Categories
Los Angeles Multifamily Rent Control

Next Allowable Rent Increase for LA Rent Controlled Properties

LA Housing Department Stipulates the next allowable rent increase for rent controlled properties effective in 2024.

7% is the number as of right now.

After a 3+ year rent freeze due to Covid-19 Renter Protections, the Los Angeles Housing Department has stipulated the next allowable rent increase for 2024. This information was published on July 1, 2023.

Here are the details for LA RSO Rent Increases:

  • Landlords of RSO properties can resume allowable rent increases effective February 1, 2024. No banking or retroactive rent increases are allowed.

  • The annual allowable rent increase under the RSO from February 1, 2024 through June 30, 2024, will be 7% unless amended by City Council. An additional 1% for gas and 1% for electric service can be added if the landlord provides the service to the tenant.

  • Landlords must provide an advance 30-day written notice for all rent increases of less than 10%.


This information can be found on the latest LA Renter Protections Notice updated in July 2023. You can access that notice here.

UPDATE as of 11/2/2023 – The Los Angeles City Council’s housing and homelessness committee passed an amended motion Wednesday 11/1/23 to lower rent increases from 7% to 4%. View Update Here.

Categories
Development Los Angeles Multifamily

New Apartment Construction is Down Considerably

LA and Other West Coast Markets are Experiencing a slow down in new construction development.

Despite a worsening housing crisis, many major West Coast cities have seen a decline in new 2023 construction projects. Although demand for housing remains consistent, developers are pumping the brakes due to high interest rates and the inability to secure debt financing. As demand for housing continues to grow and supply begins to stagnate, upward pressure on rents and property values could lead to additional upside for property owners come 2025.

What’s Happening:
 

  • Record inflation in 2022 saw construction costs increase considerably, cutting heavily into the margins of developers.
     
  • Debt costs have skyrocketed in the past months, with many construction loans containing rates above 10%.
     
  • Further turbulence among regional banks has exacerbated the issue and with many developers either unable to secure loans or forced to finance with very low leverage.
     
  • The Mansion Tax in Los Angeles has made the merchant development of apartments nearly unfeasible when 5.5% of future sale proceeds is slapped on to all deals exceeding a $10M+ exit price.

Effects and Implications:

  • While current construction projects are still hitting the market, you may see the current dip in new construction having its market impacts in late 2024 to 2025, further exacerbating the supply and demand imbalance that exists in LA.
    .
  • Lack of supply and an abundance of demand likely will result in increases in both rents and property values, bettering the position of current property owners.
     
  • As we sit in a current market marked by rising cost of debt and declining values, it is important to look past the present to see if any future market trends might lead to increased returns. With projections of easing interest rates through 2024 and 2025, combined with the possibility that the lack of new construction may lead to an even tighter housing market, holding now with intent to sell in 2025 may not seem like such a bad option.
Categories
Los Angeles Multifamily

Just Closed – The LA 7 Portfolio – 7 Properties, 94 Total Units

Seven LA multifamily properties sell to a single purchaser in one of the few LA portfolio sales of 2023 so far.

Through a challenging market with sales volume down considerably, a thinning buyer pool and a tight credit environment, we were able to close a significant portfolio transaction consisting of 7 apartment properties totaling 94 units spread amongst four core LA submarkets – Mar Vista, Palms, Koreatown and Hollywood.

All 7 properties were subject to LA rent stabilization and were by all measures value-add properties, with current rents significantly below market and significant Capital Expenditures needed in the way of unit renovations, plumbing, roof, electrical and mandatory soft-story retrofits.


General Feedback From the Market

The general feedback from the diverse pool of purchasers was typical for a transaction such as this one, highlighted in few bullet points below:

  • Systems Capex: Many prospective purchasers were skittish about the amount of systems capex needed (ie roof, plumbing, electrical and seismic) in addition to the standard unit renovations that would be necessary to achieve market rents. With the cost of construction, materials and labor still on the higher end, this was a legitimate concern for many prospects.

  • Negative Leverage: With interest rates in the low 6s, much of the market pushback circled around the concept of negative leverage – ie the cost of debt for the acquisition loan exceeded the cap rate.

  • Low Rents: As is customary with many value-add properties with legacy ownership, the current rents were significantly below market with upside of around 65% from current to market. Many were attracted to the upside, albeit harder to capture in today’s landscape.
  • Attractive Basis: Many purchasers were attracted primarily to the blended ‘price-per-pound‘ basis of the portfolio, which was $186,170 per unit and $275 per SF. 46 units were located in Westside submarkets, while 48 units were located in Central/Eastside submarkets.


Healthy Buyer Interest
with Multiple Offers Generated

Through the marketing process of The LA 7 Portfolio, we attracted attention from the most active buyers in the LA market – both large and small. Most of the prospects were family offices and/or local syndicators.

  • Throughout our competitive marketing process, we were able to attract attention from some of the most active names in the business. By our Call for Offers date, we had generated over 20 offers in various property combinations and price ranges – a few of the offers all cash.
  • The properties were spread out over roughly an 11-mile distance (about an hour drive in LA traffic) from the western-most property to the eastern-most property. Some purchasers preferred only the Westside assets – while others preferred only the Eastside assets.
  • The terminal buyer was a well-established operator with ~2,000 Units under management locally, who in the end acquired all 7 properties at the full asking price.


The Final Deal Metrics

Below are the final blended deal metrics for the LA 7 Portfolio:

  • $17,500,000 Sale Price
  • 7 Properties | 94 Total Units
  • $186,170 blended price per unit
  • $275 blended price per SF
  • 12.4 GRM
  • 4.5% blended cap rate
  • Approximately 66% upside in rents from current to market
  • Located in Mar Vista (2 properties – 20 Units), Palms (2 properties – 26 Units), Koreatown (2 properties – 36 Units), Hollywood (1 property – 12 Units)

We are currently evaluating similar Los Angeles properties and portfolios for local owners. If you would like more information on how we may assist, please reach out to me at ewong@greysteel.com


The LA 7 Portfolio

12 Units in Hollywood
18 Units in Koreatown
18 Units in Koreatown
9 Units in Palms
17 Units in Palms
10 Units in Mar Vista
10 Units in Mar Vista
Categories
Family Real Estate Ownership

Owning real estate with your siblings. Good idea, or no?

Many of the properties that I sell in Los Angeles are on behalf of family ownership groups.  It may or may not surprise you that more than half of those family ownership groups are at odds with one another, many times because of their joint real estate ownership – some of them to the point where they no longer even speak.

