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Every Friday, join us as we dive into the latest in real estate multifamily with David Moghavem, Head of East Coast Acquisitions at Trion Properties. David invites top experts who know the ins, outs, and trends shaping the real estate multifamily market across the nation!
Whether you’re a seasoned investor or just curious about where the next big opportunity might be, Deal Flow Friday brings you the weekly inside scoop on what’s hot, what’s not, and what to watch for in today’s ever-evolving real estate scene.
00:00:00:00 - 00:00:19:15
Taylor Avakian
Welcome to podcast. My name is Taylor Avakian. No vacancy. And today we have two esteemed guests. Very happy to have him on far and David. Yeah. Thank you guys for being here. We're excited to get into some quasi institutional space, which is what you guys really kind of play in Mom and pop, where a lot of you guys started value out, which is where I'm at.
00:00:19:17 - 00:00:24:05
Taylor Avakian
And we're going to talk about everything real estate. So appreciate you guys. This is a collaboration podcast.
00:00:24:06 - 00:00:27:11
Speaker 2
Yes. You do SEO.
00:00:27:11 - 00:00:28:04
Taylor Avakian
For a Friday.
00:00:28:09 - 00:00:30:14
David Moghavem
Deal flow Friday, No Vacancy collab.
00:00:30:14 - 00:00:31:19
Taylor Avakian
First three way podcast.
00:00:31:20 - 00:00:33:12
David Moghavem
But you're hosting you're hosting.
00:00:33:12 - 00:00:33:22
Taylor Avakian
I'm going to host.
00:00:33:22 - 00:00:36:10
David Moghavem
This one. Maybe you'll come, to Miami and we'll host I.
00:00:36:11 - 00:00:36:23
Taylor Avakian
Know I'm.
00:00:36:23 - 00:00:38:07
David Moghavem
Nervous for a Friday.
00:00:38:09 - 00:00:39:12
Far
Let me come to Miami to.
00:00:39:13 - 00:00:40:01
Speaker 2
Yes, I.
00:00:40:01 - 00:00:41:18
Far
Need on the air, but.
00:00:41:20 - 00:00:45:01
Speaker 2
Animation. Exactly. And to one.
00:00:45:02 - 00:00:45:21
Far
Oh my God.
00:00:45:21 - 00:00:46:11
Taylor Avakian
Never been.
00:00:46:11 - 00:00:47:11
Far
Man. It's the funnest place.
00:00:47:11 - 00:00:58:04
Taylor Avakian
I everyone said especially during Covid people would, you know. Yeah. I had some friends who were just like, I'm getting out here, I'm going to Miami. Goodness gracious. 11 looks incredible. I'm just going to say.
00:00:58:06 - 00:01:01:13
Speaker 2
It is a fine establishment. It is a fine I have.
00:01:01:13 - 00:01:04:22
Taylor Avakian
For like that. But just, you know, the art of what?
00:01:04:22 - 00:01:15:11
David Moghavem
Yes. That is it's a great concept. It's a great concept. And there is more to Miami than 11. But you got to always, pay your homage to.
00:01:15:12 - 00:01:19:11
Taylor Avakian
Yeah. I mean, look, it's it's a fun. It's a it looks like a very fun place.
00:01:19:12 - 00:01:20:02
David Moghavem
It is, it is.
00:01:20:04 - 00:01:42:06
Taylor Avakian
I will be going there if I go to Miami just for. I, Okay. What I want to talk with you guys about. One is I want to figure out how you guys got into real estate, because that's always an interesting story to me. Yeah, not like, you know, I saw a guy do this and that, but what I want to understand and figure out is, okay, how did you get in and then what has that experience been?
00:01:42:06 - 00:02:00:12
Taylor Avakian
Thus far from perception to reality? Because a lot of people want to get into real estate who listen to this and or are in real estate just starting out. So I kind of like to throw the journey because you both are working, at an institutional firm and also do deals yourself. So it's kind of this very interesting situation.
00:02:00:17 - 00:02:02:09
Taylor Avakian
Sure. If you wouldn't mind telling me, I.
00:02:02:09 - 00:02:04:09
David Moghavem
Think we'll do elders first.
00:02:04:09 - 00:02:07:21
Speaker 2
And then kind of go chronological. Chronological. Right.
00:02:07:21 - 00:02:09:11
Taylor Avakian
So how did you get in there?
00:02:09:13 - 00:02:30:02
Far
So, I'll say look at the thing that first, you know, I was going to USC living downtown and downtown changed so much when I was there in early, early 2000, and you could just see how much it was impacting the city, and you wanted to be part of that change. And I wanted to I wanted to know the people who were doing it.
00:02:30:02 - 00:02:56:09
Far
I wanted to be part of it. I want to be around it. You know, at first I wanted to do hotel and retail. That was like either hotels or retail. Spend some time doing some hotel type of work, very little time and GFC hit almost immediately. And so hotels made no sense from 2008, 2009, 2010. Retail was, you know, like offices today.
00:02:56:11 - 00:03:02:16
Far
And for a while I was doing non-performing loans, which is honestly.
00:03:02:18 - 00:03:05:20
Taylor Avakian
Where you had a firm like a bigger firm or where, you know, what I was.
00:03:05:23 - 00:03:10:21
Far
I was selling non-performing loans@auction.com. I was like one of the first employees at actually there's no.
00:03:10:21 - 00:03:11:05
Taylor Avakian
Way.
00:03:11:06 - 00:03:34:00
Far
Actually how I met Max. We could talk about that later. I was at Standard and Poor's stuff, and Forbes before that. That was a boring job. But, you know, in oh eight, that was the kind of jobs that were out there for sure. And, I was then I was selling non-performing loans. The saddest thing about that was you saw people who are doing everything right, and they weren't catching a break.
00:03:34:02 - 00:03:56:06
Far
And and, you know, it's like, hey, once this tenant comes in, I will have enough to refinance this out. And this tenant has is interested. Did the fit tour. We're going to be good. Then the next month comes by. These three tenants blew out, you know. And so when we talk about things being bad. Yeah. Now they're not they're not that bad now.
00:03:56:06 - 00:04:00:23
Far
And I was just getting started then. But you could just see.
00:04:00:23 - 00:04:02:13
Taylor Avakian
You could feel it's a different time.
00:04:02:13 - 00:04:14:23
Far
And that just seeing that not being in it but seeing it has impacted my career majorly. I think David could tell you, you know, the guy who's always talking about the downside, you know. Yeah. Which is not always the fun guy.
00:04:15:00 - 00:04:17:20
David Moghavem
We always talk. We always say Fozzie Bear.
00:04:17:22 - 00:04:21:16
Speaker 2
And, Max is probably the bulldozer.
00:04:21:18 - 00:04:26:12
David Moghavem
Max is the bull, finds the bear, which has saved us on a lot of stuff, too.
00:04:26:14 - 00:04:28:12
Speaker 2
You have to have both. Yeah, absolutely. And, like.
00:04:28:12 - 00:04:29:06
Taylor Avakian
Partnerships.
00:04:29:08 - 00:04:45:04
David Moghavem
If I had one, told me a story that's resonated with me. That one, one of his first days in, like, your first job, he had to go into all the models pre GFC and adjust them to what actually happened. And he went from lower.
00:04:45:04 - 00:04:45:21
Far
Lehman models.
00:04:46:00 - 00:05:05:20
David Moghavem
To Lehman models, and you were just adjusting them from, you know, positive rent growth to negative rent growth. And he's like that really stuck with me and that's, that's stuck with me as well to I didn't live through the GFC, obviously. I was in high school. But that's something that you remember for the rest of your life.
00:05:05:21 - 00:05:27:01
Taylor Avakian
That's so interesting to me too, because I think scars are what make us right. We learn from trauma, quote unquote. And then, it affects the way that we look at business moving forward. And then you can take some things for different people. But someone who's gone through like a really one of the worst recessions in history might have a little bit different perception on deals.
00:05:27:01 - 00:05:47:01
Taylor Avakian
And what's a good deal? What's a bad deal? Where's the downside from this than someone like you or me who were not in that space? Right. We might have a little more positive outlook. Oh man. The rents are going good. The population is growing here, right? Like. And you're over here like. Well, if Tesla leaves, like, all these rents are going to come down, whatever it is per se.
00:05:47:03 - 00:06:11:18
Taylor Avakian
But I think it's good to have that perspective and be able to have that experience too. When you're working as a unit, which I previously I've talked about a lot of times, is like having a team of people that you can lean on, bounce ideas off of, you know, brainstorm, figure out, okay, what am I missing here? Or where's an opportunity that maybe we don't see, but you can see because of your specific experience?
00:06:11:20 - 00:06:15:16
Taylor Avakian
I think that's a great way to, to go about the business and obviously, you guys have done it.
00:06:15:18 - 00:06:30:12
Far
We could only control what we could control. Right? You don't always see that. You don't. Right. Often don't see what's going to come. But if you know the deal, you understand the deal. You know, it's like, we always talk about the underwriting and yield on cost.
00:06:30:17 - 00:06:31:01
Speaker 2
00:06:31:04 - 00:06:31:22
David Moghavem
That's our Northstar.
00:06:31:22 - 00:06:35:01
Far
Some people throw that out the window in 2122 because the.
00:06:35:02 - 00:06:35:09
Taylor Avakian
Rents.
00:06:35:09 - 00:06:48:22
Far
Growth. Yeah. Yeah. And made a ton of money doing it. And you know David and I were just talking about it. And we were you know at that time we were like are we the dummies not buying this stuff? You know, because those guys are making a bunch of money and we're scratching around.
00:06:48:22 - 00:07:11:21
Taylor Avakian
Okay, let me ask you something. I want to put the scenario so you know what you know now, right? You're a company. Let's say it rhymes with rides, right? And you're raising and doing a bunch of deals. You're crushing it. You're absolutely crushing it. And you're maybe not doing the levered yield on cost. Would you go back and do what that was?
