was honestly easier because you dealing with good subcontractors and good Architects and Engineers so that's how we pivoted to your apartment that's super interesting because it's like it I mean it's
Taylor Avakian
the age-old story of right you start small and then you learn a little bit and then you pivot and then opportunity comes you're like yeah it's risky but I mean we know how to do this like what what's what's a 20 unit apartment building versus um extra bedroom you know I mean it obviously on the surface on paper it sounds crazy but I think when you're in the process it's just like why managing and you know this too managing an 8-unit apartment versus a 100 unit apartment at a certain level it's kind of easier to to to do and to make money on 100 unit apartment and scale than have 8 unit buildings scattered across the entire
Paul Schon
c yeah for sure and that's what we have we have a bunch of smaller buildings across the city so our our property managers we we they're running around the city all over the place versus if it's allinone easier more efficient to manage but I we think there's more of opportunity in the Middle Market space so I like staying in the 20 to 40 unit range why do you say that why do you think there's more opportunity in the Middle Market I think it's just a it's the the sellers are not as uh you could say sophisticated because that's I mean it's it's true they're not as sophisticated they maybe own the land the apartments for for a long time they they they haven't Juiced up the rents they haven't remodeled versus the institutional owners there's they're squeezing for everything so
Taylor Avakian
well uh which brings me to another Point um and then we'll hop back into a little bit about Mexico because I if Paul is Mexican um which yeah proud of it too yeah exactly exactly um so it's almost impossible to develop right now in today's market why do I keep hearing that from every developer they're like it doesn't make you can't give me the land for free and I won't develop it why why are they saying
Paul Schon
that 100% accurate uh we've seen cost there there's many factors but uh costs have increased so much rates have increased so much and times to build have increase so much which so not only did your rates go up but now instead of a 15-month build 18-month build it's taking two years two and a half years sometimes even three years so imagine that interest payment that you're paying property taxes what you're paying and you're seeing no cash flow so I actually I I I wanted to bring some because everyone always asks me how much is it to build how much is it to build the main question that I get asked we built 30 buildings across La so I brought some notes and this this will answer your question okay I want to know so this is 10 years ago or 12 years ago we built
Paul Schon
a building and then we built the building 12 years later same exact building
Taylor Avakian
so start me from like finding the deal and closing on the deal to like give me
Paul Schon
the time this was like we we we we built it in 2014 20 around there um and then we then built a very similar building in 22 so very like uh 10 years or so across has passed so land originally we bought it for $40 a buildable square foot and now that lane even though land prices have come down it's double $80 $90 per buildable square foot soft costs soft costs have increased the city has added more soft costs of professionals what are are charging more so soft costs were $19 a foot at for that building now they're around $50 a foot holy yeah so that's more than double hard cost this is where the the the majority of the money is in the hard cost $17 a foot
Paul Schon
we built it per per gross square foot now you're at around 350 of gross square foot and this for the same kind of same exact building so literally we grabb this because we would repeat a lot of the same buildings similar Lots similar same architect same design same everything so hard cost would doubled more than doubled and then financing cost that's where it's even now with today's rates we paid around $15 a foot on on on financing now it's close to $50 a foot so we were building for around 250 a foot Allin including L now to build that building you're at the mid 500 and you can't sell a building for that exactly so right now we're n to buy a building around 42 foot or to buy and this is newer construction so that's why development doesn't makes sense so I took some notes but I wanted to
Paul Schon
make give you that's super helpful good good accurate numbers super helpful
Taylor Avakian
because so why do you think on some of the things like obviously soft cost because the city and you know the attorneys and planners and all that stuff they're more expensive sure L more cuz it's from time of land acquisition until you're actually doing stuff coming out of the ground is what
Paul Schon
a year two for a title at least a year so we we used to be able to
10:00–20:00
Paul Schon
the same thing it's like things just are take longer when there wasn't that much development going on um we could get per from acquisition to breaking ground in 12 months now it's even this is buy right stuff or Toc stuff even 8 81 stuff we got 181 going right now it's taking 18 months yeah around 18 months so just
Taylor Avakian
to get out of the ground just to get out of the ground and people in Texas or any other of these other States um which I know you guys were trying to work on some in Texas like there's like no zoning in Houston so yeah I mean what does it take to build something in Houston like a year I I don't know I
Paul Schon
bet I hear it's way faster and then when I go to national conferences we're always the laughing duck in California it's like why are you guys what are you guys even doing over there you guys are have the worst housing crises and it takes you guys the longest you guys have the mo I don't know if we have the biggest fees to build but I would assume so it's like yeah California just a pain in the ass to build and they keep saying
Taylor Avakian
we have a housing shortage and it seems like they're not doing very much to to make that easier for developers like you it's I sound like a broken record because I say it almost every time but it's they everyone knows we have a housing housing shortage in Los Angeles why do the rents keep coming up because supply and demand that is the fundamentals of why your rent keeps going up it's because there's not enough housing for everyone else and when it's harder to develop that only constrains the supply where it becomes almost a benefit a benefit or like the people who are winning are the ones who can afford to do these new developments and make it pencil because their rents are getting almost shielded from the rent control laws and the lack of Supply where it's it kind of can somewhat financially
Taylor Avakian
make sense if at certain periods right when interest rates and like things like that are not going crazy but um it just is so hard to to build stuff in LA and people keep complaining that it's you know oh it's the black stones of the world no it just we can't build anything I mean in your Testament too to the cost even if they wanted to build something they couldn't build anything because it's too expensive geez man that's insane so um you mentioned ed1 which I know we haven't actually talked about a ton but um that was hot for a minute tell me why you jumped into ed1 explain to me people what is ed1 and why you guys are
Paul Schon
