Taylor Avakian
If you were like 30 years old today and you didn't have the portfolio and you were starting from scratch, what would you do? Would I stay in LA?
July 1, 2025 · 49 min
Why I’d Leave L.A. If I Were 30 Again – Jeff Palmer Gets Real
With Jeff Palmer — Multifamily Investor
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In this episode of No Vacancy with Taylor Avakian, Jeff Palmer, a 40-year veteran of California's multifamily real estate landscape, shares his expert insights on navigating the complexities of the…
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Episode show notes
In this episode of No Vacancy with Taylor Avakian, Jeff Palmer, a 40-year veteran of California's multifamily real estate landscape, shares his expert insights on navigating the complexities of the state's evolving real estate market. Discover how historical trends in California's apartment sector, including cycles of rent control and housing regulations, shape current investment opportunities. Jeff reveals where savvy investors can uncover the next wave of growth and wealth in commercial real estate. Before making your next multifamily investment, listen to this episode to equip yourself with the knowledge that can transform your portfolio. Join us for this wealth of knowledge tailored for LA apartment owners and real estate professionals. Subscribe and Stay Ahead! Stay informed and empowered in the multifamily real estate market. Subscribe to the channel for exclusive insights, rental updates, and expert analyses on the Los Angeles market. 🔔 Don’t miss out on the latest trends and tips to maximize your property's potential: https://www.youtube.com/c/TaylorAvakian 📈 Connect with me: Website: https://www.thegroupcre.com/ Email: taylor@thegroupcre.com X: https://x.com/TAYVAY_ LinkedIn: https://www.linkedin.com/in/tayloravakian/ #RealEstateInvesting #CommercialRealEstate #LosAngelesRealEstate #JeffPalmer #RentControl #PropertyCycles #CRE #CreativeOffice #InvestmentStrategy #TheGroupCRE #TaylorAvakian #RealEstatePodcast
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Episode transcript
This 8,325-word transcript is matched to English (Original) automatic captions. Timestamps seek the episode player to the matching passage.
0:00–10:00
Jeff Palmer
Probably not. Wait a minute. Only people that occupy warehouses are then the savings and loan crisis hits. My bank gets taken over and I I sign up with the resolution trust corporation to be a consultant to liquidate the bank's real estate. We started making some money in real estate and then he went to his investors convinced them that you know you can actually make money in real estate and it was probably a really good time. There'll be a period when the opportunities will you know just
Taylor Avakian
emerge. Welcome to the podcast. My name is Taylor Vian and I'm here with my esteemed guest Jeff Palmer. Jeff, you've owned real estate in California for 40 years. Is investing in California dead?
Jeff Palmer
No, it you know sometimes I have a dream that and the dream is that I wake up and suddenly all my apartments are in Newport Beach and it was just a nightmare.
Taylor Avakian
Yeah.
Jeff Palmer
That I owned apartments in Los Angeles. So that's kind of the good dreams I have.
Taylor Avakian
So it's Los Angeles that's been the the real issue. It's been the real challenge for owners is the the way that the city council and the politics have really made Los Angeles a very difficult place to be an owner. Why do you think that that has occurred and is there anything that we can do about that?
Jeff Palmer
Well, it initially kind of goes back to the history of rent control and because you've owned here for 40 years.
Taylor Avakian
So like what have you seen happen?
Jeff Palmer
My family's owned even before that. So in um 1977 or 78 I was at the I was a student at the Wharton School and um what were you studying? Uh economics and uh finance. I was a graduate student and around that time we had this the Howard Jarvis group put out Prop 13 and rents were going up, prices were going up, everything was going up 10 12% peranom. In fact, there was a time I walked into a lender and showed him my performer and he said, "You're only using 8% rent increases. conservative. Wow. Yeah. So that was back in the
Taylor Avakian
late 70s because 78 was when cost Hawkins was put into play.
Jeff Palmer
Yeah. Well, no, the rent control, not cost Hawkins was like 96. Got it. So we we there was a campaign and the apartment owners like the equivalent to CAA promised the we're campaigning your rents are going to go down and that was a major selling point of Prop 13 that the apartment owners were going to pass on the tax savings savings to the renters. But unfortunately the next year it gyated up even higher.
Taylor Avakian
Oh jeez. And so there was sort of this revolution that occurred. Do you remember what cap rates and interest rates were at that time?
Jeff Palmer
78, you know, they were like 9 10% and cap rates were 8 to 10%.
Taylor Avakian
So they were still negatively leveraged LA.
Jeff Palmer
They were positive, but but that's not how people thought. You're thinking year one, right, with when you're going up seven or eight. I mean, someone said to me, "Hey, I want to buy on an eight cap rate." and he showed it to me and it was like a six cap rate. And I said, "Well, you said an eight cap rate." He said, "Yeah, the third year." And he and he said to me, "Why would anybody be stupid enough to sell an apartment building the first year cap rate?" So that's where things were at. I mean since so yeah cap rates we had neutral leverage but rents were going up so quickly that by the third year you were very
Taylor Avakian
positively leveraged and then they enacted rent control.