00:07:12:01 - 00:07:15:08
Taylor Avakian
Would you do what they did? AKA does that make sense?
00:07:15:10 - 00:07:28:18
David Moghavem
Can I just say something to the you know, what rhymes with rides? Yeah. We could yeah. Tight ties is like the poster child right. But a lot of a lot of groups are going through it. It's really not just them.
00:07:28:20 - 00:07:30:02
Far
Ourselves, including.
00:07:30:04 - 00:07:48:16
David Moghavem
You know, we have floating rate debt too. So, it was they're the poster child and everyone wants to talk to them. And they grew fast. And I know Sean personally, and but even if I didn't know him, I would say this objectively, like everyone's going through it. And so when you say, would I do things differently?
00:07:48:16 - 00:08:10:22
David Moghavem
Yeah, hindsight's 2020. You would buy a longer a cap, you would buy fixed rate debt, but you wouldn't necessarily, with the knowledge you have, be able to do something differently. We stuck to our guns on a lot of deals through the unbranded return on cost Northstar. That allowed us to not buy deals that we shouldn't have, and we're thinking ourselves for it.
00:08:11:00 - 00:08:30:11
David Moghavem
And it saved us on a lot of deals. But we're still we're still struggling because we're we put floating rate bridge because we're value add guys. And we knew we can move the NOI 3,040%, which we did, which we did. So that's just not enough in this environment. So we're surviving.
00:08:30:11 - 00:08:46:02
Far
I mean, fixed rate was the biggest thing was it's hard because, the floating rate loans were cheaper. More leveraged. Most of what we borrowed was 65 to 70% of cost. Didn't feel that crazy. And.
00:08:46:02 - 00:08:47:04
Taylor Avakian
Yeah.
00:08:47:06 - 00:08:47:19
Far
But you.
00:08:47:19 - 00:08:50:14
Taylor Avakian
Know you're conservative at those numbers back then. Yeah.
00:08:50:14 - 00:09:03:04
David Moghavem
Yeah, yeah, we were conservative doing bank bridge 60 LTC and we lost to a lot of groups doing that fun high octane bridge. So I guess we were like the conservative ones. But even on those deals.
00:09:03:09 - 00:09:22:05
Far
We did buy a lot during that time. And you know, a lot that we'll have to that we're working through. Sure. I think if you bought anything in 21, 22, most likely you're not making money. You know, at least in most of the markets that we're in, but I think probably everywhere. Right. And so we're not here to say like oh we didn't do any of that stuff.
00:09:22:05 - 00:09:43:02
Far
I think, you know, one thing I noticed is like we bought a deal that's coming up for refi right now. We bought it for three on our door. And we were really excited because the dealer down the street they bought for 360 a door, we bought this for 300 door and there were basically very similar deals. Well, guess what, our rents are that's coming due and now we have to figure it out.
00:09:43:04 - 00:09:51:23
Far
They put tenured debt on, don't have to worry about it for another seven years. And, it seems like that might have been one of the. You know that.
00:09:51:23 - 00:09:52:13
Taylor Avakian
Totally.
00:09:52:16 - 00:10:21:05
Far
But I will say also, investors wanted to see the higher returns because we put the fixed rate debt. We're still young. You know, I'm the old guy here and kind of the old guy. I tried, but I'm only 41. They wanted to see the low mid 20s. Right. Like, I remember we sold the deal in the Bay area for, I want to say it was like a 26 IRR in Hayward and, and a lot of investors who invested with us also invested in Tide Tides.
00:10:21:08 - 00:10:30:00
Far
And they had gotten a 118 IRR check from tides like the week before and weren't so happy with the 26 IRR, which is crazy.
00:10:30:00 - 00:10:32:09
Taylor Avakian
When we get on it, you're like, oh.
00:10:32:11 - 00:10:40:09
Far
Wow. I mean, tides was doing two acts. I don't quote me completely, but they were doing two acts in like a year or two.
00:10:40:11 - 00:10:42:14
David Moghavem
And we had overlap on a lot of the.
00:10:42:14 - 00:10:43:08
Far
Risks in a year.
00:10:43:09 - 00:11:03:04
David Moghavem
They had overlap on a lot of investors like what we had said we were being compared and we just stuck to our guns end of the day with a lot of deals. And it may have not grown as quickly. Yeah. But we did grow what we think considerably and we're happy with our growth. And I think we'll be okay coming out of it.
00:11:03:04 - 00:11:07:22
Taylor Avakian
And I didn't even give context. Can you guys talk a little bit about the company a little bit and like what you guys do?
00:11:08:04 - 00:11:36:07
David Moghavem
Sure. Yeah. So try on founded, 2005. Max and Mitch, long time buddies. They, you know, ones that Mark was at Marcus. Max's at Marcus Mitchell's at HF. They joined forces, built out a portfolio, sold it right before the GFC, then started buying nonperforming notes and reos collateralized by multifamily. That's how they met. Yeah. Jinx. And, great stories there.
00:11:36:09 - 00:11:57:15
David Moghavem
And once that market dried up, started reverting back to rent control. LA, SoCal, NorCal all started expanding up the coast. Farhan then also led the way to expand into Oregon, and I think we were the most prolific buyer at one point in Oregon.
00:11:57:15 - 00:12:07:08
Far
Yeah, we imported we bought about 26 deals in the Oregon Metro. We've exited, I think 17 of those deals, something like that. Wow.
00:12:07:08 - 00:12:16:14
David Moghavem
Yeah. And I joined like 2015. So almost ten years ago, that was when we had about a few deals in Oregon and, and some in North I think arc.
00:12:16:14 - 00:12:18:08
Taylor Avakian
Where what was your assets under management.
00:12:18:08 - 00:12:25:11
David Moghavem
At that. Yeah, I think it was like half a billion maybe something like that. Now we're like 1.5 depending on what valuations you use.
00:12:25:13 - 00:12:27:05
Speaker 2
Yeah, there's probably 20 triple.
00:12:27:05 - 00:12:30:02
Far
Units and more or less 7500 units. Yeah. Wow. Yeah. Triple D there.
00:12:30:08 - 00:12:33:13
Taylor Avakian
Triple crown like exponentially. Yeah.
00:12:33:18 - 00:12:35:19
Far
And that's since. Yeah. Since the merger.
00:12:35:22 - 00:13:01:15
David Moghavem
Exactly. So then, about right before Covid, we decided to make a push to new markets. Colorado being the target. And that's where Farhan and I tag team that market. It's the biggest, state we own in, in Colorado. And then after Covid, we opened up the Miami office and started buying throughout the southeast Florida, Georgia, Carolinas.
00:13:01:16 - 00:13:19:19
David Moghavem
And I moved about a little over two years ago to run East Coast acquisitions there for hand running, the West Coast and now we have a great lens, nationally. I know we're not in the Columbus, Ohio's, and that's where everyone's talking about, but we have a really good sense at this point that we were just talking about.
00:13:19:19 - 00:13:20:19
Far
This of seven states.
00:13:20:19 - 00:13:28:11
David Moghavem
Yeah, seven states. Like we have a really good pulse nationally of like what's going on. So our contacts, we have more contacts when we're talking through market.
00:13:28:11 - 00:13:30:06
Far
We come up David and I compare a lot of notes.
00:13:30:11 - 00:13:49:08
David Moghavem
Yeah. Yeah we're talking a bunch and we're in the weeds on all our markets. So it's like really cool to see how and you know pre pre rate hike everything was basically solving to the same. So now that rates have hiked and things have kind of reset. It's really cool to see how things are pricing now for David.
00:13:49:08 - 00:13:55:11
Taylor Avakian
So what is going on in the markets like give me that. You said you had your finger on the pulse in different markets. What's happening.
00:13:55:13 - 00:13:57:19
David Moghavem
It's a loaded it's a loaded question.
00:13:57:21 - 00:13:58:04
Speaker 2
I mean.
00:13:58:04 - 00:14:19:15
Far
One thing that's interesting 1980s deal in Dallas will trade for a five cop most of the time. Yeah, right. But you could buy I mean, and this is what's interesting. You could buy a new deal in downtown L.A. or like a ten year old deal in downtown L.A. for close to six cop. And downtown L.A., you know, the supply starting to dry up, obviously.
00:14:19:15 - 00:14:27:10
Far
And they have the concessions. They have some demand issues. Hopefully downtown LA in LA comes back. You know I love la la.
00:14:27:12 - 00:14:28:16
Taylor Avakian
Me too long way.
00:14:28:17 - 00:14:53:10
Far
And I believe that downtown will come back. You know a lot of people may not believe that especially with this Olympic push and all that kind of stuff. And so feels good to get 100 basis points for a bet on a property that is 35 years younger. You know, at a basis that's probably close to 2016 basis, you know, and I'm Dallas is a tough market to operate in.
00:14:53:11 - 00:14:57:09
Far
Yeah. And you know most supply lots of vacancy, lots of delinquency.
00:14:57:09 - 00:15:00:01
Taylor Avakian
There's nothing stopping people from building something right down the street.
00:15:00:04 - 00:15:22:04
David Moghavem
Yeah I would I would say like where for John and I are agreeing is like we're both in favor of out of favor markets right now. Like the la Bay area. Or again, for me, we just closed the deal, in Atlanta. And that's a pretty out of favor market with some of the delinquency issues. And we bought an early 2000 deal at a six and a quarter cap.
00:15:22:06 - 00:15:26:10
David Moghavem
Good quality. And the brand comps are institutional owners.
00:15:26:12 - 00:15:27:20
Far
And debt was cheaper when you bought it.
00:15:27:22 - 00:15:30:10
David Moghavem
And we bought it locked in a low five rate. Exactly.
