Shawn Evenhaim
I'm one that believe that every day you learn something. It's okay to make mistakes, just don't make them twice.
February 8, 2026 · 43 min
This Father-Son Team Built A $1.3 Billion Empire (Here's How) Shawn and Edan Evenhaim
With Shawn Evenhaim & Edan Evenhaim — Balaciano Group
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Father-son duo Shawn Evenhaim and Edan Evenhaim are reshaping the Los Angeles skyline through Balaciano Group and the iconic The Q brand.
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Episode show notes
Father-son duo Shawn Evenhaim and Edan Evenhaim are reshaping the Los Angeles skyline through Balaciano Group and the iconic The Q brand. With nearly 3 billion in transactions and multiple Builder of the Year awards, they share how they build, brand, and manage modern multifamily properties in one of the most challenging real estate markets. In this in-depth conversation they cover:- Starting as an immigrant in construction and evolving into large-scale multifamily development - The power of true vertical integration: in-house entitlement, architecture, general contracting, and property management - Why controlling the entire process delivers better design, quality, and community outcomes - Building a premium residential brand inspired by Tesla and Louis Vuitton - cohesive identity, no concessions, standing behind the product - Creating genuinely smart apartments with integrated technology at scaleUsing detailed data tracking (amenity usage, fob scans, equipment analytics) to constantly improve buildings - The realities of developing in Los Angeles: regulations, Measure JJJ, ULA, rent control concerns, and their impact on housing supply - Family business dynamics - respect, generational differences, and wanting the next generation to surpass you - Calculated risk-taking, surviving major market cycles (including 2008), and knowing when to slow down - The critical role of relationships, political access, community involvement, and philanthropy in real estate success - Advice for younger developers: start slow, learn from others, avoid over-leveraging, question everythingWhether you're interested in multifamily development, branding in real estate, smart-home technology in apartments, vertical integration, Los Angeles real estate challenges, or family business succession, this discussion offers rare insight from operators actively building and managing thousands of units in a high-regulation environment.
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Episode transcript
This 8,904-word transcript is matched to English (Original) automatic captions. Timestamps seek the episode player to the matching passage.
0:00–10:00
Taylor Avakian
Sean Evenheim, founder of Balaciano Group, builder of the year awardee with [Music] nearly 3 billion in transactions and Eden even the visionary behind the iconic the Q brand redefining the modern resident experience. They are the father-son duo transforming the LA skyline.
Shawn Evenhaim
I see especially younger people today want everything fast. They want a car, Uber come, they want food, they'll deliver it to them in 5 minutes. So Amazon will deliver. Life is more complicated than that. Just go through the process. Don't try to jump too fast, too high. That's when people fall.
Edan Evenhaim
What allows me to be successful is really that he wants to see me succeed.
Shawn Evenhaim
Some people just want to be big. They want to own 20,000 units. They want to control certain things, but at the end of the day, they're going to make either less money or more money, but they'll have much more headache.
Edan Evenhaim
I think the main reason or the main piece that makes it work is just having respect.
Shawn Evenhaim
It's crazy, by the way, that our cars are so smart, our phone are so smart, everything is so smart, but then you get to a house, it's the most stupid thing ever.
Taylor Avakian
All right. How did this begin? 1994. Take me back to you coming to the United States and saying, "I'm going to build and develop homes and take on the risk of doing that." Walk me through that, Sean.
Shawn Evenhaim
So, I came in ' 89.
Taylor Avakian
Oh, 89.
Shawn Evenhaim
But 94 I started the company. So, I came in ' 89. And like most immigrants, I got into what other people that I knew were in and they were in the construction uh industry. And few years later, a developer that I was working for as a subcontractor had some issues and I offered him to help him in his company and I became the president of the company and two years later I opened at the time it was California Homebuilders which we changed the name uh after we got into the uh these type of uh buildings. So it it was interesting beginning and I started very slow which I highly recommend to anyone that started business you know that's that's the right way to do it. I know everyone want to do everything very quick today and do an exit and so it was different and I started by building really
Shawn Evenhaim
custom homes. I built homes in Calabasas Malibu in different areas and u 94 if most of you are young. So there was in the middle of a recession. So I it was a good time to start because there were some good opportunities and it evolved into small lot subdivisions which we were doing uh a lot in the city. We did small infill uh project and uh later on we did larger projects which were still infill but 90 homes, 80 homes, 70 homes. when measure JJ came, I don't know how many of you know what measure JJ, it was uh implemented in 2016 and basically it said that if you do resoning um and and other entitlement in the city, you have to build a project with prevailing wages and other kind of union requirement which at that point killed that business. Uh and we knew it's coming.
