estate yeah um there's that but as far as what we're looking at I mean you know we just we put out an offer on we're seeing a lot of non-rent control you um non RSO stuff coming up in La now um which is which I think has some compelling uh metrics to them that we we'll see where they shake out I mean obviously it hasn't helped that rates have kind of blown out over the last couple weeks here it's definitely put a wrinkle on on getting deals done but again if you can you know
…the same time the benefit of buying an existing apartment building with people who are eventually going to move out or a good chunk of them even a rent control building over five years will probably have about three qus of their the residenc they move out um is that there's cash flow for the investor so there there there is a pathway uh frankly for a different way of doing it it just it does take longer because you have to rely on turnover and certainly there's not going to be any government agency is going to try
…I don't think a lot of people talk about that how just because there'll be because people say like Argentina how went from that's more on the rank control side but they went from highly rent controlled to not rank controlled at all and their rents came down 30% right like that's something that a lot of apartment owners and people who stand up for apartments will point to and say Hey look this is why some of these programs and policies that we have in place on the service may look great but actually in reality the…
…than at first blush with Argentina oh really yeah I think part of what happened was that there were people there were owners because because the rent control laws were so egregious uhhuh they were so restrictive they chose not to rent them out oh so like New York right and so that was part of the reason why the rents went down they they were off the market they weren't actually leasing even though they were vacant and so yes so that so that's not necessarily the case here we have a pretty low vacancies which is…
…I mentioned I'm from Montreal they have a a major cling Supply issue even worse there really because they have that um you know super restrictive rent control laws and so yeah so they have uh you know they have a major affordability problem even though the wages the cost of living is lower uh wages are lower too and and so yeah they it's very difficult to get an apartment there as a result and um so yeah people are uh yeah or they don't you know their their buildings are aren't taken care of very well and they're…
…like a broken record because I say it almost every time but it's they everyone knows we have a housing housing shortage in Los Angeles why do the rents keep coming up because supply and demand that is the fundamentals of why your rent keeps going up it's because there's not enough housing for everyone else and when it's harder to develop that only constrains the supply where it becomes almost a benefit a benefit or like the people who are winning are the ones who can afford to do these new developments and make it…
…yeah we're always looking for for new opportunities to buy existing we're looking for newer construction so we don't have to deal with a lot of the rent control laws on the older older buildings and yeah just by existing I think right now there's there's some distress in the market
so interesting it's so interesting um I'm curious to know your thoughts with the regulations and R control and this is filmed before prop 33 either passes or doesn't and it'll come out after so we're not going to have the answers to this but with like all the regulations that are going on in California rent control things like that how do you do you see California and Los Angeles as being a long-term place where you want to continue to develop or do you see yourself trying to diversify in maybe a little more…
…in 6 months 12 months now what is it 3 months away for this November vote four months if and we were talking about that about New York vacancy control right that is on the ballot in Los Angeles and so if you're buying properties that you guys are buying 20s 30s 40s 50s 60s built 1960s built buildings and those are capped at you know 3% to four 5 6% rent increases per year now imagine your business plan in in 2017 2018 2019 where you can't increase the rents when someone leaves that that that crushes any sort of…
…we'd raise all the money we would have a slice of the GP which means we had some sort of Rights and then what we really cared about is we also controlled a lot of the parts of the business plan mostly we were Consulting marketing helping them with construction design and obviously leasing the apartments and so we were able to kind of cherry-pick some of the best deals we saw from our clients but we also had this extreme transparency that most investors don't have because we releasing the apartments yeah so at the…
we ended up selling every single building that we had bought um before they changed the rent laws there was a big rent law change that happened I think it was 2018 okay um that basically uh enacted vacancy decontrol yeah which means that if you have an apartment that's an a certain class of rent regulation and it's being charged a th000 bucks it is controlled even through vacancy so even if the tenant moves out at that rent and it really changed the market in a big way and then we ended up deciding to sell The…
…is that you've got this missing middle where the all of the housing it just seems it it's for people that can pay four or five dollars a foot for rents or paying 800 to 1200 a foot for, you know, housing. We had this concept called price controlled units where
have to guess um ever since Co so many any ex out California because we had a crazy we couldn't raise rents for years we couldn't do eviction moratoriums so so many people ex out California if I would say a percentage it used to be from 80% would do California now it's maybe 40% will do California yeah man but I think it's starting to get better now because of all the supply that got built out of California and not in California and people are coming back and
you're actually controlling it it it felt us it made us feel really good being the position we were in and I we did really well um it was a market that was just going gang busters it reminds me and I think this will resonate with some of the audience um the co markets I like to call them the co markets but they're markets that just exploded after Co that was New York City wow you know post financial crisis like rents were going up 10 20 30% a year in some areas and it was crazy and then so then how did you parlay…