00:15:30:10 - 00:15:32:18
Far
Very positive leverage on that deal. Yeah.
00:15:32:18 - 00:15:48:03
David Moghavem
And so I think you're going to get cash flow and everyone's paying rent. And occupancy is strong at that property and it's going to be cash flowing. And you can get appreciation when those out of favor markets, the tide start to turn.
00:15:48:05 - 00:16:18:12
Taylor Avakian
The pendulum swung almost too far. It feels like where the high growth markets, the steady long term West Coast coastal markets who historically had big gaps in A, B and C class. I've seen that compress significantly where you can buy a 2016 bell building for 350 a door, and you can buy a 1980s building for 275 a door or 300 a door, and you're like, wow, that's, you know, there's a big difference there, too.
00:16:18:12 - 00:16:28:21
Taylor Avakian
Totally. And that's effective. So you're seeing that across the portfolio. And really the that spread is changing for markets that are historically stronger or not as strong.
00:16:28:23 - 00:16:55:08
David Moghavem
Yeah. So I kind of back to if I was saying people want to buy in, I guess like syndicated high net worth investors because we have we have over 6000 active investors. They're looking at the Dallas's and the Miamis and these places and they're great markets fundamentally. But we're starting to see a point where maybe some of these out of favor markets that people used to say no to are starting to have some really compelling yields.
00:16:55:10 - 00:17:16:10
David Moghavem
Like what foreign was just saying 100 Bip delta for new construction in LA. That's two an LA is a is a standalone market. Yeah. You know this isn't a tertiary market. This is a standalone prime market. It has political risk. It has its issues. But for a 100 basis point, expansion in yields, it's pretty compelling.
00:17:16:14 - 00:17:34:06
Far
And by the way, this deal, the average income was $187,000 per unit that I'm talking about in downtown L.A., the average rent was right around 4000 per unit. So the rent income was good. There's a lot of things to like about it now. The political risk, which yeah, I feel like comes up on every.
00:17:34:06 - 00:17:35:05
Taylor Avakian
We can't knock everyone.
00:17:35:05 - 00:17:37:10
Speaker 2
About it. Every episode has it. Yeah.
00:17:37:11 - 00:17:49:12
Far
Real like that's a real risk. Yeah. And that's why I think it's hard to do value add in LA. It's hard to buy older in LA. I think the only I don't want things can change but.
00:17:49:14 - 00:17:50:14
Taylor Avakian
Your opinion right.
00:17:50:14 - 00:18:07:00
Far
The easiest way to buy in LA right now is buy these new deals. Yeah. Nine deals hit the market this week. I think. Ten Blake just came out with a 10th, deal in LA this week. And they're all new. All now. And Koreatown, Hollywood, I read.
00:18:07:02 - 00:18:14:21
Speaker 2
Oh, we're tweeting tweeting that, I felt like we talked separately. You guys tweeted about it? I'm.
00:18:14:21 - 00:18:17:22
David Moghavem
Like, starting to get more active on X. Phone's been on X for forever.
00:18:18:01 - 00:18:19:16
Far
Yeah, nobody reads my stuff.
00:18:19:20 - 00:18:24:12
Speaker 2
But I read it, I read it, so it's like all of if we had a private conversation X.
00:18:24:14 - 00:18:26:23
David Moghavem
But yeah. Go on. You're saying,
00:18:27:01 - 00:18:34:21
Far
Downtown L.A., Koreatown, Hollywood, as you know, probably as good as anyone. Yeah. Impaired market. Hopefully come back.
00:18:34:21 - 00:18:35:06
Taylor Avakian
Yeah.
00:18:35:10 - 00:18:59:00
Far
You know, what are people willing to pay for, especially when they're all out at the same time? And is there enough institutional interest to take all those deals. And it'll be really interesting to see because generally when we take early deals to institutional investors, we they read it like they read the email half the time, you know, it's hard to even get them to really pay.
00:18:59:00 - 00:19:03:03
Taylor Avakian
Attention to them. It's almost like this. They've blocked out read acts like Dot.
00:19:03:04 - 00:19:04:14
David Moghavem
Even the headline read, it doesn't.
00:19:04:14 - 00:19:34:14
Taylor Avakian
Matter how good it is. Yeah. It's like mentally they can't get past the political risk that's associated with. Which is quite interesting because a lot has changed, in LA with, with the fires and people are not happy with the way that it was handled from a government perspective. And what's happening on a national level, too, it feels like there's a chance that California could swing, you know, further, I guess towards not so extreme left, at this point in time.
00:19:34:14 - 00:19:43:23
Taylor Avakian
And I'm curious to know if that changes any of investor sentiments about Los Angeles and California. You guys obviously doesn't seem like you're seeing that right now.
00:19:44:04 - 00:20:08:02
Far
I mean, how we react to what happened is, is going to be important. Yes. And look, the least important thing is how investors feel about it. The most important thing is that we put the differences aside, do what's best for for our city. And, you know, to take a second, oh, a reason I'm wearing this LA is I've been very proud of our city, and the people of our city like we've been.
00:20:08:07 - 00:20:31:12
Far
My wife and I have been volunteering. Those places are packed. The people who haven't lost homes are helping the people who've lost homes. And, you know, it feels like LA's coming together. It's important for us to come together, decide where our future is going to be. It's got to be easier to build. You know, it's got to be a little more business friendly.
00:20:31:14 - 00:20:36:10
Taylor Avakian
If we can get there, it feels like LA is just waiting to explode.
00:20:36:10 - 00:20:41:17
Far
We're going to have the Olympics. We're gonna have the Super Bowl. Yeah. We're the middle of the entertainment industry.
00:20:41:17 - 00:20:43:00
Taylor Avakian
There's so many bright spots.
00:20:43:05 - 00:21:04:08
Far
Where are the King and diversity, right. You know, I went to Somalia and restaurant the other day. Fantastic. Like, yeah, LA is a special, special place. And it was funny when I was visiting, David, Max and Mitch in Miami. Everyone in Miami loves to tell you, what's happening in Miami. Like, they were just. Everyone's just collectively excited.
00:21:04:10 - 00:21:29:07
Far
And then I came back to LA and everyone's collectively kind of bummed out with what's going on. And I think we need to kind of focus on what's good and hopefully collectively be excited, hopefully help the people who lost their homes in the fire. How do they help those areas grow, you know, help those people. And I think it's key also, with the fires, don't just do it for the two weeks.
00:21:29:09 - 00:21:44:01
Far
It's going to take years to build these things up. Yeah. And so, you know, I mean, take your time in the food banks, you know, at the shelter right now, they're pretty hard to donate your time to because everyone is doing it. But yeah, we're going to need it for years.
00:21:44:01 - 00:22:03:17
Taylor Avakian
It's going to be a long a long process. And what's, what's you know, obviously the Phoenix, right. What gets burned down comes back even stronger. I mean, there's we brand new cities in Los Angeles, like brand new, brand new. Yeah. And, it's going to be very interesting to see from the perspective of the sentiment of people. And I agree with you.
00:22:03:17 - 00:22:34:19
Taylor Avakian
We right now, it feels like LA's coming together as a collective unit, and we need to do it longer than a couple of weeks. Right. We need to continue to do this for the foreseeable future. And if we can have that collective, unity that their mindset of helping each other out and bringing each other up together in this, which I felt over the last, you know, ten years become even stronger, is this duality of political or not, not even tenant, owner this they're like, moving farther and farther away from each other.
00:22:35:00 - 00:22:45:12
Taylor Avakian
And if we can get back to like, hey, let's all try to make this more, more livable, easier, more enjoyable, then I see Los Angeles just like exploding.
00:22:45:12 - 00:23:11:10
David Moghavem
And I feel that's the silent majority for, for Angelinos. And I specify silent because you hear the headlines of the bad apples that are, you know, an arsonist or this or the silent majority of Angelinos love this city. Yeah. As someone who's been living in Miami for a couple of years, but born and raised in LA, I'm proud to be an Angeleno.
00:23:11:12 - 00:23:28:22
David Moghavem
And it's painful for to see what's going on from a distance. But everyone loves this city, even if they don't agree with the politics or whoever's running it. They love this city, and they're proud. And it will bounce back. It'll bounce back, I'm sure of it.
00:23:29:04 - 00:23:49:06
Far
By the way, on that note, not too not to make this, you know, you know, just on the fire. But the headline is landlords are price gouging. My experience is landlords are trying to out. Yeah. You know, the landlords are trying 100%. Well, I helped a lot of friends and Altadena area try to find places in Highland Park, Glassell Park.
00:23:49:06 - 00:23:55:08
Far
Yeah whatever those areas. And you know, people like Moses Kagan where like, what can I do. Yeah. You know.
00:23:55:09 - 00:23:57:20
Taylor Avakian
I same thing for the agents to our chat.
00:23:57:20 - 00:24:01:15
Speaker 2
The okra chat. Yeah. I don't know if that's I but.
00:24:01:15 - 00:24:18:09
David Moghavem
You know, everyone is super helpful. And I really I really haven't anecdotally seen any bad activity there. I'm sure there might be something, but I haven't seen it. And people, again, the silent majority is really trying to help out. That's what's special about the city.
00:24:18:11 - 00:24:39:01
Taylor Avakian
100%. And I want to parlay that into what opportunities you guys see moving forward on a broad spectrum. And this could be obviously East Coast or what you do West Coast or what you do. Like where do you see the opportunity moving forward? With a lot of things changing in this market, where are you looking to capitalize on it?
00:24:39:03 - 00:24:41:03
Taylor Avakian
And make the most of it?
00:24:41:05 - 00:25:03:12
Far
Sure. Look, it's really hard right now, right? Like, we don't know where the, we don't know where interest rates are going. And so there's not like a, you know, pure path to growth, but right now, what I think is most interesting is at least on the West Coast markets, it might be a different for Davis markets as well.