Shawn Evenhaim
We still had inventory so whatever was in title in title and that's when we decided to shift gear and and we all we did some buildings before but not nothing like at this magnitude and what
Taylor Avakian
uh just to give people some color like what is the balanc group what is the current assets under management what is the portfolio look like I I read 125 properties buildings something like that what's
Shawn Evenhaim
what's the current no under management less we have few thousand units um and uh we have about a 100 employees altogether We something unique about us. We take a project from A to Z. So we'll buy like this one. We bought the land. There was an office building on it. We got it entitled. We are very involved and engaged in the whole process. So we do the entitlement in-house. We'll hire architects. And again, we are very involved in the design of the buildings. We'll build it. So we have a a division within the company. We don't use general contractors. We are the general contractors. And when we finish, we transfer it into another department within the company which do the management.
Taylor Avakian
What does that do in terms of savings? Like what's the spread on doing everything vertically integrated versus having outsourced?
Shawn Evenhaim
So it's interesting because few months ago uh a big developer in LA asked us to go to lunch with him and he he'd do it different than we do and he wanted to do it like uh uh change his way and do it like us. As far as money saving, it's not a lot. It saves some money but it gives you much better control uh for us because we are not just a merchant builder. We don't care just about just building, you know, ROI, cap rate. We care about the design of the building. We care about the quality of the buildings. We we care about the community we working in. So for us, it's so much easier because when you build these type of buildings, there are a lot of changes along the way. And and that's how you get to the results of
Shawn Evenhaim
the quality and the design of this building. And if you use a general contractor, you're going to pay a lot of money and extra work. when you are the general contractor, you just pay the cost, which is much better as far as the management to run an operation like we run here and in the other Q buildings and and other uh properties too. It gives you the luxury of really controlling the quality of the management.
Taylor Avakian
You guys are very vertically integrated, what you said, not only vertically integrated in terms of the actual development process, but you're vertically integrated as a family business. Edon, you work alongside your wife, your your mother is in the business as well, and I'm sure maybe some of your siblings. What's it like working in a family business when you know this is the dynamic? You're building massive buildings.
Shawn Evenhaim
Should I leave? [Laughter]
Edan Evenhaim
I think it depends on the father and and the son or the parent and the kid. Obviously, I'm very lucky. He's amazing. He's the best to work with. I say that. I think that everyone uh in the company would say that, too. And I think the main reason or the main piece that makes it work is just having respect both at work, both outside of work. For him, I think what allows me to be successful and is really that he wants to see me succeed and even like succeed more than him. And I think he would say the same thing. I don't know if that's true for every parent, but it is for him. So, it makes it very easy.
Taylor Avakian
Sean, what did Edon bring to the company that maybe has inspired you or has added to branding, which is such a big part of what you guys do? Like the colors on the walls. You toured me through the gym, which I almost decided to break my lease and move up here because it's incredible.
Shawn Evenhaim
What we have vacancies, what
Taylor Avakian
what is the the youth brought to you in terms of your your perceptions?
Shawn Evenhaim
So, a a lot. I think that any manager need to know what they don't know. They need to realize that and they need to surround themsel with people that are better than them than them in in certain areas. So if I'm not great in marketing, I need an amazing marketing person, much better than me. There are managers that don't think this way. They think they're the best at everything and there no one know better than them and and it's an issue. And and as a parent for me I my biggest success is if my kids will do better than me. So that that's something that you know not just at work but you know when he done and his uh brothers were growing up it always was you know make sure give them enough space to do what they want and and
Shawn Evenhaim
just you know hold their hands but let them go at some point and and do whatever they they do best. And for me, the fact that that's how I see it, it's, you know, I don't see even when he asks questions or when when I need to to show him certain things, I see it as a as a privilege for me, not just for him. So, it's it's an attitude that you have to have as a parent. But as far as what he brought, luckily Dan joined us right when we were working on the Q brand. So, you know, the Q brand was was an idea and we'll talk about it a little bit later, but he brought the part that that I was missing because, you know, I thought I was young at the time. You know, I'm not that old, but I'm not that young. And and
Shawn Evenhaim
these generations today, even Idan's brother, which is, I don't know, five, six years, five, four years younger than you. He he's completely Yeah. different generation. Different. So, it's it's crazy. In my generation, it wasn't this way. It's like the 30 years was the difference. So um but he brought all this energy and and and vision of his generation and what they want and what they look at which sometimes you know people at my age would say it's non it's nonsense and why you need it or or whatever you're going to say and and so he was very very helpful and we have a lot of younger people in the company too and I think we we used to have now we don't have as many but even internship we used to offer internship because I think it's so essential Especially when him and his brother went to college, I realized
Shawn Evenhaim
how important internship is and uh and and how much it give them um to to realize what they like to do to learn, you know, if that's what they want to do in life and and uh and for us in the company having younger people around, college age people around it, it was great too.
Taylor Avakian
Did you have a mentor? Was there someone in your life who put you under their wing and showed you the ropes?