Jeff Palmer
So yeah, so the the renters were very angry. They react they we tried to fight it and we tried to get the state to stop it and I actually wrote a paper that debunked another guy's paper and while I was actually at Warden but uh it didn't really we lost and rent control came. So but it stayed stable and we you know it turned out that as inflation went down it wasn't so bad. I mean at um it was between you know we got a min of three and a max of eight back then you know if rate rents are going up 10 12% you know eight's good right tenant for the tenant.
Taylor Avakian
So was there always a a supply demand issue in in Los Angeles?
Jeff Palmer
No. 70s and 80s. Well, there was the the 70s and 80s. We had very high supply of both apartments, but a lot of them were um in in the 70s, we had a very high supply. But sometime around maybe the late 70s, it switched to for sale. So condominiums became very popular to build in the late 70s and so there was actually an overhang of supply in the early 80s and so we did have some some really healthy building in the 70s and 80s and that kind
Taylor Avakian
of projected things cuz I it's funny if I'm kind of a history nerd so I remember one weekend I was wanting to look back at where cap rates, rents, things
Jeff Palmer
like that.
Taylor Avakian
And you'll see periods of time, like decades in in Los Angeles where the average rent is the same. Like the average rents stayed at, you know, it was like 900 bucks for 10 years or something. Maybe it fluctuated from 900 to 9.85, but they were it was it
Jeff Palmer
was stable.
Taylor Avakian
It wasn't this continued up into the right trend.
Jeff Palmer
I don't think I remember it being stable in my time.
Taylor Avakian
If you I think it's on the if it's the HUD website or something like that, you can go back and look and see and there's these periods where you're like, "Oh, wow. The average rent came down for a little bit and Well, no, rents do go down."
Jeff Palmer
Yeah. There's no doubt about that. Yes. So, which I think we're in right now a little bit comparative to where it was the mildly going down.
Taylor Avakian
And so your family was in this and you graduated from Warden and then what was your next foray into saying, "Hey, I'm going to go raise money and buy as many buildings as I possibly can."
Jeff Palmer
Uh, well, that didn't I worked for many years. I worked until I was in my 30s.
Taylor Avakian
What did you do?
Jeff Palmer
I started with a firm called Kaufman and Broad, which is now Broad Homes. They were a home builder. Okay. and I was an acquisition person from them and I flew around the country trying to buy section 8 apartment buildings and joint venture and build section 8 apartment buildings. Wow. Back in the 80s. Yes. The actually the late 70s. Okay. Yeah. And then so you worked in in I did that and then I went I tried to you know I mean the real estate market was on fire in 78 and 79. I mean in 1980 it was just on fire. It just you know going up like mad. Was it was it 30 bids on homes kind of situation or 30 bids on like a well on apartment buildings they were just going up in value and cap rates
Taylor Avakian
were compressing and going selling for lower and lower cap rates.
Jeff Palmer
It was rents that were driving it. It wasn't cap rates.
Taylor Avakian
Got it.
Jeff Palmer
It was rents that were just massive in Well, that's why we got rent control period. Yeah. and I got an opportunity I a a Philippine company. I was getting promoted very rapidly because everyone was going out and starting their own business then it was so lucrative. So even though I was only a year or two in the business I was like you know promoted very highly up and then someone approached me and said hey how would you like to partner with me? I'll pay your overhead and give you a cut of the deal and you go out and do and you know what you're doing. You find the deals for me and then I did that for about you know little less than a year and we hit the first recession. There was the mini recession of 1980 and in what
Taylor Avakian
did that look like?
Jeff Palmer
They decided it was just like like now they just they wanted to get rid of inflation. So, I don't know if it was Vulkar or the chair chairman be before him, but they they blasted interest rates up and everything came to a halt. You couldn't sell anything. Oh jeez. And everyone was pissed, you know, no one, you know, I don't know, might might be a a lesson for what's happening now. I mean, people were angry. Yeah. and the president and the Federal Reserve chickened out and so they then radically lowered interest rates and the lights went back on and everything started selling again. Interesting. But during that time period the my partner had found Jesus and decided he didn't want to go into an in ancillary business. So, I was on the job market again and I got a job as a
Jeff Palmer
project manager for a mortgage banker who had an equity division building and and buying office buildings and apartments in LA County.
Taylor Avakian
And when did the transition for you to then do your own thing? Because you mentioned to me that you I I'll
Jeff Palmer
give you the story on that. And so basically uh when I was doing this venture
10:00–20:00
Jeff Palmer
my current partner I was introduced to my current partner I met him and he kind of kept in contact. He would call me and ask questions and he kept you know like I was almost becoming an in-house adviser for him. He just kept bugging me. So around trying to get the dates correct. I think it was around 19 89 or 80 sound like around 89. He said, "Hey, how would you like to be my partner?" And I said, "Well, how much does that pay?" And he said, "It doesn't pay anything." And I was, you know, doing really well. Yeah. With bonuses. Yeah. You're probably living a good, you know, I I was actually work, you know, in the equity division of a of a savings and loan. And in those days, savings and loans could actually invest in
Jeff Palmer
real estate and do joint ventures and own properties and act, you know, and wasn't that when the savings and loan
Taylor Avakian
crisis happened in the '90s?
