Why You Should Invest in LA Real Estate with Taylor Avakian

THE SELF STORAGE REPORT — EPISODE TRANSCRIPT Episode: Why You Should Invest in LA Real Estate with Taylor Avakian Guest: Taylor Avakian — Founder, The Group CRE (Los Angeles multifamily brokerage); host of the No Vacancy podcast Host: Chris Berg — Abernathey Development Recorded: March 27, 2025 Video: https://www.youtube.com/watch?v=ybCeN3fwuKc Key topics: South LA 4-to-10-unit multifamily trading at 6.5% to 8% cap rates; ULA transfer tax stalling anything $5 million and above; a $730,000 to $750,000 4-unit close in South Los Angeles; Section 8 vouchers above market rent producing 7% to 8% cash-on-cash; insurance moving from 3% to 5% of expenses up to 10% to 15%; the City of LA's billion-dollar budget deficit and $1 billion a year homelessness spend; 15,000 structures burned in the Palisades; price-per-unit bases back at 2010 and 2011 levels; an Ellis Act conversion of a 4-unit into a single-family home; rent control as an artificial rent floor and value-add engine; Central LA submarkets Koreatown and Mid-City; the 2026 World Cup, 2027 Super Bowl and 2028 Olympics infrastructure thesis; tenant buyout economics; 500 to 600 cold calls a week and a $9.2 million first apartment deal Note: Speaker attribution reconstructed from raw captions. Light cleanup of transcription errors only; wording preserved. Timestamps and YouTube chapter markers removed. Turns marked [attribution inferred] could not be attributed with certainty. ————————————————————————————— Chris Berg: Welcome to the CRE Report. I'm your host, Chris Berg. Today we're talking about why you should invest in LA real estate and is now the time to be doing that. Special guest today, he's the founder of The Group CRE, Taylor Avakian, also the host of a great podcast, No Vacancy podcast. Definitely check that out. And he's focused on multifamily here in the LA area. So, he might be a little bit biased, but I think we're going to flesh out the thesis in reality and be objective around what's happening within this market. So, Taylor, great to see you and thanks for joining us, man. Taylor Avakian: Chris, thanks for having me, man. You are, uh, you've done that a few times, man. I need to improve my intro like you are. That's incredible. Chris Berg: I have definitely done that a few times, my friend. Maybe a few too many, but, uh, but I enjoy it. So, I'm excited in this conversation. Um, I do want to get into kind of a unique way to look at the LA market. Before we do, just to give people some context about you. I mean, you've been out in CRE for a while, multifamily. Give us a bit of your background. Taylor Avakian: Yeah, for sure. So, started in multifamily in Los Angeles in 2018, uh, fresh out of school, 21 years old, and was basically given an area, a list, and said, "Hey, go go dig up some deals." So, for the beginning half of my career was making 500, 600 cold calls a week, which if anyone's listening to me do these, they know that that is a big part of my career. And I still love talking on the phones. Um, was very fortunate that had some great mentorship, great training, and, uh, it took me a little bit to get some deals underneath me. It took me a full year to close my first apartment deal, but that was a $9.2 million deal. And then the ball just started rolling and ever since I've been obsessed with, um, becoming the best broker that I can be and it's been pretty incredible. So, yeah, multifamily through and through. LA, we've seen a ton of ups and downs. This was pre-COVID, post-COVID. Those are two different eras in Los Angeles. So, I got a lot of thoughts. Chris Berg: So, I didn't think we were going to go there, but since you talked about, hey, I want to be the best broker. Let's just kind of flesh this out as well from a standpoint where, you know, you and I are both athletes. So, I want you to talk about what it looks like being a broker, but break down like how you work on your game. And here's what I mean. As a QB, like I had to work on my three-step drop, my five-step drop, my seven drop, like, you know, the outs, things like that. So, as you look at the different skill sets of being a great broker, are you saying, "Okay, man. I got to really improve my cold calling skills"? And then like how do you look at it from an athletic perspective? Taylor Avakian: I'm super passionate about this. I'm glad you asked that because yes, I grew up an athlete. I was a baseball player growing up. And so, for me, I didn't realize it until I was in the corporate world. And it wasn't, um, sports, because in sports it's kind of known, okay, you practice, you practice, you practice, you practice, and then you have the game, right? 90% of your day is practice, 95%, and then 5% is the actual competition. And it didn't feel like that was something that I had when I was in corporate, the corporate world, when I was in business, right? And so what I've spent a lot of my time doing is understanding the fundamentals of human psychology. And I wish I studied psychology in school because I'm so fascinated by it. All the books that I read, everything is like how do you improve yourself on the phones? How do you improve your, uh, rapport building, communication skills, articulation, all the things that when you're in a people-to-people business really really matter and getting deals done, negotiation, all that stuff. So, I spent an inordinate amount of time trying to improve, um, that. And what that looks like for me, and it's still something that I need to spend more dedicated time on, is like the practice of role play, of sitting in a situation, getting an objection