Shawn Evenhaim
Not really because again I moved so my parents are still in Israel. I moved from Israel but um I didn't have a mentor. I had them I had few I won't call them mentors but in a way there were mentors later in in in in the last probably 15 20 years of my life people that are very very successful that I became friends with and they didn't mentor me but just being around them to me they were mentors. I I just learned from them so much.
Taylor Avakian
Is that how you learn? Is that your process for learning? because I' i've been around a ton of um successful real estate people, owners, right? And there's a common thread that I've seen is that they're continuously always improving. They're always looking to up their skill. They're not afraid to talk to, you know, the the the plumber over here to figure out a new pipe way that works better for their buildings, right? They're always trying to improve. How do you approach learning and how do you continue to improve yourself, you guys both as you're as trying to grow this into what you imagine to become?
10:00–20:00
Shawn Evenhaim
I I learn every day. Every day I learn something. Um so one is reading, being involved in the industry, being involved with the city, being involved in in certain organization, but really just watching what other people do and learn what not to do and what to do. So because we are a smaller company, you look at some of these bigger company that hired the best architect, the best designers, they spend a lot of money on marketing and you can just watch them and very quickly realize what you need to do without spending all these money on on everything they've done. So when I used to do single family home communities, I used to go to the KB of the world and the LA of the world, all these big public company and just you see they came up with a new floor plan. you study why cuz they they
Shawn Evenhaim
spend millions of dollars understanding what's now, what's the next trend and you can just get it by walking through their model. So there there a lot of things you can do and and I really I'm I'm one that believe that every day you learn something and um as long as you know it's okay to make mistakes just don't make them twice but uh it's part of learning making mistakes. It's
Taylor Avakian
funny you say that because I uh you were some of the first people to put tech enabled like full buildings, solar panels, full amenities, right? But also you study from other people. So there's a first mover advantage and there's certain aspects that you think about that you want to have someone else move and then you learn from. How do you know which of those to be the first mover and which ones to wait back and see if learn from others?
Shawn Evenhaim
So when we think about something that doesn't exist and and I can give you two example, we'll create it. Um so when I was doing again single family homes, we wanted to make the houses smart and if you build the custom homes and you wanted to put a crestron system and spend half a million dollar, you could do it. But the simple houses didn't have it. So to me, we went and most of you probably don't remember, but IBM came up with a smart home system and then they shut it down a few years later. So we went and met with IBM and we said we really want to do something affordable. So it's crazy by the way that our cars are so smart, our phone are so smart, everything is so smart, but then you get to a house, it's the most stupid thing ever.
Shawn Evenhaim
You go to you have to go to the wall to turn the light on and it just basic things that there there are many more things we should do in the housing industry. But even when we build these buildings, so fast forward, so we were the first one in LA to have smart homes at at very low half a million dollar price range um as a standard. Everything we did in the housing was standard and we can touch that too. But when we start building these buildings, we wanted again everything to be smart, integrated and there wasn't something out there. So we had to go to Yel that makes the locks and said we want your lock to work with to work with this system. And they said, "Wow, great idea. let us work on it and and we went to the lighting and so
Shawn Evenhaim
we end up building something that I think helping a lot of other people down the road. But these systems are not that expensive uh to put in but no one thought to put them all together cuz you could buy a thermostat and say a lot of people saying oh I have a smart apartment.
Taylor Avakian
Why?
Shawn Evenhaim
Because you have a Nest thermostat. That's not a smart apartment. Yeah.
Taylor Avakian
This episode is sponsored by Loan Titan, a leading residential financing loan company specializing in both conforming and non-conforming mortgage solutions. Loan Titan offers Fanny May, Freddy Mack, nonQM, and private money, hard money loan programs, helping borrowers who need flexibility beyond traditional lending guidelines or speeddriven financing solutions. Whether you're purchasing, refinancing, or investing, Loan Titan is known for smart structuring, clear communication, and reliable execution. Visit Loan Titan.com and mention Taylor Avakian to get started. Thanks for loan Titan for supporting the channel. So, you're thinking in terms of systems, and it almost seems like common sense, right? You're putting a bunch of things together like why wouldn't this be able to do this? Why wouldn't this be able to work cohesively together? We're on our phone 24/7. Like, things should be able to work through that. Um, I want to talk a little bit about the
Taylor Avakian
branding because I think that's such a big part of what you guys do. And I know there's there's been other companies that have tried to build brands and have this cohesive nature amongst their other properties, but it feels like it's kind of like a slap on a logo. Doesn't feel like there's actually something unique about the property besides maybe the paint. These your properties feel like they're cohesive almost. They could be the a cohesive unit within each of them. How did you guys come up with a cue? What was the initial room where you said we're gonna build brand? Like what was that conversation like?