Jeff Palmer
Yes. It was a bad idea. Okay. And, you know, give a developer a bank and, you know, it's not good news. Yeah. And so my my partner approached me and said, "Hey, how would you like to be my partner?" And it didn't pay anything. And he and he said, "Hey, it's even it's even worse." I go, "How could it be worse? Not getting paid anything because we have to put up half the money." And I said, "Well, this is the craziest thing I heard. I I don't want to do it." Yeah. So, I'm doing well. And then the savings and loan crisis hits and my bank gets taken over and they I I sign up with the Resolution Trust Corporation to be a consultant to liquidate the bank's real estate for them for a couple of years. and then that runs out and I said, "Well, what
Jeff Palmer
am I going to do?" So, there weren't, you know, real estate was much worse than the great financial crisis. I mean, really, it was just horrible. I, you know, the banks were going broke. So, what chance did you have, you know, right? You couldn't get any money for and and the policy was foreclose. That was government policy. Clean up the mess. So I mean I mean you know values tumbled you just it just was a mess but we knew there were it was a great opportunity but so the first thing I did is I I became a receiver and because that was a big business
Taylor Avakian
back then you wanted to get there's been a couple people on on this couch who've were also receivers as well in the
Jeff Palmer
'90s in the '90s like what you did.
Taylor Avakian
Got it. So you would basically be hired by a bank to to manage and run these
Jeff Palmer
assets. Yeah. And since I was with a bank and I was on loan committee and a lot of the my employees went to work on in the REO departments of other banks, I was able to get business.
Taylor Avakian
Got it.
Jeff Palmer
And this So the second thing I did was I called my my partner up and I said, "I'm ready. Let's do it." And he said, "Hey, I'm I'm messed up. Don't you read the newspapers? You want to think I'm going to go out and and do deals now? I'm trying to survive. Yeah.
Taylor Avakian
You know, he was already in some pain.
Jeff Palmer
Yeah. So, that didn't pan out initially, but um at that point, I went out and searched for a partner and I Well, and and I was paying the bills through the receiver business. Got it. And I you know, do you remember your first deal? Yes. Um, I found a Israeli who had a billionaire partner and he was going to give me a piece of his deal and so and you were going to manage it or I would find it and run it and he had a property management company so I wasn't going to he was going to manage. So you're like, "Hey, you go find the asset manager and and do the leasing." Got it.
Taylor Avakian
So a little sweat equity.
Jeff Palmer
Yes. All sweat equity. Wow. And so, yeah, the first deal I did was I bought a an office building in Santa Monica at $60 a foot and it had previously been it had peaked at 220 a foot.
Taylor Avakian
Even then, it was 220 a foot.
Jeff Palmer
Yeah. Holy crap.
Taylor Avakian
Yeah, man. That's crazy to think cuz there's some buildings in downtown LA that are selling for 100 bucks, 120 bucks a foot. That's That's a full cycle. So, you bought this office building and I assume your job was like, "Okay, now what do I do next?"
Jeff Palmer
Well, we bought the office building and I had to try to lease it. So, I was actively involved in trying to lease it and we were, you know, we came up with the concept of spec suites and uh
Taylor Avakian
what's that?
Jeff Palmer
You basically build out the suite. Before that, you basically would give the guy a TI list. You get $10 for walls.
Taylor Avakian
You get like spec homes. You would build out the spec offices. You're like, "Hey, we built this really cool office. Like, move in." Got it. Okay. And so you And this is in the '9s. So you're you're doing this office. You're renovating it. You're leasing it up.
Jeff Palmer
And then when does at the same time I'm still looking for more properties.
Taylor Avakian
So we are you looking at apartments or are you looking at everything?
Jeff Palmer
Well, the advantage of office buildings back then I was looking at apartments too. Okay. Yeah. And the advantage of office buildings is that, you know, when apartments get a cold, office buildings are on their deathbed. That's pretty much how it works. Yeah. So, you can get in you, you know, you were able to get incredible values. I mean, I think I I bought the ground floor of Rosen, Maine, uh, for like $95 a foot from a bank. Jeez.
Taylor Avakian
You know, as that with that venture, what do you think it's worth now?
Jeff Palmer
It probably peaked that that ground floor probably peaked at like 900 foot. I have no idea. It's it's all retails.
Taylor Avakian
Yeah. I mean I I don't really follow but that's still that's that's crazy. And then when when did things start taking off?
Jeff Palmer
When did cuz you're So then Yeah. So then in term So that venture didn't work out. The Israeli ended up having a fight with the billionaire and you know seen
Taylor Avakian
that happen from time to time.
Jeff Palmer
Didn't really it didn't really pan out. So then about the same time I started doing deals with my partner. I mean LA was really I mean it was just um you know the defense industry had the end of the cold war had just destroyed the defense industry. We used to have major defense uh Northrep was located here and the banks were leaving. So LA was really falling out of fashion. Uh, and they even made some movies about it. You know, they had Grand Canyon with Steve Martin and about, you know, how bad LA was and I have to watch that. Yeah. A classic um um uh scene where one of the actors his car gets stuck in South LA and
Jeff Palmer
you know he gets into trouble with gangs.
Taylor Avakian
Got it.
Jeff Palmer
Yeah. Yeah. Danny Glover comes and bails them out cuz the Rodney King riots were in '94. Yeah.