doing something like that yeah the I think it's it's executive directors one it's a mayor Karen bass I I I really like this program um when she first got into office she's like we're in a housing crisis we need to build more housing more affordable housing which is what we were already leaning towards with building uh no amenity type building so we can have charge a a lower price point uh price per foot uh for the render and that's where really the demand is and in the more affordable space everyone can build super luxury and that's where most of the supply is coming if you can be in that Middle Market It's just tough to be in that Middle Market so she passed ed1 and and we had a de a a site in Hollywood good part of Hollywood near Netflix near Paramount where we
Paul Schon
were going to be build a to deal um but it just the numbers didn't make that much sense we already own the lane so we we switched it to an ed1 project it's it's still tight uh but it makes more sense than a Toc deal uh the benefits about ed1 is you get almost unlimited density um for that site so we were going to build 30 some units as a tocc and now we're building 97 units as an ed1 project the units become way smaller so our average unit size around just over 400 sare ft one bedro room uh units most of them are one bedrooms and no parking and no amenities and bet washer dryer units central air uh so be nice units just you're You're Building you want
Paul Schon
to be just under that $2,000 price point and since it's an efficient construction because there's no Podium there's no concrete which concrete for any development is usually the most expensive part you save in costs so it pencils better the unknowns and why I'm I I've only doing one I haven't bought more land to do more is what are these going to sell at so what cap rate who knows because you're you're your deed restricted um so I I don't know yeah I'll ask you the question there hasn't been many that have sold so it's it's really there's not a comp out there no one really knows so you're deed restricted on your run so what what what the exit cap rate's going to be who knows so we don't we don't know that market but will it rent it will absolutely rent which is
Taylor Avakian
super interesting to me because uh they that's the question it was super hot because a lot of and I'm curious to know so you said just under 2000 which is not underwriting towards what a lot of these ed1 developers were doing which was Section 8 rent so why did you choose to not underwrite that way Andor are you going to be going after Section 8 renters if you know they will rent that space because then you get 2 407 for one beds right now I've leased some
Paul Schon
Section 8 units uh with our in-house management company sometimes we we leas some Section 8 units it it is the leasing velocity we found is not as good as market rate units I have talked to some leasing agents that specialize in vouchers in Section 8 and they say they can get good velocity so we'll see I just don't want to get too aggressive on my underwriting yeah because Section 8 for that area is 2400 2500 so you get a massive pop if you do the whole building Section 8 and we'll see and then we'll yeah I don't know that also how intense the Management's going to be for Section 8 so we'll see but that is the
Taylor Avakian
potential upside and when you are developing these projects obviously with the homes you were flipping them and selling them and things like that were the apartment uh buildings that you guys developed and are continuing to develop is the plan to sell those is it to refi is it to keep them long term like what does
Paul Schon
that structure look like for you guys I'll answer that question in a second one other thing about ed1 which is interesting is if you partner with a nonprofit and you get some government bonding you get to reduce or fully remove property taxes which is huge on your noi so that's another benefit which is usually the biggest expense line item yeah the biggest expense on your operating expenses so that also can juice up the returns are you are you partnering on this one uh so they have a 5year tail so they don't want you to sell speaking of selling they don't want you to sell for 5 years after you build it so we're still analyzing we don't know we're going to sell the building or hold on to the building but and right now the property taxes is
Paul Schon
nothing because it's just land but once it's completed it'll be a big number so that's that's another benefit about ed1 uh regarding so building and selling or just buying doing the value out and selling or holding on to I prer to hold on to stuff I think that's where real wealth is created is just holding on longterm getting consistent cash flow depreciating the asset but it honestly depends on who our Capital partners are if we have some partners that want to sell we listen to them we we sell if we have some Capital partners that want to hold on to we hold on to them and
Taylor Avakian
I think that's where the real wealth interesting um speaking of capital Partners so we didn't get into the historic uh your historical background but um basically you were born in Mexico moved to San Diego and then madej your way up to La during college or after college yeah right it was yeah Bor
Paul Schon
in Mexico City when we were 14 my whole family moved to San Diego and high school college first went to UC Davis and UC San Diego and then after UC San Diego I moved to LA and that's where I started my real estate career start building the relationship telling them what you do they what they like is a lot of people have opportunities to invest in businesses to invest in uh crypto it's like there's not a hard asset real estate they can drive by and they can see it and they can touch it and they know that there's going to be some income so I think that's trick
Taylor Avakian
is um is how many investors do you typically have on a deal like is it one big Capital Partner or is it 50 so
Paul Schon
most of our buildings have been with a few uh smaller family offices that we worked with and they just put up 90 to 100% of the equity uh we've done a handful of deals uh where it's syndicated so we bring in friends and family and friends of friends and brokers who want to put in money in the deal so most of them I would say have been four or five family offices that we work with the rest have been
Taylor Avakian
syndicated got it and I think um we talked about this before but you have an interesting model in terms of finding deals would you walk me through how you guys initially found the sites and how your I guess acquisition model is a little bit different than I think many other developers right now yeah well right
Paul Schon
now we've slowed down on that um but to find land we knew exactly because we're not we're not looking for land right now it just doesn't make sense do ground up so we're looking more for existing but what we did when we were looking for land we we knew this like 20 square mile radius area that we liked where we knew the cost City of La so we we know how to move move uh through the city we
20:00–30:00
Paul Schon
knew the rents we knew that the rents would justify the costs and we would just be Dialing for Dollars bringing my broker hat putting my broker hat on we had three full-time acquisition guys and we just called the land owners and say hey we're a developer no offense but let's skip the middleman no I get it I get it and we'll just buy it from you save on the commission yeah and we just knew we
Taylor Avakian