Edan Evenhaim
The name actually was before I started working at the company. So that's more of a question for him I guess. But the queue today isn't what it was uh from day one. I think we came in with an idea um and a concept. And over the last 5 years a lot of things have worked. Uh some haven't. We've added a lot of things along the way. So the end result now five or 6 years later um is very different. Um and it's because we have that mindset of um being able to add things, being able looking at things, looking at the data, seeing that people don't use that, learning from it, not adding at the next building. So um I guess yeah, that
Taylor Avakian
it's like iOS software like you're tweaking it, you know, each iteration that comes through to have the best product or Tesla or manufacturing or whatever you're doing. You're you're looking how do you track those that data? How do you guys know what what's being used, what's not? Is it word of mouth? Is it, you know, do you have smart sensors tracking people?
Edan Evenhaim
We track everything. So, we track uh all amenity usages. We track uh fob scans into common spaces. We track um which color schemes people prefer, what type of units they prefer. Even our gym equipment now is trackable, how usable it is. Um anything that we can track, uh we track. And if we can't, we try to push the vendor uh like for example the cold punch um to add some tracking system. So, um, but that's what allows us to know at the next building next door, um, what works, uh, what doesn't work, how big this space should be. Um, and then, uh, like something that we have to go and I guess take a chance on is, um, like adding a new amenity space, um, that we do a lot of research, um, and, uh, we tour buildings that maybe have that amenity space, um, and
Edan Evenhaim
we make a calculated guess and implement it. Um, and usually it works, but if it doesn't, then we know it's it's used for that in that building, but it's not going to be in the next one.
Taylor Avakian
Who uh who's the analytical one? Who's the one like data tracking? That's one thing that doesn't come as naturally to me. And so I I'm obsessive about typing everything out and I have paper, right? Notes because I just have to write everything 17 times. Who's the data analyst that said we have to do that?
Shawn Evenhaim
You [clears throat] sit down and and we have someone in the company Noam, which is amazing in regard. He runs basically the management side of the business and um and and he's amazing at that. He just lives for that and uh um but but going back to the brand you mentioned Tesla. So I was one of the first 10,000 Tesla owners in the world. Like there the Tesla Model S. It was a signature. So I I got it and you know I when you got it originally you had to go to a store and then you you order the car. They still had I still have the paper brochure by the way and and you had to put $40,000 down and they said you'll get the car when we hope in a year and you didn't even see there wasn't a car that you can see.
Shawn Evenhaim
There was just a proto photo images. So it took them a year and a half and I got the car and since then I had I don't know how many Teslas. But why I'm mentioning Tesla? Because when we start thinking about the brand, we thought about Tesla, Louis Vuitto, that those type of brands that if you think about Tesla, I never seen one advertising by Tesla. Not one billboard, not in any magazine. I'm their billboard. After I got my Tesla, all of my friends have Teslas because I told him it's the best car I ever owned. So that's what drove us into the the brand idea of having something that we don't have to tell the whole world what it is. the world will know slowly and they'll appreciate it. But with brand come responsibility. So you can't just say, "Oh, I'm the best at this
Shawn Evenhaim
and that's you know when you buy a Louis Vuitto bag or you buy a Tesla, they'll give you the service and the product is good." And that's our vision. When you when you live in the queue, you'll get the service that you pay for. Yes, you'll pay a little bit more. Not as much as you're going to pay in 10,000 Santa Monica, 8,500 Burton and those buildings, but you'll get much more than any other building around here. M and what it does it it it really eliminate the competition for us. So we opened the first building across the street during COVID and everyone were doing two months concession just whatever you want just just just come in and we did zero and we didn't negotiate prices and people got upset in the beginning cuz they said oh but the that's another new building across the street and they offered this.
Shawn Evenhaim
We said oh it's a nice building you should go there. That's people get more upset when you tell them that because again going back to the Louis Vuitto model, you never find a Louis Vuitto on sale. I don't care if you like the product or not. It never go on sale. No, no matter where you are in the world because that's the product, that's the price. You like it, buy it. You don't like it, that's okay. Buy something else. And but you have to stand behind the product. And that's one thing that that we really emphasize on. We we're not just selling a dream. We're selling really something that we will stand by. And the same thing we've done when we were building single family homes because um I'll tell you a short story of how we learned from people and how people learn from us.
Shawn Evenhaim
And sometimes my team get upset that people copy us and I said no if they copy us it means we do something good. Um so we were building uh single family homes and we people were making the KB of the world and all these other public companies they were making a lot of money on the options. So they build a box they spend a million dollar on the model. It was amazing. And you came in and they said, "Okay, the house cost 600,000." And but they said, "Oh, you want this? It's 50. You want that it's 10. You want" And then they end up spending instead of 500, 6 700,000.