Taylor Avakian
So the '9s were period.
Jeff Palmer
Well, no. 92, sorry. The riots and the earthquake was in '94.
Taylor Avakian
So LA had a decade.
Jeff Palmer
Yeah. So it was really a mess and but my partner and I started doing deals in Phoenix, small deals, and they turned out to be successful. It was hard to convince investors that you could make money in real estate anymore. But we started making some money in real estate. And then he went to his investors and we um convinced them that, you know, you can actually make money in real estate and it was probably a really good time to invest in value. I mean, values were incredibly low. Yeah. So, I tried to do some apartment deals and I just things didn't work out. I mean, I just uh by luck, you know, I I tied up one building with uh whether Yeah, this was an interesting story.
Taylor Avakian
I can kind Yeah, please.
Jeff Palmer
So, I'm buying a deal from Fanny May an apartment project and they they called everyone in to interview them and they asked me, "Is there any reason why you wouldn't do this deal?" And I said, "Uh, well, yeah. I mean, it's my due diligence period. I could find something and they go next. So, wow. The so the the buyer they chose fell out of escrow and um the called me in again and they said, "Is there any reason you couldn't do this deal?" And I said, "Absolutely no reason. 100% done."
Taylor Avakian
You learn your lesson on that one.
Jeff Palmer
But it turned out that my partner, you know, looked at the deal and, you know, he was worried about the waterproofing. I mean, but I mean, deals were so cheap then we could
Taylor Avakian
have Yeah.
Jeff Palmer
I forgot what the thing was selling for like 45,000 a
Taylor Avakian
unit in Was it like what what construction? 60s7s.
Jeff Palmer
It was like like 70s.
Taylor Avakian
So the play still in LA was Value ad. Value ad was still a thing back then.
Jeff Palmer
Yeah. Oh, definitely. We did. Yeah, we in fact we did my partner did a lot of value ad deals in apartments.
Taylor Avakian
Got it. And when did it explode? Cuz you guys have now a thousand 1,000 units. 700 of them are in three buildings and then you also have some creative office space in San Francisco. When did it turn into Well, he he
Jeff Palmer
he did his apartment deals in the 80s. Got it. And then he built one of them he built in the '9s. Got it. So you kind of were able to
20:00–30:00
Jeff Palmer
and then Yeah. Assimilate through the partnership. I had family properties. Got it. And so we weren't really we end it ended up we didn't do apartments. We ended up doing really office buildings. And then so the office and you told me this and that was around we started we we got our first deal. We bought a deal at 501 Colorado in Santa Monica for like $90 a foot in 1994 with my partner. And then from there we continued and so we the problem back then was leasing the buildings. You could buy them but we were still just coming out of the recession. But luckily LA had regenerated itself and the television had gone from or cable had gone from or television had gone from like 12 channels to infinite
Jeff Palmer
channels. So all of these production companies began to invade LA and needed space. God we couldn't we couldn't lease the buildings. We we they were difficult. We were doing the spec suites but it was really slow. So one day a broker pitched me. He said, "I have this need. I have I mean the studios are going crazy and they have no room left and they're moving all the post-p production companies and producers off the studio and I and I need people to buy warehouses and convert them to office and it's like wait a minute said the only people that occupy warehouses are call centers. Like who wants who would want because my you know my
Jeff Palmer
experience my day in office was you know people wanted a high-rise with a great view a corner office with as many windows as possible. Yeah. So he he pitched this thing called creative office to me to buy these warehouses and I said hey I'll tell you what I have a bunch of empty office space. Let me take one of them and I'll make it look like a warehouse. And he said no that's not going to work. the, you know, you need the ceiling heights and the power because in those days the post companies had big Avid machines. So I went ahead anyway and we we called it deconstruction. We took the acoustical ceilings off and we put uh rigid ducting and reorganized the electrical and polished the floors and made it look like an industrial building. Like a warehouse. Wow.
Taylor Avakian
And did it did it lease?
Jeff Palmer
Yeah. Amazing. You know, it just in a week. Wow. Then we did another and another and another and another and then eventually I said, "Hey, I'll take a look at those warehouses now." So that's sort of how the, you know, creative office
Taylor Avakian
came about and and now and today, what is the current assets under management or what does the portfolio look like?
Jeff Palmer
Um, like I said, we we have about a thousand apartment units. Okay. and about 350,000 square feet of legacy office product.
Taylor Avakian
Got it.
Jeff Palmer
And really creative office and a lot of them most of them are converted warehouses, single level warehouses.
Taylor Avakian
Are those in Culver City, Venice? So, West LA and some in San Francisco.
Jeff Palmer
I have a couple of buildings left in San Francisco. I had sold most of the portfolio there. Got it. And we kept a couple of buildings. We really believed in San Francisco.
Taylor Avakian
And do you believe San Francisco is a good buy right now?
Jeff Palmer
I do. Yeah.
Taylor Avakian
Why do you say that?
Jeff Palmer
I just think it's well, it's a very cyclical city and um it has it's got a lot of talent and a lot of good things going for it. And um you know, if you believe that it's not systemic, that it's really cyclical, it would be a good buy in terms of where the basis is today.