00:25:03:12 - 00:25:22:10
Far
First off, value is really tough right now. Yeah. It's costing more to renovate a unit, you know, 17 to $20,000. We're seeing a lot of times that's only getting you 100 bucks more in rent. You know, like it's rarely getting you the, you know, what was the rule we learned when we first started? Like, 20%. I haven't seen that.
00:25:22:10 - 00:25:35:13
Far
Yeah. We're not getting 400 bucks on the value add Reno's. And so you either need properties that are severely missed, manage or maybe passively owned. Mismanaged isn't the best.
00:25:35:13 - 00:25:39:04
Taylor Avakian
You know, raise the rents every three four years. So I'm like and there's a lot of those.
00:25:39:04 - 00:26:03:15
Far
They've owned it for 25 years and they've made their money and they've, you know, kept the buildings full and have done their job to get it to the point it is now, and that those are opportunities for us to, you know, go in, you know, fix the physical problems of the property, go in push values, push rents. That typically is happening in the 5 to $15 million range or the 2 to $10 million range.
00:26:03:15 - 00:26:29:12
Far
Right now, the institutional property value add is very hard to see, but that could change. And then I think, like Dave and I were talking about this, like, what were we talking about yesterday where, the, you know, buying these high rise towers that now are 752 million plus to build, that are never going to be built again or sorry, not never, but not for a long time.
00:26:29:13 - 00:26:42:04
Far
And I'm specifically, like, thinking about Portland. Sure. Oregon in the Pearl district has some of the most beautiful high rises, and you can buy them for 350 a door. Really. And and the yields like, you know, still like. Sure. But like a for.
00:26:42:04 - 00:26:42:16
Taylor Avakian
Replacement.
00:26:42:16 - 00:26:46:09
David Moghavem
Just like, well below replacement cost product. I think that's the plan.
00:26:46:13 - 00:27:08:00
Far
Portland's been hit hard. And so the high rise one bedrooms $1,500. I wouldn't be shocked if that one bedroom was 2004 to 5 years. Yeah. Right. And so. And no one's going to compete against that a product that that those deals are hard to underwrite because you don't know when the growth is going to come. You're going for growth cap rate compression.
00:27:08:05 - 00:27:24:00
Far
I can't tell you when cap rates are going to come down. I can't tell you to what level interest rates are going to come down. If they're going to come down and I can't tell you, we can guess when the growth is going to happen, but I can't guarantee it. You know, that's why I kind of like the value add, because I could tell you where we're going to take the rents, too.
00:27:24:06 - 00:27:47:08
Far
I'll tell you what the expenses are, and I'll tell you how much it's going to cost. That I could tell you, you know, and so, you know, small, middle market, mismanaged deals and kind of core below replacement deals and like, in, in markets that are, you know, Portland's not the hottest market, you know.
00:27:47:08 - 00:27:49:05
Taylor Avakian
So out of favor, maybe markets out.
00:27:49:05 - 00:27:49:13
David Moghavem
Of favor.
00:27:49:13 - 00:28:21:02
Taylor Avakian
Exactly. Yeah. I think that'll it'll rebound. It'll come back. I'm curious to know, from you guys when you've competed over the last, let's say, 18 months when interest rates have been high, have you seen an influx of family offices who are just they don't have a timeline. They don't have investors to appease to? Are they buying these just blow business deals that maybe you're hard to see in a return on or not know when things are going to actually turn itself around, where they're willing to take the risk and buy something that 50% of what it was a few years ago.
00:28:21:04 - 00:28:51:03
David Moghavem
Yeah. So I'll just give a story briefly about four investors yesterday. Message emailed either me or Max or Farhan that are not. They invest in real estate, but they're not operators at all. They're just, have another business and trying to passively invest, asking, do you have a deal? Where's the next opportunity? There's a lot of optimism heading into 2025.
00:28:51:05 - 00:29:11:01
David Moghavem
As a deal junkie, it's a little bit pessimistic because of where rates and treasuries are at relative, where to where things have been trading the past year. So now you're thinking to yourself, man, how are we going to make this deal pencil when deals are trading? This cap rate and rates are now at this rate. How is this going to work?
00:29:11:03 - 00:29:35:15
David Moghavem
But there is a lot of liquidity and optimism, like ready to pounce right now heading into 2025 that we haven't really seen in the past couple of years. So I think with that said, you're definitely seeing people see beyond the smoke and the smoke and mirrors to see. All right, this is a good time from a long range five seven year olds to be buying right now.
00:29:35:18 - 00:29:53:03
Taylor Avakian
Yeah, it feels that way too. And when the experience of us where it was I the hard part about being a broker in 2018, 1920 was getting a listing right like that was that was hard. And it was I started out in the beginning too, so it's hard there, but once you got the listing, you're like, oh, thank God.
00:29:53:04 - 00:29:54:06
Taylor Avakian
Like I made some money in.
00:29:54:06 - 00:29:55:05
David Moghavem
A bull market. Yeah, yeah.
00:29:55:05 - 00:30:14:04
Taylor Avakian
Sell itself like it's going to sell right now. It's I'm turning down more listings than I would care to admit, because the time like, if you're not realistic, you're not going to beat the market. Yeah. It is not worth the time. And I have to go out and pick up the phone and call people because not everyone was there.
00:30:14:04 - 00:30:24:13
Taylor Avakian
Like, I'm going to take a I'm going to take a break, right. The traditional guy who interest rates were low, just making it money was easy to come by. We'd have 15, 16 offers.
00:30:24:13 - 00:30:25:07
David Moghavem
Yeah, I've.
00:30:25:07 - 00:30:43:19
Taylor Avakian
Struggled on six and a half caps, seven caps, getting 4 or 5 offers. Right. And that sounds crazy to you. And it's different markets. But it's it was the reality of the situation. And it's so interesting to see the sentiment because I try to track it as best I can. Okay. Who are the people that I need to be sharing these opportunities with?
00:30:43:21 - 00:30:44:21
Taylor Avakian
Who's active who?
00:30:44:21 - 00:30:46:02
Far
Send me your seven caps.
00:30:46:02 - 00:30:47:19
Speaker 2
Yeah, I think that I.
00:30:47:19 - 00:31:11:21
David Moghavem
Think that's what Farhan was alluding to. Whether it's LA or parts of Oregon and Portland, there is these out of favor middle market deals that you're starting to see some really compelling yields. And they might be mismanaged. They might just be out of favor. It's maybe a combination of both. But there's some opportunity there just from like a cash flow perspective.
00:31:11:23 - 00:31:21:13
Taylor Avakian
On a whole. How far off are you guys on underwriting on the current deals? Like when you're looking at your spreadsheets, are you 10% off list price, 20% off list price? How close are.
00:31:21:13 - 00:31:50:07
David Moghavem
You? The issue is at this point on the institutional space of like these markets, the list price is really whatever the seller says. Like we need to just hit this. And so there's not really as much of like a rhyme in rhythm of like where these things are being perceived at, like there is, there is at this point a little bit, but it's more of like, can I cover my bases to a certain point, or can I just can you create a market for me?
00:31:50:09 - 00:32:08:03
David Moghavem
And then what happens is maybe they don't sell, but they get recapped or there's other rescue capital and they've created a market to at least know what the real value is at that point in time. And there's just been so much volatility on the debt space that that valuation can change any second.
00:32:08:05 - 00:32:21:18
Far
I've also noticed brokers don't really want to give a whisper as much anymore. They're like, look, they really want this number. But you know, yeah, I know, you know what it's worth. Like, just tell me if you want where you can get it.
00:32:21:18 - 00:32:42:02
Taylor Avakian
It's tough. It's really tough because, it's hard to tell someone like, this is a really good deal when you yourself don't even know what's going to happen, right? Yeah. We have to be promotional about the assets we sell. Yeah, there's a certain level of, you know, like objectivity when it comes to selling an asset. But people hire us to, to go be promotional.
00:32:42:02 - 00:32:57:15
Taylor Avakian
And a lot of times they've put hard earned cash energy like, they want someone to paint the picture of what this could be. And that's part of our job in marketing these assets. But it's hard to when you're when you're looking down the barrel and you're like, I don't like that. I don't know how you make sense of that.
00:32:57:15 - 00:32:58:18
Taylor Avakian
I don't know who buys this thing.
00:32:58:18 - 00:33:19:18
Far
I think it's interesting that you said you're turning down listings. I recently had a conversation with, broker in a different market, and they said, should I just take it, even though I know it's priced too high? Because what if they take the lower priced? What if what if because I didn't take it in? This guy worked so hard on an impossible task that they give it to them later on?
00:33:19:18 - 00:33:29:05
Far
A deal that I sold the guys? I don't want to lose it, but I don't, you know, I don't want to look silly taking a deal to market that isn't tradable 100%.
00:33:29:05 - 00:33:52:12
Taylor Avakian
And I think, I don't necessarily have the answer, but how I would approach that situation and what I've been trying to do is like, here's the open, come on. Oh, here's what the situation is. Here's all the numbers. Here's the facts. Right. Here's what we're up against. Now, as long as you're on board and we're on board and we both agree this is the assumption that we're going to do, it's going to be a tough assignment.
00:33:52:17 - 00:34:15:11
Taylor Avakian
Like we're going to go out there and give it our best. There's a certain level of of investor, in my experience, where they don't necessarily have that same sentiment and they want a different kind of, you know, they want someone to promise them something, even though they know it's not true. Yeah. They want them to feed them candy and tell me, like, they want that.
00:34:15:14 - 00:34:15:18
Taylor Avakian
Yeah.
00:34:15:19 - 00:34:17:04
Far
He's looking for the hope, I think.