20:00–30:00
Shawn Evenhaim
And people got upset. And why they doing it? Because when they buy one countertop for one house, they pay much more than they buy a 100 countertop for all the homes. Same thing for every item that go into the home. And we decided we're not going to do it. We decided we're going to put everything in the house. Whatever you see in the model, that's it. That's that's what you get. And the buyer is much happier because you walk with your wife into this model and she said, "I love it. Let's buy it." And you're thinking numbers and or your wife's thinking number, whoever is is the number person in the family. And then and then you sit with the salesperson and say, "Oh, you want this? It's more." And then you get into these that's not what I thought uh I'm I'm buying.
Shawn Evenhaim
And then one day the president at the time of KB Homes called me and he said, "I don't understand. You you get more money than us and you don't have all these overhead and craziness. We have a whole design center." And he said, "Yeah, because you're doing it wrong. You sell you're not selling houses. You're selling options. I sell homes and they changed they they they changed their model to to start putting things out. So, um, so it's something that because we thought about the buyer. We didn't think just about the money. And maybe maybe we left some money on the table, but our buyers were much happier. And for us, the process was easier. When you start selling options, you you make the whole construction uh process so much complicated. And when you build it all in and yes, you do few colors and
Shawn Evenhaim
few products, but it it's much much easier.
Taylor Avakian
You uh you mentioned when you were leasing these app during co that you you told people no, right?
Shawn Evenhaim
The the best listing manager here. So she she runs the listing for the company. So that's that's why what
Taylor Avakian
what gives you because I know a lot of developers right now that I'm talking to and they would give their left arm for some tenants right now, right? They're just trying to get people in the door. What gave you the luxury of being able to structure either the financials or the way that you're, you know, the investment is like how are you able to say no and take time and have a long-term mindset of saying we don't need to lease this app in 6 months, right? Did you structure the financing in a in a beneficial way? Is the investment coming from you guys personally, different investors? How do you structure that? So,
Shawn Evenhaim
I don't have investors. I don't have partners. That that's the that's the key. So, no one's telling me what to do. So, I control my destiny. And yes, I have to have the relationship with the lender up front to tell them my vision and they buy into it. When you have investors and when you have partners, they sometimes, you know, are in control in some way and they tell you what to do. So that's one of the biggest luxury we have. Now granted, if we wanted to be much much bigger than we are and we got offers every day from investors to put money in the company from from the biggest name in the country and we prefer not to because we don't want to be big. We we want to do the right thing but we want to make money. So size to us never matters.
Shawn Evenhaim
Some people just want to be big. They want to own, you know, 20,000 units. They want to control certain things, but at the end of the day, they're going to make either less money or more money, but they'll have much more headache and and they'll have to report to many other people. So that that's one way uh we're doing it. And [snorts] again to create the product if we got nervous during COVID or after COVID when things slow down a little bit and it's the the time we open a building at at the time of the year that's not the best time then you hurt the product. It's like if again [snorts] going to Louis Vuitto if Louis Vuitto sale go down and they saying okay let's do 20% off because we have inventory. I'm sure they had scenarios that they wanted to do it but they never done it
Shawn Evenhaim
because that's that's how the brand is. Mhm.
Taylor Avakian
It's super interesting because I think having a level of um stick tuitess, if that's a word, to what you believe in and the business plan that you have is very hard to do in a world like real estate when there's a lot of external pressures from everything, right? There's a lot of things you can't control. Like you didn't control that co happened. You didn't control that interest rates, you know, quadrupled over the last 3 years. What has it been like dealing with those cycles or how do you think about dealing with unforeseen black swan events that you can't control? How do you protect yourself in those situations?
Shawn Evenhaim
You you do as good as you can. Uh by the way, I'm I'm not concerned about those things. Even co things happen and you deal with them and yes, they're tough. I'm more concerned in in today environment in Los Angeles especially from regulations because that that is the biggest issue we have here. COVID comes and go and you know when COVID comes everyone got impacted. there is recession, interest rate, you deal with it, you work it out, you deal with the banks, whatever, you figure it out. But when the city comes in or the county or the state and tell you you can't do this or you're going to do this, eventually we'll become a management company for the city. And and that's my biggest concern. And and it's not my concern for my business. It's my concern for the city because I love this city.
Shawn Evenhaim
And we we're not building enough for that reason. We're not building enough the right product. If you look at the data that we keep, you know, that the city keep publishing, not every ADU is is a rental unit. So they say, "Oh, we added so many rental unit." That's incorrect. ADUs, my feeling is probably 80% of them are, you know, gym and and fun room at the house. The other thing is a lot of units that we build today are are moderate to low income, which we're not building what we do need to build more for for the average person. So, and that's because people don't want to invest in the city because they don't know what's going to happen tomorrow.
Taylor Avakian
Are they going to have rent control?
Shawn Evenhaim
Not rent control.
Taylor Avakian
Can I evict people?