knew what sites we wanted and that's what we would pick interesting and were you calling cuz you were a broker in the beginning were you like when you first started you were you were the one calling I was calling and then I was training uh the our acquisition guys on how to call so we'd call together yeah oh my goodness man I mean it's a great pitch like who yeah if if you're a seller and you want to sell your land and a and a developer comes to your principal and he's like hey you don't have to pay 3 to 6% like let's get a deal done I mean I would argue that we we might be able to get more for your land if you didn't sell direct but but I think from a business model perspective like you're you're shaking the tree you're making things happen
Taylor Avakian
which especially when you're starting out and building a company like you got to get Scrappy you got to figure out some way to get the ball rolling get the flywheel going and um that's super cool and
Paul Schon
and we could also pitch the joint venture which Brokers usually don't want to pitch the joint venture because they want to get paid on up front so we would pay to the joint venture it's like hey you have a lot of built-in Equity here want to just roll it in and we can do a development together and now it's great because we find the lane and we find one of our LPS in the in the develop right and so then there's less Capital
Taylor Avakian
that has to come into play and and things like that um I'm curious what so back in the day you obviously knew what you were looking for what actually makes like
Paul Schon
a good site for development yeah so you for a developer that's why you have to be micr focused and it's hard to be developing in multiple cities or states or counties so you got to know the zoning really well you got to know just what you can build what like change of zoning in La is impossible and now you have to use some sort of union labor so we never did that so we just knew what zoning we could build we knew what type of density uh we can uh we can uh afford building that uh that site you got to know the how many parking spots you can fit in there um one thing is the turning radius for a parking spot so you get a very narrow site yeah it might be long and narrow and in theory you can fit a lot of
Paul Schon
units but you can't turn the parking uh if you if you're doing parking so it's it's like little things like that if you have an alley that's huge if you have a corter lot that's huge so there's so many different factors that and then we sit with Architects and it's like first we design the parking how many parking spots can we fit then we design a design above because yeah you might be able to fit a bunch of units but they're on Park what how much can you rent them for and then you you do your you plug it into a model you have you come up with like five different designs you plug them all to the model you see what makes the most sense and that's how we end up with a design so it's like a
Taylor Avakian
sensitivity analysis where you're looking at every single possible option and which one makes the most sense so that uh speaking of parking that's been a very hot topic because of ed1 and we spoke with the city we've been in I've been part of this group called Uli so we've been directly talking to them about this new um chip ordinance which they're changing a lot of the TLC and zoning and stuff in February of next year which we'll see if that makes any difference but it seems like they're pushing a lot of new development to minimal if not zero parking what do you think do you think that's going to work do you think that that the city La has made for that
Paul Schon
or like what's the story with parking I I don't know right now it it's I don't know what rents to really underwrite we have some units that are UNP parked and we rent them but if you're trying to rent a 100 units that are UNP parked what's the velocity of that leasing I think ultimately it will get to that but right now I don't know how many residents that want to pay above for newer construction above 2,000 plus can not have car so it's it'll it'll be interesting I see I saw all these to buildings most of our to buildings have are fully parked but I did see a lot of Toc buildings that don't have parking and I'm really curious what they're renting for I I don't know so for the just um how many yits do you have
Taylor Avakian
that like what's the Delta typically that you've seen in your portfolio for unpark versus parked how much rent
Paul Schon
oh um so most of our buildings have parking we just done a lot of adus that have parking and that's ones we rent without parking and I would say the most of them are Studios so $2 to $400
Taylor Avakian
less without Park which is significant if you're doing a 100 unit building right and then yeah what's the velocity of that how quickly can you
Paul Schon
get they're always harder to lease because they want parking everyone wants
Taylor Avakian
because the city's not New York City right we don't have public transit that makes it easy to uh just take a hop on the subway or a bus or anything like that which is I don't know I don't know if it's going to work out it's I guess we're going to have to see whatever incentives right if they incentivize it enough for the private markets to develop and make money they will do it but yeah on the other side of that just because they incentivize it doesn't mean the renters are going to be excited about
Paul Schon
what they're willing to pay I I do know more people that are getting rid of their car though so some neighbors that that I know are getting rid of their car um my fiance doesn't have a car just Uber's everywhere yeah so I I I've stared to know people that are start well in the last eight years I have met people
Taylor Avakian
that just like they well with with weo came to uh to La which have you taken AO I don't know yet I haven't taken one either apparently it's like a private thing but I mean I've heard good experiences where there's not even a driver in the car yeah I'd help B in win right and if there's a million Whos like yeah I guess you don't technically need a car if you're just all right you know six bucks it's you don't to pay for insurance gas all that stuff it's going to be very interesting to see uh I
Paul Schon
hope it it La does transition to more public trans more easily available public transportation that's why I love
Taylor Avakian
New York City I love going there because it's so easy to get around everywhere and one thing I miss about being there is you get to walk you just walk you find yourself 10,000 steps is I struggle with getting 10,000 steps and if someone who's healthc conscious like us like you want to try to get out there and do it um I have a hard time doing that and La cuz there's not that many opportunities to walk to do that stuff which is yeah we'll see um okay you are we talked about vertical integration so you guys are your own GC and property manager and you're growing both of them and you're doing third party work from the G GP perspective why why the third party stuff and why did you decide
Paul Schon
to vertically integrate yeah so okay well we started vertically integrated from the beginning because we kept getting when we're doing hous kept getting screwed by gc's and we didn't know why there were delays so we're like let's just do it ourselves we're going to be in this market for 50 years so let's just do it ourselves um so we got our GC license and then when we first built the first building we're like man this took so much effort I don't want to give it to a third party management company manag it we'll just manage it ourselves and first we were just doing it for our buildings we're just doing construction for our buildings and property management for our buildings but as we we grew and we assembled the pretty badass team like I the GC team we have and the property management team we