Most of the time, we are dealing with brothers and sisters who inherited properties from their parents.  While they may share a strong bond and cherish their relationship as siblings, the complexities of joint real estate ownership can create significant challenges, particularly when it comes to communication and introducing spouses into the equation. As a result, many siblings find themselves contemplating the option of selling their shared properties to forge separate paths and avoid entangling their children in the family co-ownership web.

Here are a few things you may consider if you find yourself in this situation:

  • Effective Communication is Key To Any Relationship:  Communicating effectively within families is essential for any successful endeavor, and joint property ownership is no exception. However, even the best of friends can struggle to communicate effectively when it comes to shared assets. Siblings may have different priorities, financial circumstances, and visions for the property, which can lead to disagreements and misunderstandings. Emotions can run high, and resolving conflicts may require careful negotiation and compromise.  If you happen to be the sibling running the show for the property(ies) it is always best to be transparent and up front about the financials (income and expenses) so that no one feels as if they are in the dark.
  • Spouses and Their Opinions Will Almost Certainly Play a Role:  The entry of spouses into the equation often adds another layer of complexity. While spouses should ideally support their partners’ decisions, differing opinions, personal interests, and financial considerations can muddy the waters. Spouses may feel compelled to advocate for their own interests, potentially straining the sibling relationship and complicating decision-making processes. What was once a straightforward matter among siblings can quickly become more convoluted and challenging.
  • Think About the Next Generation:  If you own real estate with your siblings and you yourself have children, ask yourself this question: Do you ideally envision your sons or daughters owning this real estate with their aunts or uncles? If the answer is no, you start planning for the future. Many worry about the potential complications their children might face as co-owners of the property. This concern stems from the desire to maintain harmony within the family and avoid any potential conflicts or burdens that could affect the relationships between cousins, nieces, nephews etc.

Many Siblings Part Ways with their Joint Ownership of Real Estate:  To alleviate these concerns, many siblings often find themselves leaning towards the idea of divesting interests from their shared properties and going their separate ways. By doing so, they can ensure that their children do not become entangled in the intricacies of joint ownership and potential conflicts that could arise in the future. This choice allows each sibling and their respective families to maintain independence and pursue their own paths without the added complications that come with co-ownership.

It is worth noting that not all families choose to sell their jointly owned properties. Some families successfully navigate the challenges and maintain harmonious relationships while managing shared assets. These families prioritize open and honest communication, establish clear boundaries and responsibilities, and actively seek to find common ground. Professional guidance from mediators or attorneys specializing in family property matters can also prove invaluable in resolving conflicts and ensuring a fair and satisfactory outcome for everyone involved.

While joint property ownership amongst siblings can no doubt present unique challenges within a family dynamic, with effective communication, clear boundaries, and professional guidance, many are able to navigate these challenges and maintain successful joint ownership.

Categories
Los Angeles Multifamily

Why some of our clients have sold properties

Let’s face it: As of this moment in June 2023, rates are up, credit is hard to come by, transaction volume is down precipitously, investors can clip a 5% risk-free coupon rather than buy real estate, and the regulatory environment for LA multifamily owners is uncertain at best. Generally speaking, not favorable conditions for a Seller.

That said: Some owners have sold in the past 12 months and below is a partial a list of reasons why they have done so:

Life Events – Death, Divorce, Partnership Dissolution – Life events such as death, divorce, or partnership dissolution may lead an investor to sell an investment property in order to divide assets or distribute wealth amongst partners and/or beneficiaries.

Step Up in Tax Basis – Related to the bullet point above, an investor (or child of an investor) who has inherited a property may sell to take advantage of his/her “step up” in tax basis, potentially resulting in very little (or no) capital gains tax exposure when the property is eventually sold.

Major Capital Expenditures – An investor may choose to sell an investment property if the property requires significant repairs or renovations that the investor does not want to fund. Many owners in Los Angeles have sold in order to avoid mandatory seismic retrofits which can cost upwards of $100,000 for small buildings.

Heightened Government Regulation – Between rent control, tenants rights, eviction moratoriums etc. heightened government regulation makes it more difficult and costly for an investor to maintain an investment property and achieve adequate returns, often times leading to an investor selling a property.

1031 Exchange – An investor may sell an investment property as part of a “1031 exchange,” also known as a “like-kind exchange,” in order to trade up to a larger (and possibly more valuable property) while deferring capital gains taxes. People also trade down, say from an 8 Unit to a duplex (or two). There are various other property types and alternative 1031 vehicles which investors trade into as well.

Problematic Tenants – Problematic tenants, such as those who consistently pay rent late or cause damage to the property may lead an investor to decide to sell the property in order to avoid the ongoing hassle and potential financial losses.

Return Capital to Investors – Many professional syndicators who have raised LP capital from investors have 5-7 year hold periods or investment horizons, after which they sell properties in order to return capital to their investors (and hopefully harvest their promote).

Retiring from the Business – Let’s face it, some just get tired of doing it. An investor who is retiring from the business of owning and managing investment properties may choose to sell their remaining properties to free up liquidity as part of their retirement plan.

Categories
Los Angeles

Is Fairfax The Best Street in Los Angeles?

Let me begin by saying: There are no “best” streets in Los Angeles…there are only “favorite” streets. But if there is one that does it for me, it’s Fairfax Avenue which is a major North/South artery which spawns from West Adams, hits the 10 Freeway, cuts right through the heart of the city, and ends in the West Hollywood area.

No matter what, I will always have a soft spot for Fairfax: In my earlier years, I worked at The Dime which is a classic LA nightlife establishment located on Fairfax between Beverly and Melrose. Unlike most bars in LA, The Dime is still very much operating and has been open for 20+ years (Shout out to The Dime Fam). If you’re into old school hip hop, The Dime is where you go. The first apartment deal I ever brokered was also located on Fairfax. It was an 8-Unit apartment building just north of Pico Boulevard, which to this day is still one of the most value-add of value-add deals that I have ever come across.

Driving North on Fairfax from the area just south of the 10 Freeway yesterday, the diversity of both the people and the real estate becomes very apparent – and it once again reminded me of why it’s my favorite street in Los Angeles.

Here is what you will see while driving on Fairfax:

West Adams (Fairfax between Adams and the 10 Freeway): Fairfax starts in the West Adams area, just South of the 10 Freeway where it splits off from La Cienega. What’s undeniable about West Adams is its historical charm and architectural heritage – full of craftsman and Victorian homes built at the turn of the century, as well as 1950s and 1960s vintage apartment buildings (also called ‘dingbats’). When you cross Adams Blvd on Fairfax and look to the right, you can get a peek at just how much the area has transitioned from infill retail to new office, hospitality and residential developments.