Taylor Avakian
No, I I I'm from Sacramento, too. So for me, San Francisco was always a place where we'd go, you know, on the weekends or school trips or places like that. And it was always wonderful. I always enjoyed it and it was the city and it felt safe and and clean. And I think I've seen too from being involved in the Southern California cleaning up Los Angeles, a lot of people from San Francisco came down cuz they've made a lot of headway and progress in and cleaning up that city and making it a place where young people want to live and work and and old people want to live and work and feel safe and and so I think with that process in place, it's only a matter of time before people feel the magic of that city again, which again behooves itself for investing.
Taylor Avakian
And when you can pick up deals at the cap rates and the basises we are today, they're not building, you know, they're not going to there's a 7 mile radius in San Francisco. It's not a forever. You can't build forever. So, I think those are good fundamentals to look at when you're investing, which is why Los Angeles, I think, is is a great place to invest, too, because you can't It's not like Texas. You can't just keep continuing to build. There's natural barriers that cause it the supply demand fundamentals to make sense. Well, they're trying to densify, right?
Jeff Palmer
Yeah. So that's one technique. Yeah.
Taylor Avakian
They just keep We know how hard that is though.
Jeff Palmer
Well, and they and they just keep hurting themselves. So, you know, they keep one, you know, one step forward, two steps
Taylor Avakian
back. Speaking of that, you've, you know, I've followed you on LinkedIn and you've put a lot of thought and you're very in tune with a lot of the regulations and laws. What do you think of the current state of Los Angeles? Like, what is going on with this city?
Jeff Palmer
Well, it, you know, it's complex. Yeah. There's the, you know, we we generated ourselves into a entertainment in the entertainment industry and that is attempting to find its footing. The one thing that we do have that really helps LA is we have a incredible tech community here and it's the the startup market has been impacted also and it's been down but there's a terrific startup market that of tech companies in what we call techainment which is the intersection of tech and entertainment and also advertising digital advertising and that particular industry could break out. We also have still mostly in the South Bay, but it is spreading
Jeff Palmer
here um a very large what I call hardcology companies um uh you know warfare maybe mostly by cyber and drones. Yeah.
Taylor Avakian
In the futures.
Jeff Palmer
Yeah.
Taylor Avakian
Hawthorne and Gardina those areas down there.
Jeff Palmer
So there is, you know, that industry that could break out. So we really just need to break out.
Taylor Avakian
Um, it feels like though in the news, and again, this is the news, so they always have their own agendas, but it feels like that everything I hear is Tesla's moving out of California, you know, Wells Fargo is moving, whatever. These big companies are all leaving California because they feel like it's not a businessfriendly state. And the city of Los Angeles, I'm hearing from owners when I'm talking to them, it's so hard to be a landlord. The regulations keep getting worse. I can't make any money. My insurance is keeping going going up. Like, what is what is the bullish case for Los Angeles? Or in your view, do you feel like Los Angeles is a bullish case that it can and rebound and continue to grow?
Jeff Palmer
Well, I think it can rebound because people do want to live here. Um, and it is expensive to live here. So, you have to give them something. We've always attracted the best and the brightest and that has always been a big plus for LA and uh because people do want to live here for, you know, the entertainment's insanely good. Sports, concerts, look at how many sports teams we have, these stadiums, the weather, beaches. I mean, it's really a great place to live, but it's very expensive in the politics. I can only relate it to the '9s where the negativism existed then and we never thought. And um you're, you know, it could be always one election away from something great happening or doom.
Jeff Palmer
And back in the '9s, suddenly we got this mayor named Richard Rearen, and he was amazing. Yeah. Yeah. And he did amazing things and he really helped allow the recovery to occur.
Taylor Avakian
Um, do you feel like we're in a place or we're moving towards that where we could have that rebound?
Jeff Palmer
You know, it's just a matter of luck. There's a lot of also more disappointing demographics. We have also a large population of very lowincome people and there's definitely a clash. Yeah. But I think LA could break out if the right circumstances fall into place.
Taylor Avakian
I sure hope so. Just for for being here for eight years now and seeing just in that time period, it's changed. I really Well, I told
Jeff Palmer
you my dream. So, yeah. Yeah. Yeah.
Taylor Avakian
I know. Waking up in Newport Beach. What is your current buy box? What are you looking at? Are you looking at deals? Where where are you looking your next move?
Jeff Palmer
Yeah, interesting question. I um am looking at you know our basic concept has since the 90s has been to take advantage of the cycles.
Taylor Avakian
Um so we're looking buy low.
Jeff Palmer
Yeah. Buy low. I mean I think the only problem is that with that strategy is that it could be a long time between acquisitions and buying
30:00–40:00
Jeff Palmer
and at some point you could run out of runway. the cycles have been very long for so you could run out of runway. Yes. So um so but we'll be looking at you know opportunistic situations where the cycle
Taylor Avakian
dictates do you feel like program we're for apartments in LA. Do you feel like there's opportunities right now or
Jeff Palmer
do you I think that if you now I my problem is I have too many rent control departments but you could tell that
Taylor Avakian
um what do you mean by that too many? Well, I mean, I have a large part of my portfolio, our rent control department. So, why is it a bad thing? Well, I'm subject to political risk, right?
