Then I discovered commercial and retail, and it felt like an upgrade! My tenants were cool, like wine bars, fitness studios, AD100 interior designers, and tattoo parlors. I had a couple in Silver Lake, and bought as many buildings as I could York in Highland Park when it was blowing up.

 

Around that time, I learned you can use an SBA loan to buy the building where your business operates, so I did that too. It still feels good to do business out of a building I own.

 

It felt like I was climbing the real estate ladder, getting into bigger and more complex deals. 

 

I am pretty proud of myself. I've managed to have a pretty solid portfolio of properties. But as it turns out, my biggest home run is our house in Los Feliz.

 

If you're a longtime reader of this newsletter, you might see where this is going…I should have just bought houses.

 

 

Mom-and-pop apartment building owners are selling in droves right now in LA. Prices for multifamily property are the lowest they've been in recent memory.

 

Why? Let us count the ways. Here's a new one:

 

Insurance companies have started inspecting rental properties every single year and handing you a repair list. Lenders are now doing the same. Add in city inspections every 2-3 years, and over just five years of ownership, a building gets inspected and generates a $5,000 repair list roughly a dozen times.

 

And rents are going down, while rent control gets tightened every year. So expenses (and the above is just one) are tripling, but income is capped.

 

 

No one.

 

No insurance inspector. No lender. No city bureaucrat on a rotation. You own a house, you maintain it on your own schedule.

 

Houses are also untouchable on rent control. No city in California can regulate rents on single-family homes because of a law called Costa-Hawkins. And it looks permanent.

 

Voters have soundly rejected repealing it three times: Prop 10 in 2018, Prop 21 in 2020, the Justice for Renters Act in 2024.

 

Your home is your castle.

 

 

As some of you have read, I had a pile of money in a 1031 exchange (had to buy a place within 45 days or pay a ton of taxes), and the clock was ticking. I looked at every apartment in SoCal, and each one left me feeling depressed.

 

I found something good in the commercial space, in Highland Park right off of Figueroa, but the "assumable" loan turned out not to be, and the deal fell apart.

 

So with a week left, we pivoted: find the least expensive house in the most expensive beach area we could barely afford. We drove to Newport, looked at two, andbought one. Offered $500K under asking, non-contingent. And we are pretty happy.

 

Guys…Newport is nice.

 

It's the cheapest house on the block in a place where prices only go one direction. We'll rent it and use it as a crash pad between tenants. And unlike my apartment buildings, nobody is showing up with a clipboard.