Little Ethiopia (Fairfax between Pico and Olympic): Just north of Pico Blvd on Fairfax, you will pass a vibrant and bustling neighborhood that is a testament to LA’s diverse cultural fabric. The best Ethiopian restaurants in LA are clearly on this block of Fairfax – so is Hansen’s Cakes which has been around since 1920 and is one of LA’s most famous bakeries.

Historic Homes of Carthay (Fairfax between Olympic and Wilshire): Just past Little Ethiopia you will pass Carthay Square on the West side of the street, which is one of LA’s 35 Historic Preservation Overlay Zones. You’ll see amazing historic Spanish style homes built in the 1920s and 1930s whose character and aesthetic are protected and maintained by the HPOZ mentioned above.

Iconic Museums (Fairfax at Wilshire): As you hit Wilshire Blvd, you’ll pass Museum Row on the right – which is the stretch of Wilshire Boulevard that extends between Fairfax Avenue and La Brea Avenue on Wilshire Blvd. Driving North on Fairfax, you’ll pass The Peterson Automotive Museum (RIP Biggie), the Academy Museum of Motion Pictures, and LACMA which is just east of Fairfax on Wilshire.

The Grove (Fairfax between Third Street and Beverly): The Grove (and adjacent Farmers Market) which are at the intersection of Fairfax and 3rd Street are two LA Landmarks that need zero introduction. If you live in LA and you have not been-to or at least heard-of The Grove, I would urge you to step outside of your house a bit more frequently. The Grove is also across the street from the CBS Television City studio, which sold a couple of years ago for $1.85 Billion.

LA’s Streetwear District (Fairfax between Beverly and Melrose): While some argue that LA’s Fairfax Streetwear district has had its best days behind it, legendary streetwear brands like Supreme, Diamond Supply Company and The Hundreds were built on this stretch of Fairfax. But prior to the influx of new-age retail stores, it would be a disservice to ignore the roots of this part of Fairfax, which was a historic center and Bastian of the LA Jewish community. Many of the LA Jewish population in the city—who had previously resided in Eastside neighborhoods like Boyle Heights, City Terrace, and East Los Angeles—moved to this area of Fairfax Ave prior to World War II, establishing delis, restaurants, kosher butchers and bakeries – some of which still exist like Canter’s Deli and Diamond Kosher Bakery which have been neighborhood staples since the 1940s.

West Hollywood (Fairfax between Melrose and Sunset): Drive North on Fairfax long enough and you will hit WeHo. No real need to expand on West Hollywood and its happenings – incredible area with no shortage of action. If we are talking about areas of LA that need zero introduction, West Hollywood is at or near the top of that list. And Fairfax cuts right through WeHo until it ends just north of Hollywood Boulevard.

Is there more history on Fairfax Avenue than included in the brief, drive-by window synopsis above? Of course. Are there other streets in LA that may be just as favorable (or better)? Very well could be the case. But if you are comparing all of the major North/South arteries which are off-ramps of the 10 Freeway from the Beach to Downtown (ie, 26th Street, Bundy, Robertson, La Cienega, La Brea, Crenshaw, Arlington, Western, etc) – for me it’s Fairfax all-day, every-day.

  • Historic Homes of Carthay Circle
  • Fairfax Streetwear District
  • Petersen Automotive Museum
  • The Grove & Farmers Market
  • West Adams Mixed-Use Development by CIM Group
Categories
Legislation Rent Control

California’s Housing Legislative Lineup 2023

As we move further into 2023, the California legislative lineup for laws and bills affecting property ownership and the real estate industry continues to evolve. In the past year, there have been several changes and updates that are important for property owners and investors to keep up with. Below is a closer look at the 2022 and 2023 California legislative lineup and explore how these changes may affect property owners and the broader real estate market in California.

SB 466  

Costa-Hawkins Rental Housing Act: Rental Rates
Status:  Hearing

  • Costa Hawkins at Risk (Again):  This legislation would dissolve core elements of the landmark Costa-Hawkins Rental Housing Act, California’s most important rental housing-protection law.  Costa-Hawkins prohibits cities and counties from imposing local rent control ordinances on any type of housing built after 1995, although the cutoff is earlier in some cities with rent control ordinances that pre-date Costa-Hawkins. It also bans local rent controls on single-family homes and condos of any age. SB 466 would undo these tenets of Costa-Hawkins.  SB 466 would authorize California cities and counties to impose strict rent controls on single-family homes, condominiums and apartments as soon as they turn 15 years old.

AB 1532

The Office-to-Housing Conversion Act
Status:  Introduced

  • What to do with Aging Office Buildings:  AB 1532 could make use of $400 million in grants Gov. Gavin Newsom has outlined in his recent budget proposal specifically for the conversion of office buildings to apartments. But questions remain about how many conversions that amount of money could actually help get off the ground given the difficulty and high costs of converting offices to apartments.

  • In its current form, the bill would: Prevent local governments from blocking or delaying office-to-housing projects through special permitting processes, design and planning reviews, or appeals, require conversions be allowed in all areas regardless of local zoning laws, require planning departments to respond to conversion applications within 90 days of submission, limit development fees on conversion projects and require that all conversion projects set aside dedicate 10% of housing units for low- or middle-income residents.

AB 2097 

Parking Requirements 
Status: Passed

  • No Parking Minimums within Half-Mile of Public Transit. This law prohibits public agencies from imposing minimum parking requirements on residential, commercial or other development projects located within a half-mile of public transit.

  • While the law provides flexibility for builders to respond to market conditions and voluntarily provide parking, such parking may be required by the public agency to require spaces for car-share vehicles to be shared with the public, or to charge parking owners for the parking stall.   Public agencies may still require builders to provide electric vehicle supply equipment and/or accessible parking spaces that would otherwise apply to the development project.

SB 897 

Increased Height Limits for ADUs
Status:  Passed

  • SB 897 provides minimum height limits of 16 feet (for detached ADUs on same lot with an existing or proposed single-family or multifamily dwelling); 18 feet (for detached ADUs located on lot that is within a half-mile of a major transit stop, or detached ADUs on lot with an existing or proposed multistory, multifamily dwelling); or 25 feet or base zone height, whatever is lower (for attached ADUs).