00:34:17:04 - 00:34:34:03
David Moghavem
I think one of the ways to be open come out as a broker. And we've been doing that with our broker relationships when we're looking at valuing deals, is like we track every single deal that trades in our market and we're not in trade. Yeah. And the ones that don't trade exactly.
00:34:34:05 - 00:34:35:05
Far
Where they're the high bid was.
00:34:35:05 - 00:35:02:02
David Moghavem
Where the high bid was, who it was the bid ask spread how many offers were also on the deals that did trade. We look at also when they went under contract and like what the Treasury was at the time and like how they're financing it and you get you don't know the exact interest rate, but you like you have a general indication of where rates were at the time that you're like, okay, well if rates are here and they traded here, then that's kind of the type of spread or positive leverage they bought.
00:35:02:02 - 00:35:09:17
David Moghavem
It's slightly negative or positive in order to understand like, all right, where can we triangulate where these values should be coming from?
00:35:09:17 - 00:35:25:05
Taylor Avakian
Okay. This is an interesting question. I don't know if you feel comfortable answering this, but just I'm curious. Sure. When you see a group. Right. Who maybe you compete against on some stuff and they buy a deal like that, or you're tracking it and you're trying to figure out where the interest rates are, is a certain part of you.
00:35:25:05 - 00:35:29:16
Taylor Avakian
Like, let me go find out who that investor is. Where's that equity coming from?
00:35:29:18 - 00:35:31:11
David Moghavem
We know. We know for the most part.
00:35:31:11 - 00:35:32:22
Taylor Avakian
Where all the equity is for most.
00:35:32:23 - 00:35:34:12
Speaker 2
I mean, to know.
00:35:34:14 - 00:35:35:10
David Moghavem
To a degree.
00:35:35:10 - 00:35:39:05
Far
To answer your question, we're trying to figure out who the equity is or we'll probably call them.
00:35:39:05 - 00:35:40:16
Taylor Avakian
Yeah, that's what I'm saying. Right.
00:35:40:20 - 00:35:43:00
Speaker 2
We'll find it. Like you just say, yeah, you'll find out.
00:35:43:00 - 00:35:52:00
Taylor Avakian
Where the opportunity is. Like if that person is willing to invest in that. And because it really what the you can do a deal if the equity requirements are low enough.
00:35:52:01 - 00:35:52:09
David Moghavem
Yeah.
00:35:52:10 - 00:36:01:06
Taylor Avakian
Like if someone wants a 1% return and they're cool with that. Like I'll go buy every deal in Los Angeles, right? Right. It's it's how much the money cost you or the equity cost.
00:36:01:09 - 00:36:02:10
Far
Absolutely.
00:36:02:12 - 00:36:18:19
Taylor Avakian
Which is really a big driver. So for you guys being competitive. And this leads me to my next question. It's like, what makes, institutional firm a syndicate. Firm, a fund. What makes them differentiate or competitive and sets them apart from everyone else.
00:36:18:21 - 00:36:21:00
David Moghavem
Like for try on. You're saying like for.
00:36:21:00 - 00:36:22:03
Far
What perspective from.
00:36:22:03 - 00:36:29:23
Taylor Avakian
From yeah. From like why what makes a good firm versus, a decent firm that maybe got lucky with the market.
00:36:30:01 - 00:37:00:11
David Moghavem
Well, I would, I would just say like, would in trial position. What's nice is we have a lot of ways to capitalize a deal to get it done. We don't just have a fund or we don't just have a JV partner. We have both. We have family offices, foreign capital, and they all have their different buy boxes in different criterias, so we can be competitive potentially on an older vintage, or we can be potentially competitive on a newer vintage because we have different ways of getting the deal done in capitalized.
00:37:00:13 - 00:37:29:17
David Moghavem
Obviously been a challenge in the past couple of years. It's been tough raising equity. Anyone telling you otherwise is lying. Yeah, but we have been competitive through the 1600 plus active investors. In picking our points in diamonds in the rough to get it done. So I think just having multiple diversification of equity sources is what really helps you be, have a competitive edge when you're bidding against deals.
00:37:29:18 - 00:37:49:15
Far
Ultimately when people and, different perspective on it. Ultimately when people give you money, it there might have been a window where it was because your deal was so good. But ultimately their trust in you, whether it's the, doctor who gives you 50,000 or JPMorgan, who's giving you a 300, their trust thing that you're going to do, what's right.
00:37:49:17 - 00:38:01:16
Far
You're going to be transparent. You're going to be straightforward. And, and that you're going to do what you say you do. I think in business, ultimately, that's what everyone wants. Totally to work with someone who does what they say they're going to do. Yeah, you're.
00:38:01:16 - 00:38:20:12
Taylor Avakian
100% right because everyone makes mistakes, right? Everything. You're not going to hit it out of the park 100% of the time. You can have down years, you're gonna have up years. But if you're an honest person and you do what you say you're going to do, I mean, we all want to work with people like that. I think that makes the most sense from a longevity perspective, too, because this is a long game, like real estate is.
00:38:20:12 - 00:38:39:04
Taylor Avakian
Yeah. You know, sure. You're making those two tax returns in a very short window and you can capitalize on that. But the real money, the real long term game of this is, okay, five years, ten years, 15 years, 20 years. Let me keep those relationships. Let me build that. Let's build together and and make that, you know, into something that's pretty incredible.
00:38:39:06 - 00:38:50:21
David Moghavem
100%, 100%. It's all about life's too short to do business with people you don't want to do, and you want to do the deal. There's so many deals to go around. It's all about doing it with the right people.
00:38:50:23 - 00:39:05:16
Taylor Avakian
I'm curious to know, how you guys structure deals, like what is your structure and is that propriety? And or how do you look at what that split is? Returns waterfalls. I want to know the details of that.
00:39:05:18 - 00:39:19:17
Far
Sure. I mean, ours is pretty basic. Eight profit, generally somewhere between a 75, 25 to 70, 30 thereafter, with an acquisition fee and an asset management fee.
00:39:19:19 - 00:39:40:00
Taylor Avakian
Do you skew heavier on the fees in the beginning, or do you would you prefer, I guess, more of a philosophical question? Do you find that investors are okay giving fee points versus the back end upside, or do you feel like they're they would prefer less fees and you guys get a bigger share of the latter?
00:39:40:00 - 00:40:03:02
David Moghavem
The latter do you want to. And we're we're okay with that too because we want to get paid. Once we've performed what we said, we were going to perform. So that's how qualitatively our deals are structured. We have fees to keep the lights on to pay for the transaction and the work being done, and to keep the staff in check to manage the deal.
00:40:03:04 - 00:40:09:06
David Moghavem
But end of the day, the real money is through the promo, and that's not seen until the hurdles are met.
00:40:09:12 - 00:40:21:06
Far
And that's market or its market to have the, you know, back end promo. Yeah, I'll say I think there's something inherently wrong with that structure. Right. Because we shouldn't have to sell a deal to.
00:40:21:12 - 00:40:22:17
David Moghavem
Yeah, I think that's a good point.
00:40:22:17 - 00:40:31:07
Far
I think the structures that allow the GP to participate longer term and, you know, hold the deal longer.
00:40:31:09 - 00:40:32:08
Taylor Avakian
And let's talk about and I'm.
00:40:32:08 - 00:40:33:09
Far
Trying to figure that out. Right.
00:40:33:09 - 00:40:36:07
David Moghavem
Yeah. Like a crystallized structure.
00:40:36:09 - 00:40:42:09
Far
Or a cash flow. Yeah. You know that cash I've been talking to a lot of people about this because.
00:40:42:09 - 00:40:43:02
Taylor Avakian
Yeah.
00:40:43:04 - 00:40:44:17
Far
Because I think everyone wants a hold.
00:40:44:22 - 00:40:45:20
Taylor Avakian
For what is the.
00:40:45:22 - 00:40:46:05
Far
Ever.
00:40:46:08 - 00:40:49:20
Taylor Avakian
Yeah. Like, if you didn't have the feel like you were forced to sell because I think we're.
00:40:49:20 - 00:40:53:17
Far
Forced to sell. Our structure forces us to. Yeah. Otherwise we don't make any money.
00:40:53:19 - 00:41:04:14
Taylor Avakian
How do you set it up where you're not forced to sell? And you can both be aligned. And this. Okay, let's try to make this thing long term and both become wealthy. How do you what do you guys think?
00:41:04:14 - 00:41:24:04
Far
That there was one. There was one. One sponsor I talked to recently, and he has, minimum equity multiple. But he participates right away. So he participates like add in 90, ten out the gates. Now, a lot of investors might be nervous because there's no profit. And that kind of stuff goes back to the trust. They do that with them because they trust him.
00:41:24:10 - 00:41:44:07
Far
His minimal multiples, something like 2.0. But he's got ten years to get there or maybe seven years to get there. That makes sense. So you're making money day one. Then you never have to sell that asset because you're always making money. I think the other way is to have a cash flow, participation over the profit. So let's say your profit six, let's say it's six.
00:41:44:07 - 00:41:48:19
Far
That's actually a more reasonable profit. Like eight is really hard. I was gonna say cash and cash.
00:41:48:19 - 00:41:50:04
Taylor Avakian
To get you. You ain't doing eight in L.A.
00:41:50:04 - 00:41:51:15
Speaker 2
No, no, they don't have the gates.
00:41:51:15 - 00:41:52:18
Far
And maybe one day.
00:41:52:18 - 00:41:53:16
Speaker 2
Yeah, but.
00:41:53:17 - 00:42:18:04
Far
Let's say you get to six and you get to participate over the six, and let's say in seven years you're out of that and you're participating over the ten. Then. Then that's pretty good too. Yeah. And you can actually hold on. There's the crystallization that you talked about. What people used to do was they'd refi all the cash out and get to participate in a promote.