Jeff Palmer
So, I mean, we just um you know, went through three near-death experiences, right? We Prop 10, Prop 21, Prop 33. Yeah. And you know, thank God for the CIA and Tom Bannon and his, you know, brilliance. Yeah. That we survived.
Taylor Avakian
But so that that political risk for you feels like there needs to be some diversification and
Jeff Palmer
for you I I can tell you that at my age I've learned that diversification is the
Taylor Avakian
key to is a good thing.
Jeff Palmer
Yes. After a while when you when you start out you can't diversify. You have to go all in. But after a while as you your wealth you know increases it becomes it becomes advantageous to diversify a safety even out of real estate into other things because it's funny people say you know put your egg all your eggs in one basket cuz you're you have a specialization but well when you're younger yeah you have no choice right you you have nothing to diversify. Yeah, you go all in, but over time, you know, you you potentially may want to consider changing when you have the opport or not changing, but diversifying when you have the opportunity.
Taylor Avakian
So, for you, what I'm hearing you say is that you're looking for ways to diversify out of rent control into non-reg.
Jeff Palmer
Correct. Yeah, that's what I've been doing. Okay.
Taylor Avakian
And what has that looked like for you over the last couple years?
Jeff Palmer
I've bought a lot of smaller new construction projects for myself. Do you does is I I really I feel that they're least likely to put restrictive rent control on small properties on small properties. There is a group of progressives. They they're called capitalist progressives versus the socialist progressives. Okay. And they do believe that developers need incentives, which funny how that makes sense. they usually will join with the moderates and protect new construction. So you feel that's probably the safest part other you know if I knew how to if I wanted to board planes or I had confidence in remote management I'd go elsewhere but because we like to have very hands-on asset management you know I prefer to try to find something in Los Angeles that I can do.
Taylor Avakian
Does that that philosophy was that something learned or was that just something that you've always felt was important to your thesis?
Jeff Palmer
Oh, just my operating style, the way that you do it. Yeah.
Taylor Avakian
You want to feel it, touch it, see it, be able to handle fires, issues, things like that.
Jeff Palmer
Yeah.
Taylor Avakian
And I'm sure there's been many circumstances where that's been very helpful.
Jeff Palmer
It has.
Taylor Avakian
Yeah. And useful. What So, you've obviously bought a many deals in your career. How do you find a deal? And and what does that negotiation process look like for you? Because you don't strike me as someone who's, you know, easy, not you're not going to let you're going to negotiate and make make sure you get a good deal for your investors and yourself. Is that fair?
Jeff Palmer
Well, you know, most of the time you're not I wouldn't call it a negotiation. Okay. the uh most of the time your um uh I've I've usually bought in the part of the cycle where things have been down and then they're starting to recover. That's been sort of our favorite part of the cycle. you know, it's a po it's a point where we think we could lease and things are slightly getting better. Still pretty depressing. Yeah.
Taylor Avakian
Well, right now and I don't I don't know when it doesn't feel like we're there yet. I mean, it feels like there's other factors, mainly the interest rates, which are causing a lot of of the cycle where we're in. And Los Angeles has the headwinds of the regulation risks which is also compounding on top of that which I think is why it's f fallen out of favor pretty significantly with again the big institutional firms but even the the smaller private investors that I speak to they they they want to buy in non they want to buy in LA county but non LA city properties because they feel like the political risk is there. So I'm curious what your thoughts are on timing and I know you know if you had a magic crystal ball you know we probably wouldn't be talking here.
Taylor Avakian
you'd be on a boat in Jamaica or something like that. But when when do you if you had to guess when do you think that time is going to occur?
Jeff Palmer
Well, I think there's two factors you need to look at. Okay. One is interest rates and the other one is rents. And if interest rates go down, there'll be a lot more buying. If rents go up, there'll be a lot more buying. So, we might be a few years away on the rent side. Um um because, you know, luckily we we're not overs supplied. You know, 5% vacancy isn't horrible. Yeah. But LA does really well be when it's at between three and four. Yep.
Taylor Avakian
And we're good.
Jeff Palmer
And it does really bad when it's six. Yeah. So, and at a five, you know, some areas are still increasing. you just don't want to be there and or not everyone wants to be there and then some areas are going slightly down or going down in rent you know but on the balance it's probably pretty even you've seen many cycles in your day and yeah so I think we need interest rates to either go down or rents to go up and you know interest rates can go down and that would help a lot like the 80s you know lights
Taylor Avakian
on lights off relieve the pressure you've you've seen a bunch of cycles over the years. And if I'm looking again, the history buff in me goes back and looks at looks at pricing of where deals were selling. I think over the last 20 years and and maybe this stops in like 21 22, but there was a 20-year cycle in Los Angeles where the prices and values and the cap rate compression like it was just going up and to the right. Do you feel like that 20-year period or that growth there's potential on the backside in the future in the year 2050 is it even possible to have the same level of growth those previous 20 years as it is in the future? And the reason I asked that is because a lot of young people in my age who want to get into the investing side of the business feel
Taylor Avakian
like they've missed the boat. feel like, man, well, these people were buying properties at 40, 50, $60,000 a door and now they're up at 300, 350, 400. Are we going to be seeing buildings at a million dollars a unit, a million two? Like that two mill like the growth metrics start to make your brain question whether it's possible? So, do you feel like we've young people have missed the boat in terms of that growth period?
