Who Would Even Buy a Building in LA or Pasadena Right Now?

I get this question every day. LA City amended its 40-year rent control formula, restricting increases to 90% of CPI. Pasadena's Measure H allows 2.25% rent increases. All the while insurance, trash, and water have doubled for many owners.

Here is who's been buying our inventory:

• Doctors, lawyers, and financiers looking for tax shelter.

• Local operators who know the current landscape and have found new ways to add value.

• Think ADUs, structured utility and capital improvement bill-backs, and knowing how to enforce the lease (i.e. properly documenting and charging for additional occupants).

• Investors in their 20s and 30s, often time with family seed money, who have the energy and patience to wait out the current anti-landlord cycle, which they acknowledge may last a decade or two.

Recent Deals From The Field:

• 826 N Summit Avenue – 5 Units in Pasadena – Closed on April 28 for $1,085,000. The seller wanted to divest a family partnership and take some chips off the table in Pasadena, while the buyer is a local operator who was attracted to the basis and believes in Pasadena long term.

• 1072 Leonard Avenue – 6 Units in East LA – Closed on April 20 for $1,114,850. The seller is exchanging out of Los Angeles while the buyer is an experienced local operator who knows what buttons to push to add value: 2 units delivered vacant and following through on approved plans to build 2 ADUs in place of the garages while maintaining tenant parking.

• 214 S Avenue 18 – 4 Units + a vacant lot in Lincoln Heights – Closed on April 11 for $994,000. Seller is repositioning equity into other projects, buyer was attracted to 3 of the 4 units being vacant, with development potential on a 12,119 sf double lot.

My Utility Bills are Out Of Control

Owners frequently call me to say that their trash or utility bill just came in the mail, and it doubled. Their insurance policy tripled. They don't want to sell, but they might have to. What should they do?

Before feeling cornered into a sale, there are efforts you can make to reduce your bills.

I had an owner reach out to me saying their trash bill went from $750/month to $1,213/month overnight, so I asked them to send me their bill. They had moved the bins 15 feet back into a corner, and had been noticing a few unfamiliar faces in their units. We called the trash company, and they told me that not only were they assessing a distance charge for all of the bins, but that they had to increase their frequency to twice weekly pickups due to the trash levels.

After the owner enforced the lease and moved the bin back, we scheduled a waste assessment for him. Not only did the bill revert back to where it was, we helped him further reduce it to $597/month by advising him to move all of the bins towards the front of the property to eliminate the two separate distance charges he was unknowingly being assessed.

The Point

There are plenty of buyers out there ready to place capital into deals. 4 of our last 5 closings were multiple offer scenarios. We're getting deals done by telling the right story and crafting a tangible path to the upside, not blindly offering cash for keys and hoping it all works out.

And if you aren't selling, you can still take some form of control over your operations and run the property efficiently.

If there's anything you'd like to strategize on, I'm always happy to discuss.