00:42:18:06 - 00:42:19:15
Far
That's that's not enough.
00:42:19:15 - 00:42:21:08
David Moghavem
Those days are. Yeah. I haven't seen those.
00:42:21:08 - 00:42:24:00
Far
And maybe one day we'll come back. But B.
00:42:24:00 - 00:42:26:11
Taylor Avakian
Just because refining you don't get the money out of the you need.
00:42:26:12 - 00:42:39:03
Far
You can't get a lender. Stop giving 100%. And then with rates in the sixes you're not you know. Yeah. You'd have to get to a nine plus yield on cost to get 100% cash out.
00:42:39:05 - 00:43:02:23
David Moghavem
Yeah. The first point is actually important. Like lenders of historically now starting to taper down on revise. So even with rates going lower people are just more cognizant that the whole by Reneau refi cash out hundred percent put it in the next one. It's just become funny money to a point where now lenders don't want to necessarily get involved with that to bail you out on a refi.
00:43:03:00 - 00:43:05:21
David Moghavem
Interesting, because you never know what's going to happen after. Totally.
00:43:05:21 - 00:43:25:08
Taylor Avakian
So the the, the dynamics of lenders has affected a ton of the strategy behind the syndication and the investments from the private. Yeah, right. Yeah. Because they dictate a lot of what happens. The cost of money, you know, again there's more factors. But if they're going to they used to give you 75 and now they're going to give you 65.
00:43:25:08 - 00:43:26:21
Taylor Avakian
Like yeah it's going to affect some things.
00:43:26:21 - 00:43:45:12
David Moghavem
But but back back to the structure question I do I do think it's important to find a structure like you said that has alignment of interest. But you also need to know like what your capital is looking for. Some of the capital is looking for quick.
00:43:45:12 - 00:43:50:18
Far
Flips or because if they're double promoting, right, they have a problem with their investment. Right. And they need to hit their. Yeah.
00:43:50:21 - 00:44:10:01
David Moghavem
So it's just like also, alignment of interests of like who your capital is and what they want. Not, you know, some people want to invest in real estate, real estate for wealth preservation and want to go longer. And that's where you would set up a cash flow structure. Some want the quick, quick flip, get their money and get their money out.
00:44:10:03 - 00:44:18:02
David Moghavem
So it's really having that communication and maybe having multiple structures depending on the asset you're buying in the strategy.
00:44:18:02 - 00:44:38:01
Far
Yeah, I find high net worth guys, when things are going good, are kind of bummed that you're selling because they don't, you know, let's say you sell it in three years and you get a 1.6 multiple. They're not so excited. Yeah. But they're excited about that check in the mail every week, especially, you know, once you get to 1.6 multiple, hopefully you're at 8% plus type of cash or cash in today's market.
00:44:38:03 - 00:44:40:16
Far
And why don't we just keep that going?
00:44:40:18 - 00:44:41:14
Taylor Avakian
Let's just keep the.
00:44:41:14 - 00:44:43:00
Far
The and let it right.
00:44:43:00 - 00:44:48:16
Taylor Avakian
The hose open. Right. And that's not putting the kinks in this. Yeah dude. That's the dreaded 1031 exchange.
00:44:48:16 - 00:44:59:11
David Moghavem
Yeah. Well, I think I think what I learned through this rate hike period is, slow and steady wins the race. And I haven't really internalized that until now.
00:44:59:11 - 00:45:19:20
Taylor Avakian
How do you feel about when people say, my biggest mistake is not selling? Because I hear that all the time, or selling? Excuse me? My biggest mistake was selling assets. I hear that all the time. They're like, if I would have just held on would have been fine. And there's a part of me that's like, okay, sure, but we've had one of the greatest real estate runs of the last 20, 30 years.
00:45:19:20 - 00:45:21:13
Far
I wish we sold everything in 22.
00:45:21:18 - 00:45:25:00
Taylor Avakian
Yeah, right. Yeah, exactly, exactly. Everyone's like, hey.
00:45:25:02 - 00:45:26:10
Far
I'm going to sell what we did.
00:45:26:12 - 00:45:27:23
David Moghavem
And we sold a lot and we did.
00:45:27:23 - 00:45:29:08
Far
Yeah, but we sold it.
00:45:29:13 - 00:45:38:21
Taylor Avakian
That feels like it's, maybe, you know, glass half full too much of the time. Because it's all depends. It's all dynamics.
00:45:38:23 - 00:46:07:22
Far
I'm the smartest guys, the smartest guys I've seen, you know, like, there's the guys at Jackson Square have figured out how to hold forever. There's Dean Weidner. Do you know who are you? Probably, he's buying all cash deals in Phoenix right now. These are people I don't know, but I'm looking at. And I was like, this is thinking when people are, he's buying the best located Phoenix deals at, like, you know, mid to high for caps but all cash.
00:46:08:00 - 00:46:24:19
Far
You know he's got the cash to do it totally. And maybe he's got something. You know the FPA is a Greg Fowler of the world like. But a lot of these guys they they figure out how to hold lot. You know I remember meeting were you with. Yeah. When like John Sullivan.
00:46:24:20 - 00:46:25:04
David Moghavem
Yeah.
00:46:25:10 - 00:46:46:14
Far
You know, and John Sullivan took a house, then he, then he took. Then he had five houses, and then the five houses turned into apartment. And he had he own stuff since, like 1990. And this guy is, you know, gosh, I feel like maybe I shouldn't be calling out all his information.
00:46:46:15 - 00:46:47:18
Speaker 2
00:46:47:20 - 00:46:59:04
Far
He, you know, he's driving, he's driving a modest car. He's taking, and he's quietly has $500 million worth of totally, deals with no debt free.
00:46:59:06 - 00:47:00:13
David Moghavem
Yeah. And you know.
00:47:00:15 - 00:47:03:19
Far
That that and he's own this stuff for ever, right?
00:47:03:20 - 00:47:29:19
Taylor Avakian
Is in California. Does he have the benefit of prop 13? Yeah. Because that's that's something that I think a lot of people don't. If California keeps prop 13, that is something that is so special about California. And owning long term is because that property tax base is just like it's kept their maximum. Really? Yeah. And it only it makes more sense to own a building the longer you own it than it does as a new person, because that resets totally.
00:47:29:21 - 00:47:35:04
Taylor Avakian
Right? So it's kind of like this. Well, shit, man, it it's a better deal for me than anyone who could buy it.
00:47:35:08 - 00:47:46:23
Far
What was a you had a pod where someone said once every ten years your rents grow. Yeah. What was the percentage you said, yeah, I forget. So he said something like big. Like a big number, which I think was maybe a little high, like 15%.
00:47:46:23 - 00:48:00:21
Taylor Avakian
Yeah. He was basically like every there's these pops that happen, right. Yeah. And then it'll be flat a little bit and then another pop will happen. And then so he's like if you if you average that out over the long term and you're in it for those pops, then the numbers are getting stupid.
00:48:00:22 - 00:48:05:17
Far
And you never know exactly when those pops are happening. Like the whole long term. You're going to benefit from those.
00:48:05:18 - 00:48:25:02
Taylor Avakian
Yes, exactly. They may come down a little bit. It's like the stock market, man. The best days. I listen to some Tony Robbins thing. He said one time he's like, if you were in the stock market for 20, you weren't in the stock market for the best 26 days. You'd have like a 75% return versus a 375% return on your investment.
00:48:25:02 - 00:48:28:13
Taylor Avakian
It's like those specific days. Yeah. Mattered so.
00:48:28:13 - 00:48:29:19
Far
Much. Yeah. And you can't time it.
00:48:29:20 - 00:48:41:03
Taylor Avakian
You can't time it. Yeah. You just got to be in the game. Yeah. And the people who are sitting back and waiting I think, again, you just want to be smart with your investments. But it's very hard, especially in Los Angeles.
00:48:41:05 - 00:48:46:12
Far
That's good advice for you, by the way. I'm the conversation we're having before the pod. Yes. You know, you want to be in the game.
00:48:46:12 - 00:48:47:13
Taylor Avakian
Oh, for sure I know.
00:48:47:14 - 00:48:49:02
Speaker 2
Yeah, yeah, yeah.
00:48:49:04 - 00:49:08:21
Taylor Avakian
Trust me, I'm sure I'm trying to figure my way out there. You guys. Right? Yeah. It's. The brokerage is an interesting business, too, because, I assume that when you guys are, it get to a certain level and, you know, funds, like you're getting part of the carry and the promote, or at least you hope. I hope that you are where in brokers business, you don't really have something that you can sell.
00:49:08:22 - 00:49:35:13
Taylor Avakian
There's something you're building an equity. I mean, unless you get to the top of the top teams or you have some technology where another brokerage firm buy, you really, you can't sell to anyone. And so the way that a lot of brokers have made a ton of money and wealth is by funneling, funneling the commissions and then buying real estate with it, and the tax law is very favorable for what we do because we get to write off, the depreciation of the assets on our ordinary income.
00:49:35:18 - 00:49:55:23
Taylor Avakian
So it makes it very accretive to build wealth through owning real estate. And so I've always struggled with that and figuring out like, what's the best way to do that? What's the best boat you put more money in the brokerage to try to build it up and capitalize on the momentum. Do you build up the team, or do you set a little bit aside and start waiting for that real estate asset?
00:49:55:23 - 00:50:00:17
Taylor Avakian
And maybe you're really cash poor for a bunch of years, and then it starts to slowly build up, you know.
00:50:00:17 - 00:50:23:14
David Moghavem
You know, it's tough about that. Your best years as a broker is probably when the market's the hottest. And so when you're making that decision where it's easier. To put that money aside it might not be the best time. Totally. Whereas this year or 2024 has been some of this like one of the slowest years. You don't have money to spare.