Paul Schon
have they're rock all stars and we're like all right we have a little capacity we're so we're selectively taking on third party work so third party construction more on the multifamily front we're we're helping a friend out right now build a beautiful home in the Hollywood Hills uh but our our Edge is in the multif family built so many of them and then on the property management side if it's a cool owner a friend they have buildings in the markets that we already have buildings we'll ma we'll we'll talk and we'll manage for them we're not trying to explode our third party work but if it's if it there's synergies there we know we can save compared to most management companies the owner money because we run it so efficiently because we they're mostly for us and we have the systems as
Paul Schon
if we're the owner so we're we're we're lean and mean in our property
Taylor Avakian
management you take the care of it which is the biggest complaint I hear from owners is and I have a bunch of property management friends and um you know no one loves your building as much as you do typically but if you have that mindset of you know taking care of it like it is yourself and you have the systems in place then it's not as difficult to just plug another building into the system and be able to provide the same level of service to that which is super great I think if you're going to build anything really systematize it processe it processe it ises that work anyways um okay what's the number one cause for
Paul Schon
development delays uh preo vertical or once you're going vertical uh it's do both um I guess it's the preo vertical it's dealing with all the craziness of California and getting your permits what do you it's approved explain a little bit about the craziness of California what do you mean by that uh um so there's this thing called squa
30:00–40:00
Paul Schon
calar environmental quad act and if basically anyone can slow down your project stop your project from from getting your your entitlements because they think they're you're going to cause issues to the environment which is more traffic more noise more pollution and there's it's very easy for them to just slow down your project so I'm not an expert on it I just know that that's we wanted to stay under 50 units in a lot of our developments because we didn't want
Taylor Avakian
to mess with a SQ so is it if you're under 50 units you don't have to deal with and you're doing by right yeah got it so if you're not doing on menu or off menu incentives which basically is there's like a list of things that you can choose to if you're going on menu if you once you go off menu then you can then you're then you're subject to squa which is why I think it's so hard to build because it's I was looking at this new plan in 2025 this this ordinance and you need literally need a PhD to understand all the nuances of what you can and can't do what's the feasible what's not if you do this setbacks uh trees uh parking like there's so many nuances
Paul Schon
to it yeah and then DWP and then by understanding when the the power Department water power when it's like what setbacks do they need how much power do do you need how much Street digging do you need to do how expensive that's going to be and that usually takes around a year to know so you're we're buying these sites sometimes and it's like how much is Department of Water power going to charge us to to get this and it's it's it's hard to tell you don't even know you don't know we have a good estimate built a lot of them but it's hard to estimate that's why
Taylor Avakian
it's hard to start in development too because there's so many nuances to even one site and um you know typically I think I remember hearing this a long time ago when I was younger but a developer typically is shooting for like a 20% return minimum right to take on the risk of doing development um and so if if you know the estimates go any which way or Direction like that can blow up your project completely which I think is it one and two developers go bankrupt or something like that I think there's just one and three or one and two like if you've developed a property one and two have declared bankruptcy I think fact check me on that but I'm pretty sure that's a that's a real stat that's not good no but that's but I mean like it tells you how hard
Taylor Avakian
it is how difficult it is to be good at this and the fact that you guys have been able to be successful is kind of I mean you're beating the odds which is pretty damn good yeah I like it what are some of the Lesser known um like misconceptions people have about
Paul Schon
the business um I think it's it's it's we're also dealing with margins so when people see oh 20 $30 million development it's it's still it's we have debt on them we we have Partners on them so it's still a 20% margin business it's not a massive margin business um so I would say that's a thing and then just the the the length length of time it takes to build these I wish we could go back to a way where it could be more efficient in
Taylor Avakian
building these faster what um what do you think is next like what's the future of development in terms of is it adus is it something has to change politically like what do you think the future
Paul Schon
of development development is going to stop like all my friends who are developers they're stopping they're like pencils down we're not breaking ground on any we're not doing any new acquisitions to do development other than maybe covered landan plays that's what we're looking at so we can buy something with spitting out good cash flow and then we can entitle it while it's spitting out good cash flow maybe we'll we'll look at deals like that but development's going to stop which is going to make rents significantly go up or condo prices go up on a price per foot and then it'll might make sense to start developing again M or also we need maybe rates come down hopefully rates come down and that'll also help with the numbers but right now development just going to be on on pause it is just because it doesn't make sense it does not
Paul Schon
make sense as the numbers we looked at earlier it just does not make sense
Taylor Avakian
at all so that's why you got to have to find these ancillary businesses in the meantime because you can't I mean there's not much else you can do or
Paul Schon
just bu existing I think there's right now there's so you're going into existing stuff oh yeah we're an ESC to buy an existing building right now really yeah tell me about that tell me about that process and what you guys are looking to do we bought existing in the past it wasn't our our our core strength our core strength was during development but we bought existed and done some value ad but it just um so yeah we're always looking for for new opportunities to buy existing we're looking for newer construction so we don't have to deal with a lot of the rent control laws on the older older buildings and yeah just by existing I think right now there's there's some distress in the market
Taylor Avakian