or, uh, having someone say something that you know likely is going to come up in a conversation, practicing that situation, and figuring out how you want to respond or how you can resonate or connect with someone. So, right now, it's in the mornings. Sometimes I'll spend 30 minutes and practice on some objection overcoming, or, you know, um, I'll — if I'm doing a pitch, I'll practice the pitch, what I'm going to be talking about, the structure and the flow of what I want that conversation to look like. Maybe some common thoughts and objections. Um, I spend a lot of time trying to understand the person that I'm speaking to and meeting with. So, for example, if they're an older owner, maybe a mom and pop, and they really want to spend more time with their grandkids or their family, or they want to go on that cruise that they've been wanting, it's been on their bucket list for a very long time. I try to put myself in their shoes and resonate like what is really their pain point, right? How can I articulate that I understand that and that my job is to help, to be here to help, because I know my skill set. I know what I'm good at. I know that if you give me the opportunity, I'm going to make it happen. But it's not what I think, it's what they think. And so, how do I let them know that I understand what they're going through and that they can trust me and resonate with what I have to do, because I'm confident in my abilities. They just have to be able to trust that that confidence will come and help them in their situation. So, I think a lot of it's that. I mean, um, do you spend time practicing and doing these kind of things? Because I'm sure when you were in broadcast, like, did you guys — was it just reps or did you spend some time? Chris Berg: A lot of those reps. I think that's one of the things that I appreciate about you saying, "Hey, I'm doing 500 calls a week." Like, I'm starting to do a lot more off-market calls now. And yeah, you know, I mean, look, nobody loves doing cold calls, but what I do love about it is that you get a ton of reps in. Like when I was with Tony — Taylor Avakian: Except me. I love cold calls. Chris Berg: You do? Taylor Avakian: Oh, yeah. I thrive on cold calls. It's like my happy place, my home. It's, um, it's what I grew up doing. And so I'm so comfortable having that conversation with someone. Like it's funny, too. Go ahead, Chris. Chris Berg: The convo piece. I definitely like — once you get them on the phone, I'm good, right? It's just a like, ding. Nobody answers. Ding. No, you — like that's the piece that's a little bit. But I'm with you. Once I get them on the phone — and that's what I was going to get to. I think what I'm hearing you say, and I don't know if everyone sees the world the same way, but everyone's kind of trying to sell benefits or why them, but I always find like, hey, if I can solve your problem, you're going to want to work with me, right? And so that, like you mentioned, is how do I find out what that problem is? Probably put a little more salt in the wound and then you go, "Okay, I need to solve this thing." Right? So, it's identifying the problem, right? And then being able to resonate. Taylor Avakian: I, um, I hired, um, a business coach a couple years back and one of the main points that he was sharing with me is like you have to identify their problem and make them feel, or at least give them the resonation that you understand their problem. If they feel like you understand their problem or know it better than they do, then, I mean, you trust them. It's like you go to a doctor, they know more about the human body and your particular problem than you do. And so you trust them. And so we have to be the doctors of the real estate and be able to instill that trust in them and understand, okay, I get your problem. I understand this. I've dealt with this before. Um, so yeah, I love the calls. I just — it brings joy to me. Chris Berg: So, I'm curious, and again, not to get too far off the rails, a couple things. One, have you ever read the book Influence by Robert Cialdini? Taylor Avakian: It's a staple. I read it every year. Chris Berg: Good, good, good. Um, and then the second thing is now, you know, in today's tech age, I'm curious. You say, "Hey, I make 500 calls a week." Are you getting one person on the call a day, 10 people out of 100 calls? What's your ratio these days? Taylor Avakian: I'm about — so I do have to do a little asterisk. Most of my calls are of people that I've spoken to at some point or another. And so I'm speaking to maybe 25 people a day. 20 to 25 people a day depending on the day. So I'll structure days where some days are relationship calls, some days are new prospecting calls, some are like circle prospecting near, uh, listings that we have or trying to sell deals. So there's different themes that I have throughout the day that are kind of the reason for my call. And it helps me too, I think, for having a reason. A lot of people get, um, caught up in feeling like they're trying to take something from someone. For me, what helps me is if I'm working to give someone something, either a piece of information or something, then it's not scary. Like I'm here to provide value to them. I'm not trying to take something from them. Um, and so that's like a mindset shift that you just learn from doing a million reps. And it does — when you're doing the million and one cold call, is like there can be this monotonous tone to it. So you kind of have to make it fun and enjoyable and you learn a little bit of the tricks of the trade. I'll tell you this funny story. I remember at one point I was making some calls on a