00:50:23:15 - 00:50:30:14
David Moghavem
Maybe so. But that might be the best time to invest 100%. So that's where it gets a little dicey.
00:50:30:14 - 00:50:32:13
Taylor Avakian
It's tough. It's a it's a weird dichotomy.
00:50:32:13 - 00:50:50:18
Far
Oh, so when it's all your money, it's a little hard to scale. It's, you know you know, it's good to cynic. It's good to use other people's money. Yeah. And they benefit. Right. They better looks. The people who know the market's the best sometimes are are the brokers. Right. And they are making the cool calls and are finding and seeing the best deals.
00:50:50:18 - 00:51:09:21
Far
So the people who are giving you money to invest in a deal are getting value, because you're able to scale. Yeah, they're able to scale quicker. Right. Like it's hard to look if you're buying a $15 million deal, you have to have $6 million. Yeah. And equity. It takes a long time to get there.
00:51:09:23 - 00:51:23:07
Taylor Avakian
Let me ask you guys something. From a from a broker's perspective, if you know a broker, right. And they're buying deals and quote unquote, their market and they show you a deal, does that change your perspective on the deal?
00:51:23:09 - 00:51:25:07
David Moghavem
If they also own in the market, if.
00:51:25:07 - 00:51:28:23
Taylor Avakian
They're known as being, investor in a buyer in a market?
00:51:29:01 - 00:51:29:16
Far
I think.
00:51:29:16 - 00:51:30:17
David Moghavem
Not really to me.
00:51:30:17 - 00:51:49:02
Far
But it can be a comfort. Look, we we we're traders, right? We sell every our average whole period is 32 months. It's it's going to be longer. Yeah. Right. But it's been 32 months historically. We're going to give the deal back to the guys who gave it to us no matter what. You know we just talked about this.
00:51:49:04 - 00:52:11:00
Far
Yeah, a couple days ago. And so but it is a bit of it is a bit of a conflict that you have to figure out how you answer. And what I've seen, I've seen some institutional guys in markets buy some institutional level deals. I've seen guys in markets buy deals in other markets, like or, or you could just get really good at explaining why you're doing.
00:52:11:00 - 00:52:15:09
Far
Yeah, and how you're going to do it. And yeah. And try to be as transparent as possible.
00:52:15:15 - 00:52:29:15
Taylor Avakian
I think it's a, it's a, it's a strange balance because I've seen both ways. And I get it from both perspectives too. I think you could do it. I know you can do it tastefully and still, because I know plenty of brokers who own a shit ton of real estate for sure.
00:52:29:16 - 00:52:30:00
Far
Yeah, they're.
00:52:30:00 - 00:52:36:13
Taylor Avakian
Still super active, and they still do a ton of deals. And I'm like, okay, so there's a way, there's a way to do it tastefully.
00:52:36:15 - 00:52:38:08
Far
We respect those guys too, right?
00:52:38:10 - 00:52:44:16
David Moghavem
I would say I, I get that there's a conflict. I totally understand that. But like, you know, just a the conflict.
00:52:44:17 - 00:52:46:08
Far
Yeah. But people could.
00:52:46:10 - 00:52:48:02
Taylor Avakian
Look and feel like, well if you passed, I.
00:52:48:02 - 00:53:04:10
David Moghavem
Think I would, I think I would respect their opinion a little more if they also own in the market, like if they're selling a deal and they own a deal, like I'm, you know, in the same submarket and they're giving me their take. Their pitch is probably impeccable because they know they own in the in the area. Yeah.
00:53:04:15 - 00:53:14:20
David Moghavem
And to me it's like, okay, who owns I'm going to do my deed. I'll feel good about it through my own lens. But here's someone that also is an owner and is selling like you.
00:53:14:20 - 00:53:16:08
Taylor Avakian
You're telling me to buy real estate in LA.
00:53:16:12 - 00:53:18:12
David Moghavem
I should yeah, I think a seven cap.
00:53:18:12 - 00:53:21:18
Speaker 2
You should buy that seven car. Yeah, I think, I'll buy with you.
00:53:21:18 - 00:53:38:23
Far
Let's say, let's say they have a deal and they're overpaying for the utilities and say, hey, I use this company to get utilities down, use them, take it back out in three months, because that's going to have this impact. It's like you could, you could I think David's doing a good job explaining as you you could use it to your advantage.
00:53:38:23 - 00:53:39:04
Far
Yeah.
00:53:39:04 - 00:53:48:14
Taylor Avakian
There's a lot of a lot of benefits for being so greedy and deep in that market where you know how to change, you know, 1%, but 1%, a bunch of 1%.
00:53:48:18 - 00:53:49:01
Far
Add.
00:53:49:01 - 00:53:49:14
Taylor Avakian
Up is.
00:53:49:14 - 00:54:07:23
Far
I mean, it's one of the great things about our business because when when we get $100 more revenue, you know, a good times, we get 13 times, you know, $100, $1,200, that's 14,000. You multiply that by 100. Now you're talking, you know, on real money on just a $100 difference.
00:54:07:23 - 00:54:25:08
Taylor Avakian
That crazy? Yeah. It's insane. Speaking of knowledge and getting knowledge, when you guys either go to a new market or one that you've already been in, how do you become that expert or what resources do you guys go to to actually feel confident in the decisions that you're making?
00:54:25:10 - 00:54:33:08
David Moghavem
Yeah, I would start by saying it takes us years before we buy our first deal in a market. Oh, really? We we're faster.
00:54:33:09 - 00:54:35:07
Speaker 2
Yeah, but it's needed. But that.
00:54:35:11 - 00:55:00:12
David Moghavem
Like, it's not it's not necessarily intentional, but. Yes, it's needed. We track a lot of deals. Farhan and I have broke into many markets together, and we have seen it's painful at times where you're just underwriting every single deal for years. And in Colorado, it was a black swan event to finally break in. It was Covid, but we were tracking that year.
00:55:00:13 - 00:55:02:14
David Moghavem
We're tracking that market for years.
00:55:02:16 - 00:55:05:10
Far
And we got offers for at least two years.
00:55:05:10 - 00:55:29:11
David Moghavem
Right? Yeah, exactly. And that's what it takes, though, to, you know, we're trying to beat the market. We're trying to find a discount to market. So we need to first figure out what market is we need to figure out who's buying these deals. We need to figure out what the cap rates are on our numbers, the real numbers, if it's a non-disclosure state, that's even tougher because now you have to scrap for for data.
00:55:29:12 - 00:55:31:02
Taylor Avakian
That's where you get a bill right from the brokers.
00:55:31:02 - 00:55:51:23
David Moghavem
Exactly. Which we broke into that one too. And it was it's very tough. It's very tough. We also are vertically integrated. So not only do we want to buy a deal, but we want to scale and get a pulse and have boots on the ground and know things first before the rest of the market knows which has helped us buy deals.
00:55:51:23 - 00:55:59:21
David Moghavem
It's also helped us not buy deals because we know we're catching ourselves on a falling knife, potentially.
00:55:59:23 - 00:56:15:05
Taylor Avakian
Which is huge. Yeah. And I actually just had a situation, like that where randomly and I call and check in on clients all the time. Right. So I just want to check in. Hey, what's going on? How are you doing? And this happened to be a call that I was making. So I called the guy and I was like, hey, what's going on?
00:56:15:05 - 00:56:35:01
Taylor Avakian
How are you doing? He's like, oh, we're actually under contract on this deal. You know, it's this deal this year on this deal. And I was thinking I was like, wait, that sounds so familiar. Like, wait, what deal is it again? And he told me the address, and another person that I had known was under contract on that deal and found out that there was some shady shit that was happening from the owner.
00:56:35:03 - 00:56:54:05
Taylor Avakian
And, I was like, are you aware of, like, I think this is the current situation of this deal. And they hadn't released their funds or deposits like that yet, but they're like really like we've we looked through the deed, we didn't see anything. And they went back again and we were able to find this discrepancy and like, dude, thank God.
00:56:54:08 - 00:57:06:17
Taylor Avakian
Yeah, we would have been screwed if randomly like they didn't I didn't comment, they didn't know about the situation going on there. But like that's the relationships. Those are the things that you want to be able to pick up the phone and call someone and be like, hey, what's the story here?
00:57:06:17 - 00:57:33:02
Far
Yeah. Isn't it interesting in 2025 when we have as much data as we can, we have AI, we have ChatGPT, we have everything available. Those human conversations are kind of the most important thing. They tell you where to look for the data, you know, like, we like in Beaverton. There I've walked every property over 50 units and have sat with the property managers for longer than they probably want it to sit with me.
00:57:33:07 - 00:57:58:15
Far
And that is gold. Yeah, those conversations are gold. Talking to the property managers. The brokers, honestly, are often the ones who guide us on where to invest. You know, those conversations are worth a lot. You know, when we're first in the market, you get to a coffee shop and you're chatting up the barista. Then a night, you're going to a bar and you're chatting up the bartender, and and you're just trying to put it all together and figure out how to.
00:57:58:17 - 00:58:17:06
Far
And that takes that takes a long time, and it takes a lot of energy. Yeah, but it's actually a lot of fun to a lot of. Right. Like to understand how the city's working, how it work traditionally, how it's changing from the people who live in it and, you know, work at, love it or, you know, love it or hate it or whatever.
00:58:17:06 - 00:58:21:15
Far
Totally. You know, it's it's I think it's one of the funnest parts about real estate.
00:58:21:15 - 00:58:33:07
Taylor Avakian
I think that many people in real estate are very competitive. And there's that competitiveness of knowing some thing or putting pieces together that other people can't. We're like, that light bulb moment goes off.
00:58:33:09 - 00:58:34:13
Far
The puzzle is awesome.
00:58:34:15 - 00:58:43:12
Taylor Avakian
Yeah. You put the put the puzzle pieces together and you're like, oh my gosh, no way. Like I figured it out, right? That's that's super, super exciting.