and there's some good deals out there so talk a little bit about that newer construction because of uh so ab42 is a Statewide law which I assume you mean you're trying to buy a472 buildings which are any buildings in the city of Los Angeles built after 1978 um and you have different regulations in terms of how much you can raise the rent versus also substantial Renovations and just being able to go through a business plan so walk me through the business plan if I had a deal and I just listed it today like what would that have to look like for you to be interested in it well we
Paul Schon
got to be able to get good financing so there has to be income there um which has to be what right now we're looking to the at at least the five okay at least a five in place five cap in place five cap and obviously there's juice in the rents where we can increase those rents to like seven seven would be great depends on the locations so the the deal we're buying now we're askar to buy now we actually went removed contingencies yesterday uh own it at a five and a half uh in in West LA so it's good good location yeah 2000s built so so it was a good buy and and we there's juice on
Taylor Avakian
the the rents we can increase the rents give me uh this this is going to come out after you close so like give me more details on the deal how you looked at it why it seemed juicy like go into as much detail as you can I don't want to
Paul Schon
go into much detail because uh don't want to put the broker throw the brok got it got it got it was it off Market no it was it was on the market um it was on the market about you want to pick a
Taylor Avakian
different building where I just want to understand like from your perspective because this always fascinates me so if I as a broker I'm looking to buy a building right like I know okay I want to buy a property in this location this neighborhood because if I have to hold on to it forever I'm comfortable owning in that market I also want to see okay if I can if the rents are at 2,000 bucks and Market's 3,000 How likely am I to be able to get those rents of 3,000 and how fast am I going to do it and how much is it going to cost me so I'm looking at vacancies I'm looking at uh quickness of leasing like how competitive the leasing Market is I'm looking at if I can add an
Taylor Avakian
Adu potentially to there and then I'm buying it I need it to go in at five and a half I need to stabilize yield on cost to a seven and then I'm underwriting and predicting that if once it's finished and stabilized I could sell it at a six or 575 or something like that so like that's what I am if I was to buy a building that's how I'd look at it you don't have to give me exactly that deal but like is there give me an example of that how you think about that no you
Paul Schon
you broke it down extremely well uh that depends on the neighborhood so we're west of the 405 we we might be able to think we can sell it at a five and a quarter five and a half five years from now but the uh these Capital Partners done a bunch of deals with them they they like to hold so we're just looking at as a cash flow play it's like how fast can we get to high single digits cash onh returns and um yeah so that's that's that's more we're looking at but yeah you got to get the the yield on cost as high as possible that's the that's the most important number that we look at even for development what yield on cost are we going to get to once we're
Taylor Avakian
execute our business plan yeah and yield on cost for those who don't know is basically like the cap rate after the cost of improvements and everything that goes into it so like you know let's say you have a five cap and it the market Mar rates put it at seven but you have to put money in to get that those higher rents so it's including the cost associated with that which is where you get your number after everything okay this is how much you know our our
Paul Schon
return is yeah and that's your prad because if you're selling at a five and a half five years from now and you're at a seven you have 150 bit spread and that's your profit that's your developer profit
Taylor Avakian
yeah and ideally if if I think it's a really good time to buy right now truthfully because if cap rates compress in the slightest 2550 100 basis points which you know they were in 2022 we were selling three cap deals which is just crazy 2021 2022 like if you buy a six five cap and you get it to a seven and then now you can sell it a four like that's how you get rich as [bleep] yes like that's the [bleep] money right there right so it's it's interesting to
Paul Schon
even but who knows like if it'll ever get to a four because I don't know if rates will ever go come down that low but even if you just let's say cap rates come down by
40:00–50:00
Paul Schon
10% and then noi growth by 10% that could be a big number too so it doesn't have to be such a huge margin I think just cap rate compression by 10% and noi growth by 10% it can get very interesting and let's say you have interest rates come down by 10% so
Taylor Avakian
that could be a pretty big number yeah that's where the compounding comes into play and that's why real estate is such a feels like a boomer bus but why people love real estate is because it's all on a multiple right and so you don't have to move that much to have a big swing in value uh which is good on both I mean good and bad on both sides right which is the people who were underwriting the developers underwriting to a a 475 or five cap exit and now they come to us and say Hey What Can you sell this new constructure for and I'm like uh 5 and a half 575 depending on the location and they're like oh my goodness okay well I don't think we're going to be
Paul Schon
selling anytime soon I got two of those go two that we completed uh last year and it's like the the cost is more than the value so we spent four years grinding away buying the landan bought it right built it right problem is financing costs increased so much in on development deals you're on variable loans so the interest just shot up like crazy so now each month you're paying double what you anticipated that you would be paying so you're interest Reserve is gone so now you have to fund the interest reserve and if there's slowdowns because of covid delays and supply chain issues so now the Project's taking longer and now each month it just cost double what you anticipated for longer and now your cost is just higher than the value of
Taylor Avakian
the building jez that's I mean that's why it's it is not for the faint of heart development right especially when we saw such a like I don't think anyone could have predicted what we saw happened over the last couple years how quickly those interest rates Rose and I mean a lot of people are feeling the pain which if you have the capital now you can take advantage of those distress especially when the capital Partners I mean there's some deals in Texas where lenders were I don't know 65% LTV and the buildings aren't worth 65% of what the person bought it for like they can't even sell it at par crazy which is just
Paul Schon
insane and yeah they overbuilt a little in Texas so there's a little bit of Supply so rents have gone down from what I've heard but it's mostly just a capital markets issue it's a capital Market fundamentals are generally good especially in La there still a 95% vacancy here occupany occupancy yeah so the fundamentals are strong
Taylor Avakian
so interesting it's so interesting um I'm curious to know your thoughts with the regulations and R control and this is filmed before prop 33 either passes or doesn't and it'll come out after so we're not going to have the answers to this but with like all the regulations that are going on in California rent control things like that how do you do you see California and Los Angeles as being a long-term place where you want to continue to develop or do you see yourself trying to diversify in maybe a little more regulation friendly areas