Saturday and I was like, this is — I'm feeling it, right? And I got to that point, I was maybe at 700 calls for the week, and so I just threw on a little bit of an accent, like I just talked in a country accent, and it made it enjoyable and I was like, you know, "Hey John, how's it going? Yeah, it's Taylor over here from The Group and, uh, you know, want to talk to you about your property." And like, you know, it just — you got to make it fun. Chris Berg: It's so funny you say that because I was making some calls today and a guy pulled the accent on me, and his — they had a guy on the passenger side. The dude's totally laughing like, you know, this guy's busting my chops, right? So we had a good time. But you have to — like you got to break the pattern. So, um, anything else you want to share there as far as like the facets that you look at from being a broker, or ready to move on? Taylor Avakian: Yeah, I mean, um, I think for me wanting to be the best broker that I can be just comes from that athlete mentality of wanting to win, to do your best. Um, it's an interesting business when, like, most sports is a zero-sum game. There's a winner and a loser. And I think in business it's not a zero-sum game. It's an infinite game, as Simon Sinek says it. So, if you can have the mindset of we're sitting on the same side of the table and we can mutually help each other out to get to whatever goal, whatever our plans are, um, that's been really fun to have that more long-term mindset. So, I'm going to continue to do it. I enjoy it. I love entrepreneurship. I love tech. I love AI. I love all this stuff. And I'm sure we'll get into some of that later. But brokerage has been really, really fun. And I'm excited to continue and just dominate the world. Chris Berg: You know what's interesting is you just laid that out, and maybe it's because you were just being presumptive around it, but what I love about it is the real estate. Like I just love the asset class, and you didn't say real estate, but I just think it's such a great asset class and you get, you know, tax benefits and there's other things you can do there with. So it's just a really powerful wealth generator for generational wealth. Taylor Avakian: So yeah, it's funny. It's funny you say that because, um, real estate to me is awesome and I agree with you. It's super cool. But the part of this job that I enjoy is not the sticks and the bricks or the architecture, the beautiful creations. I mean, development side, it's really cool to see what people can build. I think that's more creative. I love creativity, and so the creative aspect that I get where I can really work that muscle for me is the relationship, is the trying to dig up opportunities, is the chasing the deal. It's not necessarily the real estate for me in particular. Um, but I have to learn to love the real estate, but I love the challenge of finding that opportunity. That to me is like what gets me up in the morning and makes me work, um, the dumb hours that I do. Chris Berg: Very well said. And I agree with you a thousand — like I love the hunt. I think what gives me that extra oomph is that if I put you into an asset, like I can feel really good about the asset, where there's other things you can go sell and you're kind of like, yeah, I don't know if this is going to really really work, bro, but I'm selling it. You know what I mean? So maybe that's what it is for me is like, hey, this can be a lifetime asset for you and your family that literally could change generations of your family. So I appreciate. So, um, all right, let's jump into LA and I want to ask it this way. Have you ever read this book King of Capital about Stephen Schwarzman and Blackstone? Taylor Avakian: No, I haven't. But I — it's — I should write that down now, saying it's a very very good book. Chris Berg: Um, but there's a story pretty early on where Schwarzman talks about one of the second deals that he did, it went awry, right? And so they didn't underwrite it well, they didn't vet it very well. And so now anytime they get an investment review committee and a guy brings a deal to the table, everyone has to start with, okay, why should we not do this deal? Right? I think it's just a great kind of flip on the head on, okay, let's poke holes through all these thesis to ensure that we've covered everything, um, just to try to mitigate risk. So I want to actually start there with you. I'm thinking probably as a surprise to you, but so why should people not invest in LA real estate right now? Taylor Avakian: You should not invest in Los Angeles if you are not comfortable with dealing with the headaches that come with, one, being an apartment owner, and two, dealing with things that are outside of your control, which is the government regulations and things like that. Because it's no surprise, like LA is a very highly regulated market. There are a lot of people in power that are more in the socialist camp and they make it very hard to be a business owner, let alone a landlord. Um, it's even harder to be a landlord, but it's hard to be a business owner in California and Los Angeles. And I think that there's still headwinds from that perspective. So it makes it very difficult if you don't either have some sort of specialized knowledge or some sort of boots on the ground presence here or an understanding of what the intricacies are of actually owning and managing in Los Angeles. Like if you're coming from outside and want to beat all the people who've spent decades trying to master the art of real estate in LA, like you're going to be mistaken. You're going to not make, uh, a good investment choice most