  • The law introduces the potential for two-story ADUs if certain conditions are met, but ensures local agencies are not required to permit three-story ADUs.  SB 897 now clarifies that two detached ADUs may be constructed (and qualify for building permit ministerial review under Subdivision (e)) on lots with proposed multifamily dwellings. This change will allow developers to include two detached ADUs in their design and planning processes for new multifamily residential projects.

AB 2011

Housing Development on Commercially Zoned Sites
Status: Passed

  • Housing Development on Commercially Zoned Sites. The centerpiece of this year’s housing production legislation are two different laws that aim to advance residential development on sites currently zoned and planned for commercial and retail use.  AB 2011 provides a streamlined ministerial approval pathway, comparable to Senate Bill (SB) 35 of 2017, for qualifying multifamily projects on commercial zoned land that pay prevailing wages and meet specified affordable housing targets.   This law does not take effect until July 1, 2023.
Categories
Los Angeles Multifamily

With Utility Bills Higher, Property Owners Look to RUBS

Many Landlords Consider Billing Tenants For Utilities via RUBS Program

As the cost of utilities continues to rise for LA landlords, many owners are considering the implementation of a Ratio Utility Billing System (RUBS). RUBS is a way for Landlords to manage their expenses by proportionately sharing utility costs with their residents. While RUBS is not without its critics, many landlords have found it to be an effective way to manage rising utility costs.

Utility Costs Surging

SoCalGas bills up 3x: Natural gas prices in California have increased significantly in recent months, driven by factors such as extreme colder weather events, supply chain disruptions, and an overall increased demand. SoCalGas, the largest gas utility in California, has warned its customers that bills for 2023 could be up to 3x higher than last year due to surge in prices.

LADWP not far behind: Not to be outdone, in 2022 The Los Angeles Department of Water and Power implemented rate adjustments on water usage, a move that has lead to higher bills for many customers. The change went into effect in January 2022 and primarily impacts residential customers who are the highest water users. LADWP uses a four-tiered pricing structure based on usage to determine the rates a customer pays for water.

Benefits of RUBS

RUBS typically proportionately divides water, sewer, trash, electricity, gas, or pest control utility costs among residents using a formula based on several factors including state and municipality regulations, size of units, and the number of occupants in each unit.  Some of the benefits are as follows:

  • Tenant Cost Absorption: Tenants absorb the costs of their utility consumption as opposed to the landlord.
     
  • Fair Cost Distribution: Utilitycosts are divided on an individual basis, making the process more equitable for tenants.
     
  • Increased Net in Operating Income: Utility consumption contributes to a decrease of Operating Expenses leading to an increased Net Operating Income.
     

California does not currently have any laws that prohibit the use of RUBS and there are many companies that you can employ to implement RUBS at your property.  Additionally, there are also programs which can be purchased to independently implement RUBS. 

Categories
Legislation Los Angeles Multifamily Rent Control

What to know About LA’s Latest Renter Protections

LA County Eviction Moratorium Extended by 2 Months

The LA County Board of Supervisors has voted to extend the countywide renters protections once more. The moratorium will now expire at the end of March 2023. County leaders have indicated that this will be the last time they push the end date.

According to the LA Times and other sources, because properties located in the City of Los Angeles will no longer have its own eviction moratorium (as of January 31, 2023), the eviction moratorium for LA County will apply to the properties and residents of the City of Los Angeles starting February 1, 2023 and ending March 31, 2023.

The Latest Renter Protections in LA

In addition to the LA County eviction moratorium extension, last week the LA City Council also approved additional sweeping renter protections outlined below which pertain to properties located in the City of Los Angeles:

There are three main components to the LA City expanded renter protections:

  • Universal Just Cause: The LA Rent Stabilization Ordinance currently lays out specific allowable causes for evictions. These include reasons such as failure to pay rent, illegal activity, etc. Just Cause requires a landlord to specify the reason for eviction from the RSO list. In cases where landlords evict tenants without an approved cause (called a “no fault” eviction), then the landlord would be required to pay tenant relocation costs.

  • Relocation Assistance for Tenants subjected to Large Rent Increases over 10%: While this certainly does not apply to most landlords whose properties are already subject to LA Rent Stabilization, Landlords who raise rents by an amount greater than 10% of their tenant’s current rent will be required to pay the renter relocation costs. Relocation fee amounts are determined based on the length of tenancy with additional relocation fees to be paid to qualified renters.

  • There will now be a Minimum Threshold for Failure to Pay Evictions: Landlords will not be allowed to evict tenants who fall just a small amount behind on rent. You may only proceed with an eviction if the unpaid rent amount exceeds one month’s worth of fair market rent for that unit type (currently $1,747 for one-bedroom, $2,222 for two-bedroom). IE if a tenant lives in a one-bedroom unit and owes total back rent of less than $1,747 – that tenant cannot be evicted.

Categories
Los Angeles Multifamily

Just Closed | 10793 Ohio Avenue in West Los Angeles

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10793 Ohio Avenue
Los Angeles, CA 90024
7-Units | Just Closed in Westwood

We just closed this 7-unit multifamily property in the Westwood area situated south of Wilshire and just east of Westwood Boulevard. This was a property that had been in the family of the Seller for over 50 years. The Seller, like many other small operators in California, was fatigued by the heightened regulatory environment that accompanies apartment ownership in Los Angeles nowadays. The Purchaser was a local student housing operator who was in the midst of a 1031 exchange.

The property traded at sub 4% cap rate and roughly 16x rents. All things In the long run, owning apartments in West LA is generally one of the safer real estate investments out there. The location with respect to transit (and the ocean) are optimal. While the yields upon acquisition may be lower than elsewhere in the market, when all is said and done the rental demand is steady, the rents grow over time, and it’s still ‘The Westside.’

Categories
Los Angeles Multifamily

Newsom passes sweeping pro-housing legislation. But is it enough?

Newsom makes an aggressive pro-housing push in California

If there is one thing residents and landlords can agree on, it’s that California needs more housing. How much more housing? That depends on who you ask. State officials say California needs to ramp up production to 310,000 new housing units annually over the next eight years — a pace that’s 2.5 times faster than the current rate. CA Governor, Gavin Newsom, has taken a proactive approach in his recent passing of pro-housing legislative bills, a few of which are outlined below.

Assembly Bill 2011

  • AB 2011 allows for ministerial, by-right approval for affordable housing on commercially-zoned lands, and also allows such approvals for mixed-income housing along commercial corridors, as long as the projects meet specified affordability, labor, and environmental criteria.
  • The bill also requires that all projects seeking approval under its provisions ensure all construction workers earn prevailing wages and receive health benefits.
  • With thousands of potential commercial sites across California, the bill would allow production of new affordable housing units at scale, without changing the density or character of existing residential neighborhoods. One recent analysis found the potential for 2.4 million units statewide.