Paul Schon
so free uh rate hikes we were starting to look outside of St uh we were starting to look in Texas now with the raid hikes I think I want to we're doubling down on on Southern California not all California but Southern California we know the market we have a competitive Advantage here we we we have the teams we have the relationships and even though sometimes government gets in our way it affects us one way but it benefits us other way like you were saying earlier if you own it and there's no Supply rents have to go up and the value of the building is going to be worth more and if you can build here which right now doesn't make sense but it will make sense physically impossible for developers not to be building for more than five years so I think it
Paul Schon
the cycle will come return and we're going to have a competitive advantage to be building here and the demand will always be there it was scary for some time uh during Co and we're we were just the demographics were just awful for California were just like first time in I don't know 1800s that California lost people but I do believe so beautiful here we have a diversified in so so many Industries here I think people will come back and I and that's going to be good for us that was my only fear I'm like are we going to be the next Detroit where everyone just leaves but I think it's too beautiful that I think the the industry will still be strong here um so once people start moving back which I think I I I actually I I I was telling this to a friend I think we had
Paul Schon
the perfect storm for the bad in California and in development we had people leaving because of covid it's like why pay $3,000 rents for one bedrooms when there's no bars there's no restaurants there's no sporting events it you couldn't it was illegal to be outside it was nonsense why pay that so no people left make sense but now that everything opening up I think that's the per they could be the perfect store for the good that people start coming back there's there's there's restaurants there's nlife there's entertainment so how many sports teams do we have in la oh my gosh than up it's crazy a million so people are going to start coming back so that's going to be good for for California Southern California and the second thing is we had crazy rent uh uh interest
Paul Schon
rate going up and we might see a reversal of that maybe not as low as it was but we'll see a reversal and that affects us but then it'll benefit us so I think we suffer through the perfect storm in the bad and we might get the perfect storm in the good I love to hear that
Taylor Avakian
because I agree I'm long Los Angeles um we'll see after prop 33 all the the internal talk with the Brokers and prop 33 for those who don't know is basically um getting rid of something called Costa Hawkins which it's a stay wde rank control law that limits what governments can can and can't Implement in terms of rank control and prop 33 would get away take that away which would allow any local city and government to make as strict of rank control as they' like which the talk is something called vacancy control uh which I'd love to get your opinion on on that because we feel at least on The Brokerage side and I know a lot of owners it's like that seems in [bleep] sane to want to cap what you can increase a vacant unit to if that happens like what are your thoughts
Paul Schon
on that I think a key to business my dad would always say is you got to be adaptable so you just got to figure it out um I think for it makes more sense for developers if that passes because now you get to set market rate rents from the beginning uh the I think the value ad game is destroyed that game you're just going to let those buildings fall apart basically so it's it's going to be tough uh but I think for development is going to make sense I think in New York the the luxury buildings just the red shot up
Taylor Avakian
yeah right keeps going higher I know it's funny when you see you're like hey there's a case study over here right New York City like see what's happening please uh understand it um no I I agree I think um we'll see what happens but it's it's it's going to be quite interesting to personally how we have to adjust if because most of the sales we do is value ad um and there's not enough developments for us to sell all the time right so where does that adjustment go
Paul Schon
I think the key is for developers if it does happen you just give six months of concessions every new lease right so you're always above way above yeah what market rate there's
Taylor Avakian
some interesting strategy of people have been talking and and entrepreneurs will always find a way there's always some sort of they were naturally drawn to finding loopholes or where Arbitrage or where opportunities are to take advantage of some sort of information that is not widely uh available so I know that people are resilient they'll be able to figure it out but I sure
Paul Schon
hope it doesn't happen yeah no it's it'll significantly impact our it's like when I talk to equity that wants to do uh invests with sponsors a lot of them exiled California because the the political risk is just so high the demand is great just the political risk they they don't want to they
Taylor Avakian
they don't know how to underwrite that of of the investors and the capital partners and new ones as well who you talk to what percentage was open to California and what percentage is now no longer even putting California on if you'd
Paul Schon
have to guess um ever since Co so many any ex out California because we had a crazy we couldn't raise rents for years we couldn't do eviction moratoriums so so many people ex out California if I would say a percentage it used to be from 80% would do California now it's maybe 40% will do California yeah man but I think it's starting to get better now because of all the supply that got built out of California and not in California and people are coming back and
50:00–1:00:00
Paul Schon
realizing that the fundamentals the fundamentals are sh but the
Taylor Avakian
political risk are so you get away the options um speaking of resilience you mentioned earlier and this is something that's part of my life and I know part of you too is is just like working out fitness de-stressing how do you with all the culminations that go on with development there's highs there's lows business and general running a business running different how do you like decompress SL what are the things that you do outside of the the office that just is part
Paul Schon
of your life yeah well I I love martial arts all of them mostly I was a decent wrestler College wrestler and then after wrestling I got into Brazilian jiu-jitsu and then that led to boxing and Muay Tha and I do every Monday night MMA Monday so me and some friends at the gym we just put on the the gloves the shim pads and we just go at it and then Tuesday some no G Jiu-Jitsu Wednesday some G jiujitsu so it just uh that when you're in that one hour of hard training where you have a grown smelly meat head of a man trying to punch you trying to choke you you you forget about all the stresses and it's like okay I just got to survive right now it it's like that level of just pressure you're feeling in that moment where they're trying
Paul Schon