likely. But if you're willing to put in the time and effort and understand LA and all of the challenges, which sometimes can be opportunities too — you know, obstacle is the way — like the barriers to entry in Los Angeles are so tough. So tough that, um, to flip it, if you can figure that out, then I do think there's opportunities. But to answer your question, if you're afraid of regulations or want an easier route to be, um, an owner, Los Angeles is not for you. Chris Berg: Such a delicate balance, man. Because you talked about that barrier to entry, which is exactly why our JV partners — like that's exactly why we want to be in California. Not very many people can handle it. So, if you do get the asset developed, you know, it's obviously a fantastic asset, but other guys just are like, "Hey, I don't want to pound my head against the wall." What's the, um, craziest story that you've seen or experienced, uh, in LA when it comes to multifamily real estate? Taylor Avakian: Uh, man, so many, so many stories. I mean, it's, uh, from tenant interactions to fully nude to stripper poles to all those things. Mostly the craziest stuff comes from, uh, comes from like the property tours. Um, just it's a different world. And if you haven't ever toured a property in some neighborhoods — I won't name specific ones — like it's interesting. They live a different life. And, um, it's interesting to see the news and think that everyone in LA is like super wealthy and rich and, you know, can afford all this stuff. That's not the case. People are scraping by. They're working. They're working-class jobs. So, it's been very interesting to be a part of some of those situations. I mean, from a deal perspective, like super creative people in terms of making and structuring deals. Like deal structures are super interesting to me because it is a specific knowledge skill. Like for example, there was, um, an owner who I knew who basically he was buying these two parcels of land and one of them had a 4-unit and one of them had a 6-unit on it. And what he was able to do — they were selling them together — he bought both of the parcels for, let's say, like $4 million bucks. Single family homes in that specific neighborhood were trading at between $2 and $3 million. And so what he did was he Ellis Acted the building, which is an act of taking it off the rental market. He converted the 4-unit into a home, sold the 4-unit for like $3 or $4 million bucks, and basically owned the 6-unit free and clear. And that was the first time that I had seen a unique structure and someone think differently about a deal besides the typical value-add, you know, and renovate the units, NOI. So that's super interesting to be a part of and see. And that was something that just like, okay, I have a lot to learn in terms of structures and ways to make money in real estate, not only the standard value-add play. And that comes with experience in years and knowing, okay, here's what I can do, here's how I can unlock some value from this situation. So, that was a super interesting one. Chris Berg: I love that you shared that because earlier you talked about, hey, I'm creative, I love the creativity. That's the part of the creativity I think I enjoy is just like you said, watching how guys can structure deals here. Like, oh, I didn't see it through that lens. Like, good for you. We had a similar situation in Inglewood for a storage project where they just saw it through a different lens like you mentioned because of their experience, and now I've got a great asset they're going to piece together and it's going to be an awesome, awesome legacy asset for that organization. Taylor Avakian: So, um, I love being a part of those deals because you learn so much. Like those are the moments where sometime in the future something like that's going to happen and you're going to have that piece of information to be able to take advantage of that. Um, so I love learning those unique structures and how people set it up. And whenever I can get a chance to hear, okay, how did you get that deal done? Like I love it. I eat it up. [attribution inferred] Chris Berg: That's the — man, I keep going back to your brokerage piece. Is one thing that I'm like, I just mentioned with Tony Robbins, I love because we had a ton of reps, right? Cold calling I like because I've got a ton of reps, but doing deals, there's not as many reps, right? So, what do you do to try to speed up the reps or to have more opportunity to start to think outside the box? Taylor Avakian: You got to be a student of the game. Like I think, um, and I'm working on this too and I can tell there's a desire for it, is getting other owners, other principals, other people in the same room and sharing these war stories. Like what's the situation that you had to deal with and how did you get through it, and learning from other people's successes and mistakes. Um, I don't think there's enough of that. Like I want to do a happy hour thing in LA and get a bunch of principals together and just have them be able to — Chris Berg: Exactly. Have those conversations like, oh wow, you're structuring it this way. Oh yeah. Could we just take four or five of those people, just put them right here on this podcast and have a roundtable conversation? Taylor Avakian: I mean, we definitely could. Yeah, definitely something that's possible. That would be fun. There's, uh, have you seen those Hollywood — there's a couple YouTube channels that do like the Hollywood actor roundtables. Um, I love listening to those because it's like a real — they're just talking about what they do and it's like being a fly on the