Senate Bill 6

  • SB 6 allows residential development on property zoned for retail and office space without needing a rezoning, and allows project applicants to invoke the Housing Accountability Act (HAA) to limit local discretion to deny or condition approval.
  • However, SB 6 does not provide a ministerial approval pathway, and it requires applicants to commit to both prevailing wage and more costly “skilled and trained workforce” requirements for project labor (although the law provides an “off ramp” if fewer than two bidders bid for a contract under the “skilled and trained workforce” requirement).
  • SB 6 does not contain any BMR requirements, and it has fewer site exclusions than AB 2011, and so it is likely to be used most frequently in lower-cost areas of the state and on sites where AB 2011 is not available.

Assembly Bill 2097

  • This bill would prohibit a public agency from imposing any minimum automobile parking requirement on any residential, commercial, or other development project, as defined, that is located within 1/2 mile of public transit.
  • Parking mandates, which require parking for cars to be included in new housing, are common in cities throughout California and can add $40,000 or more to the cost of construction per parking spot, while also increasing climate pollution.
  • Eliminating these costly parking mandates will give Californians more choices about whether they want to pay for parking, or have lower-cost housing in walkable, transit-accessible neighborhoods. AB 2097 increases housing choice and will make it easier to provide lower-cost, walkable-and transit-accessible housing across the state.
Categories
1031 Exchange Los Angeles Multifamily

You have sold your investment property. Now what?

What our LA multifamily clients have done with their sale proceeds, post-sale…

Perhaps the most common question we get from our LA multifamily clients when contemplating a sale is: “If I sell, what do I do with the money?” There is no one single right or wrong answer to this question. It’s situational. Sometimes the right answer is you should not sell at all.

But for the ones who have sold, we have seen a few various paths taken by the Sellers in terms of their next step and how they invest their sale proceeds. Of the last 20 or so transactions that we have completed, below are a few different paths taken by the Sellers post-sale, many of course with the goal in mind to avoid paying capital gains taxes.

1031 Exchange into Local Properties

Chances are, if you’re reading this, you have at least heard of the term 1031 Exchange. In case you haven’t, a 1031 Exchange is a tax loophole which allows Sellers of investment properties to defer paying capital gains taxes by selling their properties and purchasing a ‘like-kind’ property of equal or greater value than the property they are selling.

For real property transactions (rental houses, farmland, office buildings, strip malls, etc.) the “like-kind” requirement does not mean selling and buying the exact same type of property. Some of our clients have sold a 6-unit apartment building and 1031-exchanged into a 30-unit across town. Some have sold a 12-unit and traded down into one (or more) 4-plexes for their kids. Others have sought to exit apartments permanently and have traded into commercial strip malls locally. It varies on a case-by-case basis.

1031 Exchange into Out-of-State Properties

Under 1031 Exchange provisions, you do not have to sell and purchase in the same state. In other words, you can sell your LA property and 1031 into another state. Some investors are no longer buying in California as a result of increased regulation. Some of our clients have sold their LA multifamily properties and traded into properties in Sunbelt states such as Texas or Arizona – many with the intent of escaping the unforgiving rent control Laws in Los Angeles and California as a whole.  

Other clients have sold their LA properties and purchased out-of-state “triple-net” properties (ie CVS, Walgreens, Dollar General etc) – where they simply collect rent from large commercial tenants without having to pay property taxes, maintenance or insurance for the property (ie nets).

1031 Exchange into Delaware Statutory Trusts

Some of our clients who are tired of direct ownership and oversight of a property, and prefer a completely hands-off investment such as a Delaware Statutory Trust, which also qualifies for a 1031 tax-deferred Exchange.

A Delaware Statutory Trust (DST) permits fractional ownership where multiple investors can share ownership in a single property or a portfolio of properties, which qualifies as replacement property as part of an investor’s 1031 exchange transaction. A DST takes all decision-making out of the hands of investors and places it into the hands of an experienced sponsor-affiliated trustee.

Seller-Financing

One or two of our clients have also carried paper or “Seller Financed” their transaction. Seller financing in real estate is, quite literally, when the seller of a property finances the transaction. The buyer furnishes a down payment and borrows the rest from the seller.

The seller essentially acts as the bank and holds a note, for which they are paid interest by the Buyer. There are certain tax advantages to this: An installment sale is taxed differently than a regular sale in that each installment is taxed in the year received, making it favorable for sellers who want to spread out their tax liability over a number of years instead of paying 100% of the tax in the year of sale.

Some Just Pay Capital Gains Taxes

Believe it or not, there is a large component of Sellers out there who are just done with real estate entirely. They simply do not want to own another piece of property or fractional share of a property. As a result, the transaction would result in the Seller paying Capital Gains taxes on the sale, which between State and Federal can be a significant amount depending on the situation.

Note: The above should not be construed as tax or financial advice. If you are considering any of the above, please seek the assistance of a qualified CPA and/or tax attorney

Categories
Los Angeles Multifamily

1980s 4-Plex – Just Closed Off Market | Virgil Village, Los Angeles

536 N. Commonwealth Avenue
Los Angeles, CA 90004
Stabilized 4-Plex | Just Closed

We just closed a renovated 4 unit property located on Commonwealth Avenue in the heart of Virgil Village just south of Silver Lake. The property was constructed in 1980 and therefore not subject to Los Angeles Rent Stabilization – only to California’s less restrictive statewide rent control as governed by AB 1482, whereby the allowable annual rent increase is 5% +CPI as opposed to the blanket 3-4% increase imposed by traditional LA rent control.

Over the past few years, and in particular since the Covid-19 pandemic, we have seen a flight to properties that were constructed after 1978 (non-LA rent controlled properties), as dealing with LA rent controlled properties constructed before 1978 has become increasingly problematic with various city, county and statewide renter protections.

This unique property was in excellent shape and featured spacious 2 and 3 bedroom units averaging over 1,000 SF each, with ample on-site parking and a sprawling backyard often used for concerts. The 1031 Exchange purchaser, who closed all cash with a 30 day escrow, was attracted to the growing dynamics of Virgil Village in addition to the property’s near-stabilized rents. The details of the transaction are below:

536 N. Commonwealth Avenue. Los Angeles, CA 90019

– $2,300,000 Final Sale Price
– 4 Units |4,400 SF
– Two and three-bedroom floor plans
– Year Built 1980
– $575,000/Unit
– $518/SF
– 16.2 GRM
– All Cash transaction sold off-market to 1031 Exchange Purchaser

Categories
AB 68 Accessory Dwelling Units

Investors Are Utilizing AB 68 To Add Tremendous Value to Their Multifamily Properties.