to punch you or or choke you it's like okay and then you get out it's like all right I survived this life's not so bad we're going to survive we're gonna and you you feel good after it continue it I
Taylor Avakian
know it's it's so important it's and I've wanted to get further into martial arts just because of that so many people I talk to they're like there's something and especially being a male too I guess there's that like vilon just I some about being physical that I think allows a lot of the things that we worry about on a day-to-day basis which really if you think about it are not that big of deals like we all most of us as homes and you know have food to eat and you know family is support and love and stuff like that but uh we worry about all these smaller details and can sometimes forget and not be grateful for for what we have and so I think having that physical activity to to really kind of put it into perspective and release that [bleep] like so important yeah
Paul Schon
so important when someone's choking you you and you can't breathe and then you are able to get out or you tap out and let's go it's like ah life is so great I can breathe or you're so thirsty because you just train for an hour hard and you drink water it just tastes so good or I I used to compete a lot and it's like when you're cutting all that weight and you finally get to eat food just tastes so much better so I think as humans it's good to put yourself in these uncomfortable positions and puts life into
Taylor Avakian
perspective as you said it yeah 100% no I I I'm I I want to talk to you about that because I know it's a big part and we've talked about it a bunch and um one of these times I I'll get in there and roll with you but you have to take it easy on
Paul Schon
me absolutely that's what I always tell people if anyone wants to get into Jiu-Jitsu or any type of martial arts go with that super Advanced higher belt guys they have no ego they're not going to hurt you it's the beginners that hurt the beginners so just just be careful if you ever go to a gym don't go with the beginners because they're Spazzy they can throw an elbow around yeah yeah just go with the advanced guys they'll teach you they they'll know how to control your body where you won't get injured so that's advice I have always get give
Taylor Avakian
for Jiu-Jitsu advice so um I know you don't have kids but let's say you had kids and you're you had um a a child who wanted to start in real estate right they're 18 years old or 21 years old graduated college whatever what advice would you tell them to do and what vertical would you tell them to get into I love
Paul Schon
The Brokerage vertical so I love what you guys do because you guys really understand you guys understand the deals you understand what's a good deal what's a bad deal and then as a broker you have so much Advantage you have boots on the ground you know what's selling and you know when's a good deal and you can always plug yourself in with an investor developer and say hey I'm bringing you a good deal I know you're going to make a lot of money build me into the promote and that's what we do with some Brokers that we consistently worked with is they bring us good deals we build them into our promote so not only are they getting their commission they're
Taylor Avakian
participating on the deal with us that's interesting so that incentive is that something you guys did from the get-go because you Brokers you knew okay to get other Brokers to send us the deals we want we need to incentivize them so let's figure out how we can make it as juicy as possible yeah let's make it a
Paul Schon
win-win because I I'm not going to get wealthy out of one deal I want do five 10 20 deals so if I get the first call from the broker he sends it to me he knows I'm going to take care of him not only on the commission bet I'm going to get in my promote I'm going to be the first call so yes get the and as a broker you have that option because you control the deal you control the deal you take it to your client say hey client I'm calling you but I want to be I want to participate on this deal and and and and you can work you can you can say I want to figure out how the UN turns uh work or I want to be involved I want to go to
Paul Schon
the architectural meetings I want to talk to the GC and see where the costs are being spent so I think a broker because you see from from the first step which is the deal and probably the hardest
Taylor Avakian
part is finding the good deal and so after let's say you become a really good broker after that what vertical of real estate whether that be homes whether that be industrial whether that be Apartments whether that be development value ad like after that brokerage once you get that what would the then
Paul Schon
next vertical be that you would go into I'm biased that my favorite asset class is multif family that's what I know I I've done houses I wouldn't I would stay away from houses just because the tax treatements and there you it's it's hard to cash flow houses so what I always say is like uh buy real estate that cash flows so a lot of people just buy houses like that doesn't cash flow or most of the time it doesn't cash flow so buy real estate cash flows so I'm I'm biased on multifamilies what I know industrial guys are loving life for the last six eight years because it's done such a such a good asset class for them uh which makes sense but I just don't know it so well I would say
Taylor Avakian
multi multi family okay what um what has been the biggest change that you've had to do over the last 10 years that you think made the biggest impact on business and how you look at
Paul Schon
things thanks biggest change that's good question um can't think of anything it could be it could be like biggest change in
Taylor Avakian
the your philosophy in terms of investing maybe change in the way that you structure your operations change and the way you think of anything well one
Paul Schon
thing we we got our butt kicked on a couple Lan sites that I I had it and that do not do but uh we got aggressive so we bought a couple lands sites with leverage and uh a thing I had written down like a company Philosophy is don't leverage land don't leverage things that don't cashless going back to houses don't leverage things don't don't cash flow was like a philosophy I had learned from the the oldtimers they've shared that with me and we bought a few lands sites in the worst time in the market 2020 2021 and then we were we bought it with our own cash so we were carrying the debt and we were paying for the entitlements and usually how we did it we did one at a time we'd Buy on buy it on our own balance sheet and in the meantime
Paul Schon
we'd raise Equity but then when Equity froze up because the market shifted now we had the lands sites and like and we we we sold them but we took a heavy hit so I'd go back to that philosophy of don't leverage land I think that's a that's a big Learning lesson that I knew I didn't follow and now I got to start following again what are some other lessons that
Taylor Avakian
you've learned from the oldtimers your father people who've you've seen his mentors like what are some lessons that are like your fundamental pillars of the way
Paul Schon
you do business yeah I think just what I said don't don't leverage things that don't cash flow focus on real estate the cash flows or businesses that cash flow so when we started the the construction business of the property management would always say let's grow grow with profits I don't understand those businesses that just don't have profits and keep growing growing scaling scaling scaling with no profits that's too stressful for me grow your business with profits um hire as you need instead of hire first and then hopefully the sales come in and then you need it and don't don't get over leverage yeah yeah I think those