Shawn Evenhaim
I cannot evict. How many do I need to give notices only a month after they didn't pay rent? All these new things that keep and they're not stopping. They keep coming. That's my biggest fear. It's not it's not the other things that interest rate. These things happen in life and you deal with them. So, let's talk
Taylor Avakian
about regulations in Los Angeles. What do you think? How does that put your mindset in terms of wanting to reinvest in the city? Does I know a lot of people who the last couple years said, "Hey, you know, thank you LA. You've been awesome to me, but I think I'm going to go take my capital somewhere else. I'm going to go to Sunb Belt states. I'm going to go to Florida, go to Texas, Utah." Right? You have the opportunity to do that, but I I don't think you guys have done that yet. Is that on the horizon? Are you considering it if things go the way they are?
Shawn Evenhaim
It is on the horizon. We never thought we're going to be there. So, we always said, "No, we're LA. will be in LA. LA is big enough for us, but we we starting to think this way and and I can tell you that so many of my friends in the industry are already there. One is you can raise capital now. We we don't raise money, but a lot of investors don't want to be here anymore. They said this country is big enough. I don't need to be in in in California. I don't need to be in LA. Um and and it's risky if you think about even the small regulations. So you have your, you know, insurance going up 20% and and trash going up and and utilities going up and then the city saying you can't raise rent or you're going to raise rent by 2% or I mean
Shawn Evenhaim
no one thinking about the numbers because they thinking that developers and real estate and landlord um owners they just it's a deep pocket and no matter what you're going to do to them they're going to survive. it doesn't work this way and and unfortunately this is the environment we are in and until we see a change um I don't I think we're going to have bigger problem a lot of the construction that we still see today are project that started 5 years ago yeah I mean if you check how many projects I mean in in this area in the war center there's probably I know about four that went back to the bank and about six that just were cancelled that's probably 3,000 units here that were just shut They're they're done and gone and and no other reason. This is not interest rate or other reason.
Shawn Evenhaim
It's the reason of no one want to invest here anymore, which is so sad. We
Taylor Avakian
have a sponsor for today's episode and that is AI for CR Collective. 25 listings at the moment. We're closing four or five deals a month. It's been incredible. So, if you want to learn, if you're in commercial real estate, how to use AI in your business, whether you're a property manager, a broker, an investor, really anyone, we have a huge group, over 400 people in this community. And the website, if you want to go check it out, is AI forcollective.com. So, appreciate you guys. Now, back to the episode. What has to happen for it to to feel like you want to do to invest here? Like, what what do you think actually has to change?
Shawn Evenhaim
Simple leadership. I'll give you an leadership and and leadership with a vision and understanding of what need to happen. Not just slogans, not just say, "Oh, we need more housing." You know, what are you going to do about it? It's things that can be fixed easy. I I'll tell you a story. Many years ago, Jim Han was the mayor. And I I was very connected politically because you have to be when you're in this business, but I didn't know Jim Han. But I reach out to him and at the time I don't know how many people um did business back in the late late 90s it was impossible to get projects in title in the city planning department would take two three years to get you entitlement which was a disaster and I even told him further that people may be upset that developers can you know
Shawn Evenhaim
buy their way into the system and I said that you know it's a simple answer you tell them that you get all the developers out of the system and you and it helped them. It helped the average person get his house built or his uh bathroom remodeled. So, there are ways to do it, but you need the right leadership to to have the guts and the vision uh to start thinking how we building housing and not just low-inccome housing. We need low-income housing, but we need much more than low-income housing.
Taylor Avakian
Completely. No, I completely agree with you. It's very difficult when you have these conversations with a few folks, and I've worked with them, too. They've saved up for 20 years. 20 years. They've they've bought single family homes, small buildings here, right? Grinded their job. They put it back in their investing. They pull out their investments, their money. They want to go build a big development. They're like, "This is going to be my crown jewel. I've worked super hard." And then all these roadblocks hit you. Then interest rates go up and it hits you. And like you're looking at something that has took 20 years of your life to build and there's
30:00–40:00
Taylor Avakian
really nothing to do for it. There's so much headwinds. It's really, really tough.
Shawn Evenhaim
You another good example is ULA. So ULA what it did it devalue all the real estate in Los Angeles over $5 million by 5 to 6%. Just overnight devalue everything. Now investors are concerned because interest rate you're saying okay interest went up eventually it will go down. I'll ride it. You know I'll I'll my cash flow will be tougher. I'll deal with that. But ULA you can't deal with that. They just devalue my property forever. And so investors saying
Taylor Avakian
what are they going to do next?
Shawn Evenhaim
Maybe they'll do a ULA at 10%. Maybe there they're going to be something else. This is what preventing what the the the one thing the developers fear from is the unknown. And yeah, you can predict some economy. You can predict some interest rates. Not always you're going to be right on, but you can't predict what the politicians tomorrow will wake up and will do. And and the environment now in California, in Los Angeles, they can just get away with anything and there is no consequences to them.