Local investors are taking advantage of California’s ADU (“Granny Flat”) Bill in a very big way.

What is California Assembly Bill 68 (AB 68)?

Passed by the California State Assembly in 2019, AB 68 legalized the widespread construction of “Granny Flats,” or Accessory Dwelling Units (ADUs), as easy-to-build affordable housing. ADUs are small, independent homes that are built alongside (or sometimes, within) an existing single- or multifamily home. In addition to traditional ADUs, AB 68 also legalized “junior” ADUs of 500 square feet or smaller, which must be built entirely within an existing home and have a functioning kitchen and bathroom.

Prior to AB 68, cities across California erected substantial barriers to their construction, including high fees, land use and permitting obstacles, and other “red tape.”

AB 68 addressed all these issues by:

  • Reducing the maximum time for approved permits from 120 days to 60
  • Eliminating local ordinances that had the effect of banning ADU construction, such as minimum lot sizes and floor area ratios
  • Eliminating the requirement that garages converted to ADUs include 1:1 replacement parking
  • Allowing by-right approval (i.e., minimal process) for both an ADU and a JADU
  • Prohibiting cities from banning short-term rentals in ministerially-approved ADUs
  • Granting the state’s Department of Housing and Community Development the authority to evaluated whether local agencies’ ADU ordinances comply with state law
  • Existing single-family properties in California have the potential for roughly 1.8 million new ADUs.
  • Roughly 85 percent of these are single-family homes where building an ADU pencils out according to current construction costs and rents; the remainder are sites ideal for both an ADU and JADU

ADUs in the Los Angeles Multifamily Market

We have recently seen numerous clients of ours utilize AB 68 for their local multifamily properties by building one or even multiple ADUs on-site, in areas such as storage rooms, laundry rooms, attics, basements, garages, and soft story parking areas (as pictured above) – or as fully detached structures.

From an income and value standpoint, it makes perfect sense for most investors. You can generate additional (and meaningful) cash flow for the property while adding tremendous value. Put very simply – if multifamily properties in your area are selling for $450,000/unit and you can build additional unit for $250,000/unit (which is about the going rate for ADU construction), why wouldn’t you?

Categories
Los Angeles Multifamily

16 Units – Just Closed Off Market | Mid-Wilshire, Los Angeles

1241-47 S. Dunsmuir Avenue. Los Angeles, CA 90019

1241 & 1247 S. Dunsmuir Avenue.
Los Angeles, CA 90019
16 Units | Just Closed

We just closed a 16 unit value-add multifamily transaction, sourced off-market, which was located on the border Mid-Wilshire and Wilshire Vista neighborhoods of Los Angeles – two of LA’s well-established yet seemingly fast-growing rental submarkets. The property was located on South Dunsmuir Avenue near San Vicente Boulevard, a quiet tree-lined side street with a mix of single-family residential, multifamily (old and new) as well as small lot sub-divisions.

I like this area for a variety of reasons. It is close to major thoroughfares such as San Vicente Boulevard, Pico, Olympic, Fairfax, La Brea and it is a straight shot into popular parts of town like Beverly Grove and West Hollywood. Additionally, the real estate in this area is as diverse as the residents who populate it. As mentioned above, the properties in the area feature everything from new construction, to 1930s Spanish Duplexes, to charming SFRs and 1960s apartment buildings – the list just goes on.

This particular property, originally constructed in 1947, consisted of all one-bedroom floor plans averaging approximately 800 square feet, situated on an R-3 zoned 17,407 SF lot. The property was held by a family operator for over 30 years who like many other LA owners were seeking to transition to a slightly more hands-off investment out-of-state via a 1031 Exchange due to the heightened regulatory environment locally.

The purchasers were attracted to the value-add potential of the property in addition to its central location and proximity to areas like Beverly Grove, Beverly Hills and West Hollywood. The property was delivered with 2 vacancies which the Purchaser plans to renovate and lease at market rent, along with other improvements to the property. The details of the transaction are below:

1241-1247 S. Dunsmuir Avenue. Los Angeles, CA 90019

– $4,605,000 Final Sale Price
– 16 Units | 12,364 SF
– All one-bedroom floor plans
– Year Built 1947
– $287,812/Unit
– $372/SF
– 15.3 GRM

Additional Photos:

Categories
Los Angeles Multifamily

What $2,750,000 per unit buys you in Santa Monica – 1221 Ocean Avenue.

Douglas Emmett pays a record price for 1221 Ocean Avenue in the heart of prime Santa Monica

I don’t typically write about institutional transactions but this is what I would call a WOW price. Douglas Emmett, a firm that is very near and dear to me, paid a record-price for a multifamily asset in prime Downtown Santa Monica with the purchase of 1221 Ocean Avenue – which is certainly one of the most prestigious multifamily assets on the West Coast with unbelievable ocean views. The Seller was The Irvine Company, who had owned and operated the Class-A property for years. 1221 Ocean was one of a few assets that they own in Los Angeles – outside of their core market of Orange County.

Here are the deal Metrics:

  • $330,000,000 Purchase Price
  • 120 Unit Multifamily Property
  • $2,750,000 per unit
  • $1,800 per SF
  • 98% leased at close
  • 1,500 SF Average Unit Size
  • Closed April 26, 2022
  • Purchased in the low 3% Cap range
  • DE plans to continue to significantly upgrade units and common areas

The deal was purchased via a new Joint Venture managed by Douglas Emmett in which they own a 55% interest. The property is a nice addition to the vast portfolio of Class-A office buildings which they own in the area, in addition to their sister multifamily assets also in Santa Monica – The Shores and Pacific Plaza. Congrats to my friends over at DE on this incredible acquisition!

Categories
SB 721

CA Multifamily Regulations Back Again. This Time it’s SB 721

SB 721 is the California State Balcony Inspection Law

SB 721 (Chapter 445, Stats. 2018) was signed by Governor Brown in response to the 2015 Berkeley balcony collapse. While some local governments already impose a local inspection program, this California law requires inspection of specific balconies throughout the State of California. Here’s what you need to know:

What Buildings Must be Inspected?