wall. Um, I think that would do really well. Chris Berg: Be great, dude. We got it all evergreen. Everyone can watch it, learn. So something to think about. We'll talk about that later. Um, all right. Let's talk about why you're long LA. And I want to set it up this way because, you know, you watch the news, people I talk to back in the Midwest are like, "Okay, it's crazy out there." And yet I look at LA and I go, "Okay, World Cup in 2026, Super Bowl in 27, Olympics in 28." Like, there's going to be — and I know maybe for multifamily that's not the end all be all. And yet there's a lot of eyeballs. My point with that is there's going to be a lot of infrastructure money coming in this area. I think there's going to be a lot more security. And I hate to frame it this way, and if you look at what happened with the Palisades and Altadena, I think you could even see some leadership changes in this community in 26 that could really make 27, 28, 29 take off. Shoot holes in that thesis, please. Taylor Avakian: Yeah, it's — no, it's — and I would love for that to be the case. And it feels like if the Olympics are successful, it's going to be very good for the city. The tough part is we're up against so many headwinds. Like I think yesterday they just came out and said the city of LA has a billion dollar budget deficit, which is massive. And not very many people in the city were aware of that. We spend a billion dollars a year on homelessness. Where does that go? I feel like a lot of people don't know or feel like it's actually being used. So I agree with you. There's definitely a lot of bright sides, um, on the future in the horizon. If we can do it right, like it's going to be amazing, but with the fact that our city needs to be completely redone for the Olympics, you know, sidewalks, lighting, structures, traffic, all that stuff to make that a successful thing, plus the fact that now there's 15,000 structures that have been burned down in the Palisades. How do we do everything? Is there enough labor to make all this stuff come back? How do you even set up building it with the huge machines everywhere? Like what does that look like? So, I believe you and I agree with you, and I think we need someone in those positions to say, "Okay, we're running this like a business. We have to do this now. There has to be changes made. Otherwise, we're not going to — it's not going to be a success." And everything that could come from those great opportunities is not going to come because we're not structured or ready or have the infrastructure in place, the people who are making those decisions to actually affect change. And that's what we're looking for. Everyone wants change. They're not happy with where we're at. Um, and it doesn't have to be some miracle. Like, LA doesn't have to be the euphoria, um, of the world, but we need to just make it desirable, habitable, tourism. Like, get people back coming back here. I heard Netflix might leave. Like, you can't keep kicking businesses away from California and Los Angeles and expect this market to continue to be strong from that perspective. Chris Berg: Um, I'm going to come back to my thesis in a moment, but as you're talking about Netflix leaving, I heard yesterday from a friend that there's some businesses now in Malibu shutting down because just nobody can get access to it. Are you hearing the same thing? Taylor Avakian: I haven't heard that, but I mean, for sure there's not that many ways to get over in that area anyways. So, yeah. If you — I haven't been over there. I would love to go and drive through and see what's happening. Um, I know it's pretty hard unless you live over there. So, but I — from, you know, not to make it on a darker note, but I've heard it's pretty crazy the scene out there. You just never seen anything like it. Chris Berg: Yeah, me too. Um, one more kind of in the future combo and let's bring it down maybe boots on the ground. What's happening? Because you've had eight closings in the last five months. Want to kind of hear what's trading and how it's trading. Um, so another thesis, if you will, you know, you got Rick Caruso, right? I don't know if he's going to run for governor or mayor, but clearly his name is in the conversation. The potentially is out in 26. And the thing, the variable that I like about the Olympics and why I'm long is that we've got a reality TV for a president of the United States and it's going to be his last hurrah, right? Like 2028 is his last hurrah. It's world stage. He did a lot to get the Olympics in LA. I think he's going to help fund a lot of these projects. You talk about even with a billion dollar budget deficit and being a reality TV guy. I think he's going to set the stage and just wave to the world and say you're welcome. Thoughts? Taylor Avakian: I — that would be amazing. That would be — if we can get some of the, um, the love, the infrastructure, the change that's coming from the White House, the big dogs. I think it'd be super great for the city. Um, I don't know enough about politics to speak as to what actually can happen, but I do know if it does happen that that would be incredible. And not only selfishly for myself, when I want people to come and want to invest in LA. That's the hardest part right now is like the deals. Yes, we're getting deals done, but it's all local people and it's all kind of small mom and pop. Um, I need the big dogs, the big money, everyone to come in and want to make LA a better place, invest in businesses, because it drives everything up. It helps everyone. The jobs grow, there's more people here, like everything becomes stronger and the economy becomes