Jeff Palmer
No, I mean there's other opportunities that always occur and you know so I don't think they missed the boat period. I think the only thing that in my career I we experienced was um like 30 years of declining interest rates, long-term declining interest rates which caused cap rates to decline. I mean, I remember at a certain point I called my partner and I said, "You know, in France the cap rates are 6%.
Taylor Avakian
Can you believe how low they are?
Jeff Palmer
Do you think?" And he said, "Well, you know, it's been that way for a while there." Wow. So, and I used to have a license plate on my car that said I break for 10 caps.
Taylor Avakian
Wow.
Jeff Palmer
Cuz those were good cap rates, you know, decent cap rates versus eight for sure. So, yeah. Well, we're seeing sevens and eights right now in certain pockets, but you know, I don't think you have the advantage, but you could have the advantage of great growth. There's um you know, is it going to happen in LA? It could. We could have micro neighborhoods take off.
Taylor Avakian
So, because yeah, the reason it it's so curious to me is because when I'm thinking about it from an investment standpoint, most people, I would say, use real estate as a storage of wealth. not necessarily a wealth generation. There's the few syndicators who, you know, if if you look at it compared to the S&P and you do value ad, you can make money, but for most people, it's a storage of wealth. And so, I think the question a lot of people have, especially with tech, the way that that's boomed, there's so many different industries that grow or can grow significantly faster than real estate. It's interesting to to think about is is real estate going to be more of a storage over the next decade or is it going to be that money maker that growth where you can make a
Taylor Avakian
a significant amount of income and and live off that?
Jeff Palmer
I I think there will be obviously areas where there'll be incredible opportunity in LA or
Taylor Avakian
across the country.
Jeff Palmer
I think across the country could happen in LA. You know, LA has a lot of great dynamics.
Taylor Avakian
You don't think it's ballet is baked out?
Jeff Palmer
I you know we regenerate and you know we've done
40:00–50:00
Jeff Palmer
having lived through the 90s and that experience you know what the Marcus and Milchap guy who says keep your eyes on the horizon. Keep your eyes on the horizon. I mean something will occur and you just have to keep your awareness and look for it and it'll be happening. I mean, we, as I said, in the 90s, we didn't know what was going to save LA. And all of a sudden, you know, uh, the came the information super highway. And then after that, it was followed by the internet boom. Yeah. And my god, there was a in like 1999, I mean, tenants were calling me, you know, looking for space. So, in office space, I mean, it was insane.
Taylor Avakian
Different time.
Jeff Palmer
So, but that we never we didn't even know what the internet was in 93. We had no idea. We never even heard the word. So, you know, keep your eye on the horizon.
Taylor Avakian
Things could change.
Jeff Palmer
AI for sure.
Taylor Avakian
If you were like 30 years old today and you didn't have the portfolio and you were starting from scratch, what would you do? Would I stay in LA?
Jeff Palmer
Probably not. I'd go elsewhere. Yeah. Interesting. Yeah. I think there's some incredibly high growth markets that are, you know, going through some bad times with very low prices. Now, any some incredible opportunities out there.
Taylor Avakian
Do any cities come to mind?
Jeff Palmer
I think they're the, you know, usual Sunb Belt cities and, you know, opportunists and smart people are already going there. Yeah.
Taylor Avakian
Okay. So, I'm g see I mean, you were in Phoenix. Phoenix kind of took off over the last 10 years. Arizona, Texas, you know, the Carolinas, I think, has been super hot. Florida, I mean, so many people are moving their money to Florida, which is interesting to me because insurance is not the easiest to deal with. So, I guess looking forward, well, you, like
Jeff Palmer
I said, you might find some of those areas may, you know, are probably in overs supplied. Yeah. But, you know, there might be some great opportunities there. And there's terrific growth.
Taylor Avakian
One of the things that I've been fascinated by, and we talked about this a little bit before we started filming, but you you have been active on social media and that side of the business. And I'm curious to know as someone who's, you know, been in the business for a very long time. Most would assume that and you can't teach an old dog new tricks and it doesn't seem to be the case for you. So, what prompted you to get more on the the social side and what has that been like? What's your experience been like being part of that community?
Jeff Palmer
You know, I haven't seen enormous dividends from it, but it at the moment, you know, it keeps me in contact with a lot of brokers. Yeah. Right. And it it so it's a good acquis for me, it's been a good acquisition strategy and you know, it might have it might it benefits me with lenders and you know, they got me on your podcast. Very true.
Taylor Avakian
Very true. I think your portfolio speaks for itself. So, I'm I think I'm lucky to have you on here. But, do you enjoy writing? Like, is that is that your creative outlet?
Jeff Palmer
A little bit.
Taylor Avakian
Your posts are on LinkedIn are incredible. And and that's something that I really enjoy is you go pretty deep and you understand the fundamentals of of what's underneath what everyone's saying. You're like, "Okay, here's the actually what's happening." And that's very helpful. I find it very, you know, educational.