Taylor Avakian
Can we talk about relationships a little bit? Because you mentioned it earlier, you know, being a developer, you kind of have to form relationships. Um, how important is that? How do you go about building relationships, especially when maybe you're younger in your career? Like, how do you have to think about, okay, I want to be that person one day. Who do I have to meet? What do I have to do? Like, what is the process of building actual real relationships that move the needle?
Shawn Evenhaim
It's so important. Last night we were in dinner for real estate um um individuals in LA and we sat at the table and we met six other people that you know we we we established great relationship. I think it's the most important thing in business and in life relationship is everything and and you need to maintain relationship. So in in the political arena, that how it works. You you you have to support politicians. And when you give a check to a politician, you support them. If they're in office or they're or they're running for office, it buy you access. Access can buy you influence. It's it's as simple. It's not bribe, god forbid, or any of that. You just you have connection. So when now you have you the politician will be willing to meet with you. That's the political side. And it's it's
Shawn Evenhaim
essential uh to be involved and engaged there. But then you're talking about the city, get involved. I serve on so many committees. After I serve, Antonio Varoso appointed me, Jim Han appointed me. I was I was on different committees. It's important why you you meet a lot of people with this within the city. And it doesn't mean that you meet them and now they're going to help you. They they get to know you and they trust you. So when you come up with idea, they listen to you. Um first you have access to them again to to even convince them to do certain things. So I think networking is is so important in any organization that that you think that can help you promote your career in the city get involved but everywhere you can uh and you're going to learn a lot from other people. So this is probably
Shawn Evenhaim
a good example of what ULI is doing.
Taylor Avakian
If uh if Idon was not your child was not your son right and he's sitting out here in the crowd and he wants to he's seeing us talk and he says I want to be like Shawn one day. What advice would you give him? What would you tell him are the most important things? How would you steer his boat in terms of directions? And again, I know each person's different, right? But what advice would you give someone like that?
Shawn Evenhaim
Start slow. Take it step by step. Don't run too too fast. Um, again, I see especially younger people today want everything fast. They they you know, they want a car, Uber come, they want food, they'll deliver it to them in five minutes. So, Amazon will deliver. Life is more complicated than that. So, especially the business world, do it slow. When I started, I I built one house at a time, then I built five houses, then I built 10 houses, then I built 20. I didn't jump from one house to a 376 unit building. I learned a lot. I learned a lot because I got to I was in the field. Today, when I meet with my team here that build this building, I walk around. I I know everything that they know because I build buildings um myself. So, just go through the process.
Shawn Evenhaim
Don't try to jump too fast, too high. That's when people fall. I mean, I've seen enough of my friend that made this mistake and and and they lost everything. So to me, life is too short. Unless your your your wish is only to make money and to make it quick, that's a different story. And and take risk, but take calculated risk. I I mean every I took many risks in life, but I mean I don't know if all of them, but 99.9 of them were very calculated risks.
Taylor Avakian
So, how do you know how what's too high? How do you calculate the risk? How do you think about calculating risk? It's
Shawn Evenhaim
individual. Like, whatever you feel that you can chew, you know, if you think it's too much, then don't do it. If you're going to lose a lot of sleep at night, then it's the wrong thing to do. That's my opinion. Some people don't think this way. Yeah. And um I I think you have to be and and question yourself all the time. Don't think that you know everything. Don't don't believe I I mean I see I have some friends that do custom homes and the problem with them is a lot of them started their business in 2011. They're younger than me and every time they talk to me and in the last few years I tell them be careful slow down things will it's not forever and they said no no you don't know what you mean. I mean my friend just paid more than
Shawn Evenhaim
I paid and this guy paid more and this guy sold for more. I said, "Yeah, but you know what? When it rains, everyone get wet and and you're going to get hurt." And maybe I'm wrong. Maybe I was maybe I'm ahead of the curve, but you you you will get hurt. The problem for them for for the individuals that I talk uh to never experience a slowdown. Every time they made um a deal, they made more money than they expected. If they were bad developers, they made even more money because if if a house should have taken them a year and a half to build and it took them three years, they made more money because the market went up. So I'll give you an example of 2008 and and it's a lot using your gut feeling. So in 2005, I start realizing that things are something is wrong. Every
Shawn Evenhaim
one of my the labors were buying three homes and and I remember we had a project in Van Ice and and we were selling 30 homes or 27 homes. The first home, they're all under construction in one phase. The first home sold for 400. The last home sold for 600. Both buyers got the key at the same day. They closed the escro at the same day. So, one guy closed escort at 400. One the the the last guy closed escort at 600. It it didn't make any sense at that point. I slow down and I said, "Look, something it's like playing sport with people that don't know how to play sport. It's just a matter of time until you're going to get injured." And to me, and a lot of people told me, "Why are you stopping? there is so much money to be made.