stronger. And so if we can take a little bit of that, you know, like let's make it happen attitude, uh, it does feel like LA's coming together more, but it could be a short stint and we need people to not just have this be a flash in the pan. Like this should be the calling card for us to come together and actually make real change and put people in positions who are willing to sacrifice, because you're going to have to sacrifice a lot of things in your life, um, to affect — to make real effective change. Chris Berg: So you mentioned the quote-unquote big dogs. What are you hearing from that capital stack? Taylor Avakian: I mean, you know it too. It's like no one wants to — it's too — there's too much brain damage in wanting to get returns for their investment, because investment is risk, right? You're choosing to put your money somewhere to ideally get a return on that capital. And if the risk associated with that is not priced in to the values, or at least at the scale where it makes sense, then you're not going to choose to invest there. And I don't think that Los Angeles right now the risk-to-reward profile is in balance. It doesn't make sense for a lot of people, and so a lot of them are moving to other places that are welcoming them or at least allowing it to have an easier job to go and get that return, to get that investment, um, to put money and dollars to work from a bunch of different people that they're raising these funds from and make something of it. There's — it's just, um, it's a risk-reward thing right now and most people don't want to take that on in Los Angeles. Chris Berg: Very well said. And then you think about, uh, the policy and then also I got to ask you, how much is insurance impacting, you know, NOI and investors' opportunities here? Taylor Avakian: Insurance is a big, big factor and I don't believe we've even seen the full brunt of what's going to be happening. We're still dealing with everything from the fires, but it's going to be super difficult when your insurance is 10, 15% of your expenses where previously it was, you know, 3 to 5%. That goes straight to the bottom line. And there's not much you can do about that. So, that needs to come from the statewide — like, there needs to be some state changes for it to make sense, because insurance is a business. They're a for-profit business and they need to feel confident. Again, they're like a big dog. They need to feel confident in investing their money, uh, aka their services, to provide that insurance to people here. So, um, it's been super tough from an underwriting perspective. And I think like deals that we're doing, I'm telling people, get an insurance quote before you buy this thing, close on it. Um, you have to understand what that number is going to be, because if you're underwriting one thing and it comes back completely different, you can't go to — there's only a few insurance agencies that are even writing new policies. Like your hands are kind of tied. So, um, I see that being a big issue moving forward and I see that that really needs to — there needs to be a change there. Otherwise, it's just going to be like infeasible. It's not going to make any sense. Chris Berg: I mean, I know a gentleman who's actually put together, like, part of his thesis is he's doing, uh, Midwest investments and part of the thesis is because of climate change and insurance. He's like, "No one's going to be able to get insured on the coast." And I saw an article today where Florida's now looking to eradicate property taxes. And so, you know, I drive around the state — I'm just sharing this with you because I'm not born and raised here — but it's like, man, such an amazing place with edge and energy and so many great things. And like I feel like this should be Florida times a million, and you know, right now it's just not, a lot because of the policies that are in place. So, um, you've obviously been having some activity though, doing some trades. You mentioned those have been more mom and pop deals. Like what is trading? What's it trading at? Uh, what are you getting done? Taylor Avakian: Yeah, good question. Um, so historically I've done a lot of LA city property sales and mostly in Central LA, which is like Koreatown, Mid-City. Um, over the last year we've been awarded, uh, some portfolios in South Los Angeles. So I've been doing a lot of South LA deals, and the fundamentals and the numbers in South LA are not a broad stroke of what everything else is trading for in Los Angeles. But for example, um, we've sold a bunch of 4, 5, 6, 8, 10 unit properties. And those are trading anywhere from 6 1/2 to, you know, 8% cap rates, which if I told you an 8% cap rate deal was trading in Los Angeles pre-COVID or in 21 or 22, you'd say, "Holy, that was a steal of the century," right? Uh, but that's where the market is today. And it is kind of crazy to, uh, to be a part of that and see that and have to tell an owner like, hey, I know you've increased your NOI 25%, but also your expenses have gone up and interest rates have gone up and the market is valuing this deal at 200 basis points higher than what you expected it to be. So that's been a very difficult conversation to have. But the players who are buying those deals, those size deals too — and those are the ones that are trading, because ULA is just, that's just a whole bag of worms in itself. And it's very unfortunate that that's happened. And that's stymied a ton of the bigger sales. But for the small ones, it's the investor who has a couple hundred thousand dollars and they want to invest in a property that's cash flowing and it's coastal and it's, you know, getting