Jeff Palmer
at at UCLA. Um, I was a I had a job as a researcher in market research. So, I've always had that interest in doing market research and a lot of our strategies and have been based on research and my research of the cycles over the years.
Taylor Avakian
So, you got really deep and are you analytical by nature?
Jeff Palmer
Analytical. Yeah. Okay.
Taylor Avakian
So, you like to look at patterns and numbers.
Jeff Palmer
Yeah. Love it.
Taylor Avakian
I'm super curious as what is your what is a day in the life of Jeff Palmer look like?
Jeff Palmer
Well, you know, now it's really a lot of it is just asset management and but we're always looking for new opportunities. Um there's a lot of strategy so it's everything I mean you know I we use a program called a sauna.
Taylor Avakian
So yeah I use a sauna.
Jeff Palmer
Yeah, I'm usually on a sauna communicating with my staff and
Taylor Avakian
so you're working on product. So are you is your role obviously you're you're making sure you're the final check but like are you guys talking about le leasing space? Are you talking about social stuff like the social media stuff? What I'm I'm just curious to know because you have a portfolio, you have enough money where you're not you're not trying to chase like more money that you enjoy this clearly. Like what is are you getting in the office? Are you reading the newspaper?
Jeff Palmer
Yeah. I think what the key is that you I would love to do all the fun stuff and none of the bad and have none of the aggravations. So I'm still I'm still searching for that.
Taylor Avakian
So it's putting a lot of fires out. When you got a portfolio as big as you do, which what's the assets under management right now? Do you guys have any idea?
Jeff Palmer
I you know I the market value fluctuates, you know, especially when you have an office portfolio.
Taylor Avakian
Yeah, that's true.
Jeff Palmer
That's true. things change.
Taylor Avakian
Well, before we wrap up, I I like to ask people kind of what advice they'd give to some younger listeners. There's there's young there's someone who is Jeff Palmer, you know, 50 years in the future. Um, what would you tell them? What would you say if they want to be you?
Jeff Palmer
I would look for opportunity and find investors.
Taylor Avakian
And how do you find investors?
Jeff Palmer
Well, today it might be social media. It might be coming up with a great idea or a great plan. It could be, you know, um just um knowledge, having idea of where a great deal is and then pitching it.
Taylor Avakian
How much do you think luck has to play with it?
Jeff Palmer
Well, if you can find yourself in the right side of the cycle, it really helps.
Taylor Avakian
So, you think they should be looking to buy for the next 5 years? cruising is a good time for someone to get in.
Jeff Palmer
I think you just have to wait and look for that opportunity and there's good deals in every market and there'll be a period when the opportunities will, you know, just emerge. I mean, look at, you know, people that went out to state to buy apartments in um 20 20, you know, 2021. And I mean, my god, they were just, you know, new sponsors were, you know, growing on trees and young people could go
Taylor Avakian
and Yeah.
Jeff Palmer
You know, one of my interns went out and, you know, he had, he had worked for 5 years, but he went out on his own and went ahead and acquired a small portfolio of, three buildings with 220 units. Oh my gosh. Yeah. I mean, you know, when things are hot. Yeah. Yeah. Jeez, that's incredible. Oh, and it's a little harder when things are not hot, right? When things are cold, but that's sometimes the best time to do it. So, I mean, I went out and, you know, it was rough and solicited and I even tell my young people, they go, "Well, why can't you just go to your investors and tell them to invest now?" I said, "I'm cutting their distributions. Do you think they really want to invest with me now?" Yeah. you know, you have to wait until, you know, things get a little better.
Jeff Palmer
But, you know, it's a great time to go out and find if you can if the if you see the opportunity and it's there, you know. Yeah. Put a package together and go and pitch.
Taylor Avakian
This is the last thing and I promise and I'll wrap up. How do you manage investors? What's the best way to manage those relationships?
Jeff Palmer
Well, my partner does that. That's the best way to do it.
Taylor Avakian
You get a partner who enjoys that.
Jeff Palmer
you really have to be very communitative with them. And I could tell you, look, I've we've had deals that we've owned for 30 plus years with investors. And uh the, you know, I'm as committed to those investors today as I was 30 years ago. I mean, I'm, you know, going to see all the deals through and make sure they make money and are hap. Well, they've made their money already, but they must be pretty happy saying 30 years.
Taylor Avakian
You must have done something.
Jeff Palmer
All right. It's kind of like what have you done for me lately, you know, type of thing. So, I'm going to go full cycle even over that long of a time period.
Taylor Avakian
I love it. Jeff, thank you very much for being here. I appreciate it. This was amazing. And where can people find you?
Jeff Palmer
Um, I'm You can My website's
Taylor Avakian
jeffpmippropies.com.
Jeff Palmer
Okay.
Taylor Avakian
And PMI Properties is a company. And look out for Jeff on social media. They're growing. They're growing the the presence.
Jeff Palmer
I'm on LinkedIn.
Taylor Avakian
He's on LinkedIn.
Jeff Palmer
There we go.
Taylor Avakian
Go give him a follow. And we want to thank you very much for being here.
Jeff Palmer
Sure. Thanks.
Taylor Avakian
Awesome.
Jeff Palmer
Byebye.