Shawn Evenhaim
I said, look, something is something is wrong now. We didn't shut down completely, but we slowed down. That's how we survived 2008. Yes, we we were hurting a little bit here and there, but we didn't go under like a lot of other people. And and the reason was because it didn't make sense anymore. Nothing made sense. It just um so you need to you you need to question sometimes when when people telling you it, no, no, don't worry, it makes sense. And if you don't think it makes sense, then it doesn't make sense. And if if a year or two or three years later you realize that you're wrong, big deal. At least you didn't get hurt.
Taylor Avakian
What's one thing that most people wouldn't think of, right, that you think makes him special? Like what is his superpower?
Edan Evenhaim
Yeah. Uh 4 hours of sleep and being able to operate. But I think he's um I mean he says don't chew more than you can or you know don't always take risks, but um but I mean he just works extremely extremely hard. um and just makes a lot of good decisions and I think just over time that just accumulates when you're doing the right thing and you're putting a lot of work into it and I see that firsthand. So I mean he tells you that you know one thing but odds are completely different but um he's a worker
Shawn Evenhaim
right? I mean I'm very hands-on so I don't just let everyone do whatever and and just sit back and relax and thinking that everything will be fine. I I check you know things. I I I understand things. Um, by the way, the other thing I want to mention, get involved in community, not just in the business side. Uh, I I'm very involved in philanthropy. And I can tell you that the most interesting people and and some of my best friends that I met are through philanthropy. And it doesn't mean you have to write big checks. Get on a board of something that you care and help and get involved. First, you're going to learn a lot. You're going to learn a lot because sometimes the people that sitting on these boards are smart, brilliant people that run large businesses. Second is you're going to feel better
Shawn Evenhaim
about yourself because life is not just about yourself. It's about the community you you you work in and you live in and it's going to make you feel better. But I always tell people get involved in it. Not for the reason of what you're going to get, but I I guarantee you're going to get much more than you're going to give. Way more than you're going to give. So that's another thing advice to uh people that um it's part of networking. Yeah,
Taylor Avakian
it's huge. I've noticed it myself just being able to speak and have this podcast, right? Some of the access to the people that you get. I do this cuz I like to learn and I'm curious and I just follow my curiosities and I figured other people might be curious too, like me. But it's it's incredible what you're able to build once you actually connect with someone. You're it's different when you're over the phone, but when you meet someone in person, like you're a real person on the other side of it. It's important. Um, last thing before we open it up to Q&A. What's the biggest risk you've taken and was it worth it?
Shawn Evenhaim
Probably in after 2008 I made a decision that um so we're not highly leveraged. We had inventory but we said we didn't have investors. We didn't have partners that push us to to
Taylor Avakian
what percentage just so like what percentage
Shawn Evenhaim
leverage weighed 40%. I mean very low.
Taylor Avakian
Wow.
Shawn Evenhaim
because we again it's something that I use I use my money in my deals and I don't have investors like I said so I I care for the deal like I it's my money but but I because what I saw in 2005 I mean we're not we're never highly leveraged but after 2005
40:00–50:00
Shawn Evenhaim
we start really cutting down on leverage because we realized things are not making sense but when things went wrong you know I remember having conversation with my team and I said look this is bad it's going to be bad. It's going to be rough for the next few years, but I think we're going to we're going to make a lot of money out of it. And and the way we we approach it, one is we said, "We're not going to stop building cuz people didn't have jobs." And I didn't want to lay off like I remember public companies just came the next morning and and lay off 50% of their stuff. We didn't lay off one person. As a matter of fact, if if you Google, we had an article, I think it was the Daily News at the time. Every project that
Shawn Evenhaim
we build, we put big uh banners on them with the American flag, our logo, and we said, "Keep America working." And and it was so important to us because the subs that went were working with us for so many years. We kept them and some of them came to us and said, "Look, we'll work at zero profit. Just keep us going, keep our team going. We have equipment, we have bills to pay." Um and it was a risk that we took and then things worked out. And then our bank which we are banking uh you know we didn't talk about relationship with lenders which is so important but our bank which was Alliance Bank at the time we were doing business with them for like 20 years they called us and they said we just so you know we we're not going to make
Shawn Evenhaim
it and um and and we didn't know what it means but luckily they they were in real estate so first they sold us few properties which we made a lot of money later on on um that other developers gave them back and they needed just liquidity so we end up buying And second is there was another bank that that took them over, California Bank and Trust which we're banking until now. So we've been in with the same bank for 30 some years.
Taylor Avakian
Wow. Wow. So the risk of you pushing through that time. Yeah.
Shawn Evenhaim
Not just not quitting or not not letting go. A lot of my team members are have been with me for 30 years and and we all started very young. But it's something that speak highly about the company that um you know I could have said ah things are bad you know let's just shut down let's just you know come back a few years from now and when when things get better and let's cut overhead and and that was not uh that was not the right thing to do because I look at the company as a family it
Taylor Avakian
clearly shows an incredible incredible building everyone Sean and Eon Evanheim [applause]