a 5 to 8% cash on cash return, and maybe you got to deal with some issues and Section 8 and things like that, but it's an investment and you're making money day one. Um, and they buy a deal every five, seven years, right? It's not the players who are raising funds, syndicating deals, buying a bunch of stuff, adding value. Like they're not as prevalent, I would say, as more of the individual small families, one, two, three properties under management kind of situation, at least in the South LA and the stuff that we've been working on. Chris Berg: So, let's talk about ULA. I mean, how much has it impacted the flow of deals? From what I've seen, it's been incredible how it's just basically stopped anything $5 million or above. And also with that being said, then are you saying, "Hey, there is some opportunity, Chris, if you can find" — because I saw one of the deals you closed was 750. Like that's a number I didn't even think existed in LA, right? So, are there deals out there between that 1 to maybe 4 million mark where this is a really nice niche, you can still get some cash flows, get some depreciation? Is that opportunity there? Taylor Avakian: 100%. Yeah, 100%. This is, um, in my opinion, if the politics go in a direction where the risk-reward makes sense, if you buy a deal now in Los Angeles, I truly believe in the next five to 10 years you're going to look like a genius, because some of the bases that we're seeing on these deals are 2010 levels, 2011, like what they've — Chris Berg: Yeah, 100%. [attribution inferred] Taylor Avakian: Price per unit, price per square foot, like they are, they are back to where you were buying in that area, in that era, excuse me. And, um, I truly believe that if we can get to a place where you can feel confident in executing a business plan, like there are really good deals right now, but it's not without their risks, right? Things have to go in a good direction and some of that's out of your control. Um, but between 1 to 4 million, like there's a ton of good opportunities. And people who have owned for a very long time are, and maybe wanting to retire and not be a landlord anymore. They don't want to deal with this. They don't have to wait for policies to change. They don't want to have to, you know, every 3 months they get a new notification from the apartment association that this new law or this new regulation or your expenses gone up this way. Like they don't want to have to deal with that anymore. They've made their money. They're done. Um, and those are good people to buy from because they're not motivated by necessarily the money. They're motivated by other factors in their life. And, um, you can pick up a good deal if you're willing to put in the work. Chris Berg: Boy, that's a really interesting frame. Um, just to back up for a second, I did mention you just closed a deal that was 750. Again, I didn't even think that existed in LA. So, what was that deal? Taylor Avakian: Uh, couple of them. We closed 730, 750. That was a little 4-unit in South Los Angeles. Um, you know, with South LA, the business plan a lot of times is doing Section 8 because the vouchers are typically above what the market rate rent is. So, what you can do is you can go in, renovate the units, get Section 8 voucher or some other voucher program, and you're cash flowing, you know, 7, 8% cash on cash, which is, um, I mean, very attractive from that perspective. That was — I think that was, um, I don't think that was an owner user deal. Um, but they were definitely a smaller family and wanted to invest some cash in some real estate and get some of the tax benefits like we've talked about. And it's a great entry price point. You need a couple hundred grand and you're owning real estate in Los Angeles. Like that's pretty cool. It's possible. I wouldn't say — I didn't think that was possible, um, a couple years ago, but you can buy a building for $100,000 in LA and even less if it's like an owner user. Technically, you could put 3%, 3 1/2% down and buy something and move in. You wouldn't be cash flowing, but, um, but you could own real estate. Chris Berg: You just read my mind. I was going to ask how many deals are you getting done where guys are going, "Hey, you know, at 750, here's my 3 or 5% and I'll move in and let these guys pay down the mortgage and eventually move out." And are you seeing much of that happening right now or not really? Taylor Avakian: I don't work a ton with that space. We're mostly commercial and these four units is more of a newer, um, newer product type for me. I'd say my historical sales has been, you know, 10 plus units between $2 and $50 million. And so these smaller deals are a new, uh, experience, but it's been very interesting to see the kind of people who are interested in those. And yeah, absolutely. Like you can definitely — if you're willing to live in maybe an area that you weren't super, you weren't wanting to live there, or if you already live there and you want to own property instead of paying rent, like it's 100% achievable and feasible. Chris Berg: Let's talk about this because we've talked a lot about policy. Um, you and I chatted, you put out this tweet: why I'm all in on rent control properties. Hear me out. Rent control is actually a gold mine for real estate investors. I think that makes a lot of people brain scramble. So, walk us through your thesis here. Taylor Avakian: Yeah. So, um, this is an interesting one and I don't necessarily think everyone agrees with me, but it's something that I've seen firsthand from talking to people who've not only invested in LA, but also invested in places that don't have rent