Buildings with 3 or more units that have:

  • Balconies, decks, porches, stairways, walkways, and entry structures that extend beyond exterior walls of the building and that rely in whole or in substantial part on wood or wood-based products for structural support or stability; and
  • A walking surface that is elevated more than 6 feet above the ground level; and
  • Balconies designed for human occupancy or use.

Buildings that are proposed for conversion to condominiums to be sold to the public after January 1, 2019, must be inspected prior to the first close of escrow.

When Must the Buildings be Inspected?

Inspections of the balconies, decks, porches, stairways, walkways, and entries as described above must be inspected by January 1, 2025, with certain exceptions, and requires subsequent inspections every 6 years. The inspection of buildings for which a building permit application has been submitted on or after January 1, 2019, shall occur no later than 6 years following issuance of a certificate of occupancy from the local jurisdiction and shall otherwise comply with the provisions of this law.

If the property was inspected within 3 years prior to January 1, 2019, by an inspector as described in the law and a report of that inspector was issued stating that the exterior elevated elements and associated waterproofing elements are in proper working condition and do not pose a threat to the health and safety of the public, no new inspection shall be required until January 1, 2025.

Who Can Perform the Inspections?

  • Licensed civil or structural engineer,
  • General Contractor holding any or all A, B, or C-5 Licenses issued by the Contractors State License Board;
  • Individuals certified as a building inspector or building official, as specified; (these individuals cannot be employed by the local jurisdiction while performing these inspections).

What Must the Inspection Cover?

The inspection required by this law must, at a minimum, include:

  • Identification of each exterior elevated element or associated waterproofing elements that, if found to be defective, decayed, or deteriorated to the extent that it does not meet its load requirements, would, in the opinion of the inspector, constitute a threat to the health or safety of the occupants.
  • “Associated waterproofing elements” are defined to mean flashings, membranes, coatings, and sealants that protect the load-bearing components of exterior elevated elements from exposure to water and the elements.
  • Assessments of elevated elements using methods allowing for evaluation of their performance by direct visual examination or comparable means of evaluating their performance. For purposes of this section, a sample of at least 15 percent of each type of exterior elevated element shall be inspected.
  • The evaluation and assessment shall address each of the following as of the date of the evaluation:
    • The current condition of the exterior elevated elements.
    • Expectations of future performance and projected service life.
    • Recommendations for any further inspection necessary.
    • Recommendations of any necessary repair or replacement.
Categories
Inland Empire Multifamily

The Case for the Inland Empire

Rent Spikes and strong market fundamentals in the IE are fueling strong multifamily sales velocity.

1) Inland Empire Market Fundamentals Are STRONG

  • The Inland Empire multifamily market concluded a year of rapid improvement in 2021 with additional strengthening in the fourth quarter. Vacancy tightened and rents rose. The improving market fundamentals fueled accelerating investment activity and steep
    per-unit price appreciation.
  • Multifamily vacancies tightened in 2021 to around 3%

  • Asking rents reached a record high during the fourth quarter 2021 averaging $1,729/month which represents roughly an 18% year-over-year increase

  • The investment market strengthened throughout 2021 with cap rate compression fueled by investor demand.

2) Inland Empire Employment Numbers Continue to Grow

  • There is incredibly strong rent growth in the Inland Empire with more than 65,000 jobs added in 2021 representing an increase of over 4% from the prior year.

  • Many of the jobs added were in the trade, transportation and utilities sector. The IE continues to be one of the best-performing industrial hubs in the nation.

  • Employers are expected to expand payrolls by nearly 3% in the coming year, adding approximately 46,000 jobs.

3) New Multifamily Developments are on the Way

  • Close to 4,000 multifamily units were earmarked as ‘under construction’ at year end 2021 which was triple the amount at the same time in 2020.

  • Permitting spiked during the final quarter of 2021 as developers permits for more than 1,700 multifamily units in the final few months of 2021.

Categories
Legislation Rent Control

2021/2022 California Rent Legislation Review

A quick summary of some key California Legislation significant to the Real Estate industry.

Senate Bill 9

  • On September 16th, 2021, California Senate Bill No.9 (SB 9) was signed into law and will take effect Jan. 1, 2022. 
  • SB 9 could lead to up to four homes on parcels where currently only one exists. It would do so by allowing existing single-family homes to be converted into duplexes; it would also allow single-family parcels to be subdivided into two lots, while allowing for a new two-unit building to be constructed on the newly formed lot.
  • There are several exemptions to the ministerial approvals because the bill requires that a development or parcel to be subdivided must be located within an urbanized area or urban cluster and cannot be located on prime farmland, wetlands, high fire zone areas, or land within a 100-year floodplain or land in an historic district.

Senate Bill 10

  • SB 10 creates a voluntary process for local governments to access a streamlined zoning process for new multi-unit housing near transit or in urban infill areas, with up to 10 units per parcel.
  • The legislation simplifies the CEQA requirements for upzoning, giving local leaders another tool to voluntarily increase density and provide affordable rental opportunities to more Californians.


Senate Bill 219

  • This bill allows a county tax collector to cancel property tax delinquency penalties when failure to make the payment is due to a documented hardship arising from a shelter-in-place order, and if the principal amount of tax due is paid no later than June 30 of the fiscal year (FY) in which the payment first became delinquent.

Senate Bill 315

  • January 1, 2023 of Assembly Bill 139 (scheduled to be repealed January 1, 2021) which accomplishes the transfer of real property by means of a revocable transfer upon death deed (TOD).

Senate Bill 539

  • Late last year, California voters approved Proposition 19 to allow those who are age 55 or older, persons with disabilities, and victims of wildfires greater freedom to transfer their property tax basis and provide revenue for fire districts and local governments.
  • SB 539 provides necessary clarifications for the proper implementation of Proposition 19’s provisions. These clarifications will help ensure Proposition 19 is implemented consistently throughout California and provide certainty to qualifying homeowners and those with family farms.

Assembly Bill 175

  • AB 175 prescribes various requirements to be satisfied before the exercise of a power of sale under a mortgage or deed of trust and prescribes a procedure for the exercise of that power.
  • This bill would revise the process for finalizing the trustee sale and extends the date for recording the trustee’s deed from 18 to 21 calendar days. 
  • The bill would also extend the date that the trustee’s sale is deemed perfected, if an eligible bidder submits a written notice of intent to bid, based on the recording of the trustee’s deed, as described, from 48 days to 60 days.