Taylor Avakian
are good lessons that a lot of people need to learn I myself am a big history guy so I like to study what very successful people have done and their philosophies and you notice that there's a lot of similar like lessons or similar metaph you know sayings maybe said in a different way um but the way that Charlie Munger thinks or Warren Buffett or Andrew Carnegie or or you know um Sam W Walton like there's these very fundamental keys that these very successful people have done and they try to
1:00:00–1:10:00
Taylor Avakian
impart it on a lot of people and I think people don't look back at history enough to try to understand those lessons and bring them into today and um whenever you can have something like that where you're like okay sometimes I had a I had a mentor of M said sometimes people feel better than they listen and sometimes you have to feel the pain to know that you're not supposed to put your hand on the hot stove but as much as you can really learn like okay I trust that person they're very smart they said don't put my hand in the stove I'm not going to put my hand in the stove right those are the things that I think will allow you to to to Really jump ahead of everyone if you're looking to grow into the real estate business and
Taylor Avakian
whatever vertical it is take the lessons from you know people like yourself people that you've run across ask people questions um there's so much knowledge for sure
Paul Schon
a simple quote that I love is success leaves Clues just see what successful per people are doing and just follow learn listen it's so simple yeah the
Taylor Avakian
the path has already been many people have done the path that you want to do just like look back and see what they did and if you do that there's a great chance you'll be able to get to where you want to go whatever Vision that is and
Paul Schon
it's easy especially now in California what we've dealt with through Co through the interest rates and in commercial real estate to be a cynic but I'm a believer that stay stay positive Stay Stay uh optimistic that things will turn and do not become a synic I I I think
Taylor Avakian
that's bad for business yeah 100% the last thing I want to uh talk about before we wrap up I'm just curious for myself because I'm a nerd like this what does your daily routine look like like what time do you get up in the morning what time what do you e for breakfast like what is your energy because I for me I just like how do I maximize or structure my day to feel the best I'm just curious to know what
Paul Schon
you do so I I'm I'm I'm I'm i' I'm a nerd when it comes to that stuff too yeah yeah so I I I'm pretty good at I think the the main fundamentals that I do is I'm pretty good about my sleep so I get seven eight hours of sleep consistently when you go to bed I go to bed around 11: to midnight okay and so you wake up S eight yeah I'm usually up at seven okay um and then I um skip breakfast so I kind of don't eat till lunch so 12 or 1 is usually when I start getting hungry um I'm pretty good about my nutrition and what I get into my body try to uh limit the sugars limit the carbs only drink water don't even drink coffee really has that always been the case always been the case I tried coffee
Paul Schon
for a bit and so no caffeine you don't do tea anything I do tea not for energy just for I hear it's good for you green tea just because I hear it's good for you uh so try to eat pretty healthy so it's like your nutrients are so important what do you eat give me like a typical post fasting lunch and dinner um uh chicken rice beans uh vegetables so just plates just some uh like Chipotle like I'm a fan of Chipotle I'll do a burrito bowl no no rice just beans guacamole veggies chicken so lower
Taylor Avakian
carb higher protein fiber does um you grew up in a a Hispanic household um do you still love like the old you know National like I was going to say do
Paul Schon
you love Mexican food love Mexican food love spicy food and and salsa is not not that unhealthy I don't do sour cream I I I limit my cheeses um yeah so I'm I'm very good about so work all day probably end around six uh go go to the gym GO train 7 to8 7 to 815 done training dinner at home S sim similar diet so healthy R chicken steak vegetables try to definitely limit carbs before bed um no sugars before bed and then um and then work a few more hours go to sleep do
Taylor Avakian
you do any sort of um like meditation or journaling or mindfulness or or
Paul Schon
anything like that yeah I try I I try to wake up with with a gratitude list and then um I think my my trading is my meditation I tried to get into meditation but I couldn't get into it my trading is where gym for me is just like that's my moment of present you're definitely present right yeah um but I I I test my hormones and my vitamin levels once a year so I I want to see how I'm aging um and I if I'm lacking in something like I'll either supplement in it so I have a pretty good supplement list um or I'll change my my diet based on what
Taylor Avakian
I'm missing has there been any one thing that has given you like the biggest change in either how you feel or perception or mental uh Clarity or is there anything that you've done specifically where you're like I would have done that 10 years ago if I
Paul Schon
could no and I've experimented with a lot so I've gone pescatarian I've gone vegetarian I've done the intermittent fasting and I I'm I'm I feel pretty good maybe it's because I'm consistent with my I've always worked out in my life I always eating puty clean in my life so I've tried all these different diets out and no I I failed to say yeah okay it's very interesting I think going back to real estate it's like the principle is what really that's what gives you 80 90% of it it's like yeah you can tweak things here and there to maybe a 3 5% Improvement but it's the principles it's the sleep it's the hydration it's the nutrients that you put in your body it's uh feel feeling gratitude being optimistic um I think that's what's really important it's so funny you
Taylor Avakian
say that too because um bringing him back into real estate too when I first started out as a broker my mentors were like just do the fundamentals the fundamentals are 80% of anything you're going to do make the calls do the follow-ups go on the meetings do the proposals and like everything else will find its way out all the little you know Street trip emails here and this then D like all these little excess stuff sure it can it can lead to opportunities but it's like if you don't do the fundamentals if you don't do the basics the Sleep the nutrition the the coals the this the development if you don't under understand the underwriting the rents all this stuff like the fundamentals are so important and it gets so lost because it's not shiny it's not Chic it's not something that is exciting and um
Taylor Avakian
I think the the older I've gotten The more I've realized that if you just do the fundamentals really [bleep] well you will outpace everyone because most people can't even do the fundamentals consistently yeah that's the key fundamentals consistently Paul thank you very much for being here man I appreciate this this is great yeah
Taylor Avakian
thanks 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