control. And the reason I say that is because rent control almost creates this artificial floor in terms of where your rents are going to go. And like a city with Los Angeles where there's a huge undersupply of housing, the demand for rental units far exceeds anything in terms of the demand side. And so what that means is your occupancy is 95, 96, 100% for most of these buildings. And when you have that, you know that your rental income is likely going to be at X area. Like you're not really going to fall below that because the rent growth exceeds the rental increases that the city allows. And so if market's growing at 5% a year or even 4% a year and you can increase the rent 1, 2, 3% a year, it would be a disservice for that tenant to move out and go get a new unit instead of staying in their apartment, which means you feel pretty confident with that number. And but what that also does is over time, because the rent that that apartment is paying is significantly less — like the market rent growth is compounding versus what that current tenant's paying — it allows for big discrepancies between what the current unit is renting for and what you can get for market. And so that's an opportunity for value-add and increasing the NOI significantly. In other markets where they don't have rent control, it's hard to go and increase the rent 100%, 50%, uh, by doing, you know, renovations or value-add or buyouts or things like that. But when there's rent control, that's almost built into the investment plan. Like that is created by rent control. And so I think from the standard of at least being able to execute on something like that, it allows for these big pops and big opportunities to make money pretty quickly if you can turn the units and increase the NOI, where in other markets maybe that opportunity isn't as prevalent or it's not created by the policies that are put into place. Does that kind of make sense? Chris Berg: It definitely does. And I've seen some multifamily guys that, like you said, they sort of put that in the business plan. Hey, we'll do these buyouts, we can move this Section 8 over here and this will come in over here at a higher rent. Taylor Avakian: So, um, don't get me wrong, it's very tough. Like buyouts are not what they once were. And, um, and I don't get why people are upset with buyouts. They think it's like gentrification and stuff. It's like, no, if someone wants to take money to leave, why would they not be able to do that? Why would they not be able to say, "Yeah, give me 20 grand. Like, I'll leave. Thank you. I appreciate it." Right? Or 50 or whatever the number is. Like you should be able to do that. It's not — and I get, you know, wanting to take advantage of people who don't know, but it's — everyone's an adult here. Like, you know, do your research, do your due diligence, understand what your worth, your value is, and, um, and yeah, and then everyone gets happy. [attribution inferred] Chris Berg: It's a different world. The buyout thing has been new to me. So, yeah. Um, let's definitely have you back. Let's talk about the roundtable piece. I think that would be a fascinating conversation. And, um, before we get to how people can reach out to you, anything else you want to add or share that I haven't asked yet? Taylor Avakian: Chris, I appreciate you for being on here, man. Um, for having me on here, excuse me. And, um, it's just, you know, LA is in a difficult place right now. We're dealing with a lot of headwinds, but it's an incredible place to live. The weather is best in the world in my opinion. Um, it's not without its challenges, but there's a golden star on the horizon and we're heading towards that, and I believe that we're going to be able to achieve that and get there, and we just need people who are willing to take a little bit of risk, put their neck out there and create change. If we can come together and make change, like this place is going to be the best place in the world. Chris Berg: Well, you know, you always talk about contrarian investors, right? Like capital's flowing out of here. Maybe now, like you said, maybe now's the time to start taking advantage of opportunities. You see a change in leadership in 26. And I liked your 10-year, um, horizon where if there's some changes, I definitely agree with you. There's a huge opportunity. So, if people want to reach out to you, um, here's your website. Can people email you? What do you suggest? Taylor Avakian: Yeah, email me, reach out to me, call me, text me. I'm pretty much available. All my information is public, which for right now is good. Um, follow the podcast, No Vacancy. I'm really enjoying that and I've gotten some really good guests on there, so I'm excited to continue to grow that. LinkedIn and Twitter, I'm pretty active on. And then the YouTube channel is where — YouTube and Spotify is where the podcast is. And my plan is to start doing other videos that are not just podcast-related on the YouTube. So, um, definitely excited to kind of dive into that, but I'm available. You can find my information. You can reach out. I love to talk to people about LA and the business and I'm on the phone all day long. So, it's a pleasure to be able to speak to people who are interested in it. Chris Berg: And I will say definitely check out again No Vacancy, the podcast. He does a great job, great guest, great content. So, um, Taylor, man, we just, we appreciate it. We'll do it again and keep up the great work. Taylor Avakian: Okay, I'm looking forward to it, Chris. Thank you. Chris Berg: Thank you so much for joining us here on the commercial real estate report. — END OF TRANSCRIPT —