Assembly Bill 345

  • AB 345 requires each local agency to allow an accessory dwelling unit to be sold or conveyed separately from the primary residence to a qualified buyer if specific conditions are met, including that the property was built or developed by a qualified nonprofit corporation and that the property is held pursuant to a recorded tenancy in common agreement.

Assembly Bill 803

  • AB 803 authorizes a development proponent to submit an application for the construction of a small home lot development, as defined, that meets specified criteria. 
  • The bill would require a small home lot development to  meet a minimum unit requirement and to consist of single-family housing units with an average total area of floorspace of 1,750 net habitable square feet or less.

Assembly Bill 1466

  • Assembly Bill 1466, which requires that the county recorder of each county establish a program to identify and redact unlawfully restrictive covenants from California real property records. Among the various requirements imposed on county recorders under the program, recorders will be tasked with creating an implementation plan that outlines the methods by which they will carry out the unlawful restrictive covenants’ identification and redaction.
  • In addition, the bill requires that, if requested before the close of escrow, a title or escrow company directly involved in a pending transaction shall assist in the preparation of a restrictive covenant modification (RCM) form for submission and possible redaction of the unlawful restrictive covenant.



https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB1466
Categories
Los Angeles Multifamily Playa del Rey

Playa del Rey – LA’s Most Low-Key Beachside Community

An LA gem location hiding in plain sight

Playa del Rey is one of those small beach side pockets of Los Angeles that for the most part just flies under the radar.  If you don’t know where it is, chances are you have at least passed it going either to or from LAX or maybe you biked through on the beach path heading towards Manhattan Beach.  It’s not one of those areas like Venice or West Hollywood that people specifically seek out when they move to Los Angeles.  It’s one of those hidden gem locations that really is just hiding in plain sight – its where people move when they still want to be on the Westside but want something that’s a little more quiet and away from it all.

Location wise, Playa del Rey is sandwiched in between Marina del Rey to the north and El Segundo to the south.  And it’s right next to the Ballona Wetlands which is about 600 acres of protected saltwater marsh, just west of Lincoln Boulevard as you head towards the ocean.   It’s about a 30 minute car ride to Downtown LA with no traffic.

The area was established in the early 1920s but most of the homes and apartment buildings in the area weren’t built until the 1950s and 60s.  There’s only about 13,000 residents in Playa del Rey today.  It’s a small community.  Among the more famous residents was Jerry Buss, who owned the Los Angeles Lakers and lived in an area of Playa del Rey called the Bluffs which is perched on a hill and overlooks the Wetlands and the entire Westside.  Former Laker head coach Phil Jackson, also calls Playa del Rey home.  

One of the first things you’ll notice about Playa del Rey is that it’s not really like most beachside communities in LA County.  There’s no bougie aesthetic, there’s no chain restaurants or nationally-recognized coffee shops.  Its an area that has never really cared to be cool, But in a lot of ways it still is.  As somebody who grew up there, I can tell you that not a whole lot has changed in Playa del Rey over the years.  The residents are mostly easy going long-term locals who for the most part have a lot of pride being from the area. 

For such a small community, Playa del Rey has some pretty decent spots to eat.  Going down Culver Boulevard, you have restaurants like Cantelini’s which has been there for 50 years and has really good homestyle Italian food with a Dan Tana’s like vibe in the interior.  There’s Bacari PDR, which is a solid Mediterranean spot – who also has locations in Silverlake and West Adams.  There are also local watering holes like Prince of Whales and Mo’s Place which have been there for decades.  And The Shack, a kind of grimy yet delicious burger joint that will serve you a cheeseburger with a Louisiana Sausage inside of it.  My favorite place is probably the most low key of low key spots – Senor G’s…its a hole in the wall Mexican joint which serves up pretty fantastic Burritos.  

Like most communities near the water, real estate values in Playa del rey have soared over the years.  In the last year alone, there were 73 single family homes which sold in the area with an average price per square foot of $820.  The median home price in that same data set is right around $2 Million dollars.  This is not a geography where you will find $30 Million dollar homes, but make no mistake, it is certainly not cheap to live in Playa del Rey.

If you are renting an apartment, you can expect to pay anywhere from $1,800 – $2,500 a month for a one-bedroom and anywhere from $2,700 to over $4,000 a month for a two bedroom.  

A lot of what is driving the demand for real estate in Playa del Rey is the influx of the tech and media companies which have dominated Playa Vista just on the other side of Lincoln Boulevard.  To name a few, you have companies like Google, Youtube, Facebook, Electronic Arts and so many others that populate those office buildings.  Playa del Rey has in a lot of ways been the beneficiary of the high rent spill over from Playa Vista.  For instance, it is tough to find a one-bedroom for rent in Playa Vista right now that is under $3,000 per month.  So Playa del Rey is positioned as the nearby and more affordable option.

The multifamily investment sales market in Playa del Rey is really no different than single family…the prices are high and there seems to be more demand than available supply.  There’s only about 200 multifamily buildings in the area that are 5 units or larger.  Of those 200 buildings, only four of them are over 50 units.  In other words, this is not an institutional submarket as far as multifamily properties are concerned.  It’s mostly small properties that are 5-15 units with Mom and Pop owners.  And as far as multifamily sales, it’s pretty low velocity.  There were only 3 multifamily properties which traded hands in Playa del Rey in the last 12 months.  Those sales metrics averaged right around $500,000 per unit with cap rates just under 4%.  If you are not in the multifamily space, that is an expensive deal.  Like most Westside buyers, the people buying multifamily in Playa del Rey aren’t really buying for cash flow. They’re buying for appreciation and rent growth – not to mention a stellar location.

As far as development is concerned, there’s really not a lot of it happening in Playa del rey, simply because it’s just hard to do.   In 2018, the LA City Council voted unanimously to block the construction of Legado 138.  Legado 138 is a mixed-use development which proposed 72 apartment units and 7,500 square feet of commercial space right on Culver Boulevard near the water. Local advocates argued that it would trigger a development rush and endanger the culture of Playa del Rey.  

I spent the first 18 years of my life in Playa del Rey and even though I live on the opposite side of town now, I still love going there.  It has a rich history and the fabric of the community is tight knit and well-established.   Location-wise, I like that it’s close enough yet far enough from everything at the same time.  And if you’re a beach person, the ocean is right there.   Let’s be honest, Playa del rey is never going to be Santa Monica or Venice.  And it will it almost certainly never be Malibu.  And that’s what I love about it.  It’s an area that never tries to be anything that it’s not – Playa del Rey just flies under the radar – unassuming and uniquely itself.