00:58:43:13 - 00:59:02:02
Far
We've made we we've done best when the light bulb goes off and, and then when we do it, like, you know, Beaverton was we were one of the first people who renovated and Beaverton, no one was renovating old product. And then we we did that same thing, San Leandro, beat it out. And then we bought ten deals right there.
00:59:02:02 - 00:59:03:03
Far
Yeah. You know, just because.
00:59:03:03 - 00:59:04:16
Taylor Avakian
You know, you're like, this works. Boom.
00:59:04:16 - 00:59:25:09
Far
And there's nothing better than no better info than your own property. Yeah, right. Knowing what's happening on your own property, who's where people are coming from, what the rents are, how long it takes to lease, how easy it is, how hard it is. You know, it's, you know, it's I think I've heard a few times people say there's insider trading is allowed in real estate.
00:59:25:09 - 00:59:26:18
Far
Yeah. You know, it's just legal.
00:59:26:18 - 00:59:29:00
Taylor Avakian
We're not a sec regulated, I guess, or.
00:59:29:03 - 00:59:31:10
Far
Yeah. We're not. We're not cheating. We're not.
00:59:31:12 - 00:59:49:18
Taylor Avakian
It's not. Yeah. You're not breaking the law or do anything nefarious. It's just the truth. Like that is the way that the business is run. And it's it's a people business. I'm curious to know, are you guys doing any, So speaking of AI and tech and where we're headed, because it's crazy and it blows my mind every day.
00:59:49:18 - 00:59:56:16
Taylor Avakian
This new stuff that's coming out, are you guys exploring it? Using it. How do you see it affecting what we do?
00:59:56:18 - 00:59:57:19
David Moghavem
Yeah, I think.
00:59:57:19 - 00:59:59:20
Far
Debo is probably a little better than.
00:59:59:22 - 01:00:02:05
David Moghavem
We say Foghorn. Sometimes a dinosaur, but.
01:00:02:10 - 01:00:04:13
Speaker 2
Okay. But what do you what foreign.
01:00:04:18 - 01:00:10:00
David Moghavem
Foreign foreign hands. Incredible. With the personal touch. Right. That's like, which is, like, irreplaceable.
01:00:10:00 - 01:00:11:10
Taylor Avakian
Incredibly personable and good.
01:00:11:10 - 01:00:29:07
David Moghavem
Any market you're going to love. And I think I've learned over the years to like you can't you have to get off out of your desk and, like, make those personal touch. But there's a way to do it efficiently. And I think we've embraced a lot of tools in order to not replace the personal touch, but make it more efficient.
01:00:29:09 - 01:00:46:00
David Moghavem
And I think in how competitive the market's getting you need that efficiency with your time. So like one of the things that I've embraced, with our acquisition team is deal path. And it's a CRM system. It's like a free add for deal path right now. Whatever. And
01:00:46:02 - 01:00:47:02
Speaker 2
But yeah, I.
01:00:47:02 - 01:00:48:16
Taylor Avakian
Have sponsors eventually. Exactly.
01:00:48:18 - 01:01:10:05
David Moghavem
So, that gives us an incredible pulse on what I was just telling you, like, where the interest rates were when we were able to do it and what the bid spread was like. The Ole path is a great way to get in the weeds and, like, having an organized way. With AI, we've been able to, on the property management side, have different softwares to have.
01:01:10:05 - 01:01:33:17
David Moghavem
I respond to calls, respond to tenants, and just do things in an efficient way that maybe a property manager doesn't have time to do. Again, there's you're not going to eliminate the personal touch, but that property manager has 50 things going on. So to have AI and these tools and leveraging them in order to respond to quick questions or concerns goes a long way.
01:01:33:17 - 01:01:36:08
David Moghavem
And you see it with retention at our property.
01:01:36:08 - 01:02:03:18
Far
Yeah, we've seen that like some of the major reads are taking community managers off property, doing a lot of heavy, back communication and, one centralized place that basically manages the data. It's we're doing it. It's it's sometimes great. It's sometimes a little wonky. But to start and be there when it's wonky and figure it out when it takes off, you'll, you'll get rewarded.
01:02:03:18 - 01:02:06:07
Taylor Avakian
For it's too exponential of a curve. I've just been.
01:02:06:08 - 01:02:08:23
David Moghavem
There is pains. Learning it 100% is pain.
01:02:09:04 - 01:02:20:18
Far
It's sometimes the sometimes the leasing. I like there's, like the, Lisa app. Yeah, I like prospects. Wanted to date her, you know, like.
01:02:20:20 - 01:02:22:04
Speaker 2
Yeah. Wow.
01:02:22:06 - 01:02:29:02
Far
And that's not necessarily as good as, you know, some of the other ones that we've been totally working with.
01:02:29:04 - 01:02:47:09
Taylor Avakian
They're coming out there, though. There's a lot of money being, I think just had it dropped really quick. And I think it's coming back because people realize real estate is an old industry. Yeah. Like we're the last person to adapt all these technology tools and things because our cycles are so long. And so it's hard to see returns on things when cycles are.
01:02:47:12 - 01:03:06:21
Taylor Avakian
The average homeowner I think is ten years now they own a home, right? And that's the majority of the real estate market where the money goes in because it's so big. Yeah. But even in the commercial space that if you look at just the average turnover rate for a property, it's around 3%, in Los Angeles, which means the average whole time is close to 40 years.
01:03:06:23 - 01:03:07:14
Taylor Avakian
That's a really.
01:03:07:14 - 01:03:08:17
Far
Is that that's the stat.
01:03:08:17 - 01:03:10:23
Taylor Avakian
Yeah. If you extrapolate that out and you're.
01:03:10:23 - 01:03:11:22
Far
Talking about for multi.
01:03:12:04 - 01:03:13:04
Taylor Avakian
For multifamily.
01:03:13:05 - 01:03:15:14
Far
Correct. So interesting. You think about three and a half two and a.
01:03:15:14 - 01:03:36:19
Taylor Avakian
Half to 3% velocity. And in the market which if you you know average it out it's 40 years which is crazy right. And so there's not this this, it's it's a slow old industry. And so if you can find a way to relieve pain for people, which is like, why does it take 45 days to get a loan like, why, why does it take that debt?
01:03:37:00 - 01:04:06:20
Taylor Avakian
Why is there escrow title brokers, all this stuff. Right. And again, I'm I'm shooting myself in the foot necessarily from that perspective. But there's a bunch of people touching things. And that's a ripe opportunity for, disrupting something like that if you can create it. I don't know. And I don't think in the near term future, because it is such a trust relationship based business from the principle side and from the broker side, that some AI is going to wipe out everyone.
01:04:07:01 - 01:04:24:04
Taylor Avakian
I do think it's going to take out the lower rung people, because you're just not going to need it's going to be to the people who have it and are good already have all that trust and years of experience and stuff like that built up. Like it's very hard to overcome that. You have to put in time to build trust.
01:04:24:06 - 01:04:59:05
Taylor Avakian
So it's I'm very interested to know how like the cutting edge institutions are using this to shave, you know, expenses off their bottom line, which then increases their percentage returns. They can get their investors, and there's going to be a company that's run by like two people. Yeah, that owns billions and billions of real estate. Yeah. It that it'll be these solo empires because of the tools and their efficiencies where you don't need a property like this one AI person is going to be your property manager and manage all your buildings, and they can do a million responses and reach out to the plumber when they need it.
01:04:59:07 - 01:05:13:00
Taylor Avakian
Call the guy who needs to, fix the flaws, right? They're they're going to know what the most efficient renovations are because they have all the data for what the rents are in the market. It's it's when you think about the bots.
01:05:13:00 - 01:05:14:20
Speaker 2
Yeah, it's it's crazy.
01:05:14:20 - 01:05:17:22
Taylor Avakian
It really is crazy. And I think we're in for a variance.
01:05:17:22 - 01:05:19:05
Far
We're probably not that far off.
01:05:19:05 - 01:05:23:05
Taylor Avakian
I'm glad you guys are exploring it, because if you don't, you're going to be left.
01:05:23:06 - 01:05:48:10
David Moghavem
Of course, I think, I guess while we're still on this subject, AI has turned into has turned knowledge into a commodity to a point where what we have left and it's becoming, you know, it makes things more efficient. But what we have left is opinions. And like this podcast and sharing opinions on this type of knowledge. And that's where that can't be replaced.
01:05:48:10 - 01:06:13:05
David Moghavem
Yeah. Even with general intelligence of AI, I don't think you can replace real opinions. And so the two people that are running the show of the billions of it of a one that you were describing, those are the ones with the opinions. That's the power. And they'll be sufficient through these apps and AI and compute. But it won't replace the opinion.
01:06:13:05 - 01:06:17:01
David Moghavem
It won't replace. It won't replace like what we're discussing here. So that's very.
01:06:17:05 - 01:06:18:09
Far
There's a Yoda quote in here.
01:06:18:09 - 01:06:24:00
Speaker 2
So yeah, yeah, yeah I went full Yoda. Yeah I love that I love.
01:06:24:00 - 01:06:31:13
Taylor Avakian
It is exactly man. It's it's a it's a very interesting thing. And I'm excited to see where it goes and where it takes us.
01:06:31:16 - 01:06:51:11
Far
I think we're so we're so early. You're so early. This is like the end. It's like, touch it. 99. And a lot of my tech friends have basically said one of the reasons real estate and a real estate tech is slow to adopt is because if you guys think I'm the dinosaur, the guys are, you know, with the majority of real estate, are much older than, I'm sure, you know.
01:06:51:13 - 01:07:10:11
Far
And so, it was we had did you hear about this? We had, we had an intern come in and we had it. It was a simple they were like, hey, yeah, yeah, figure out, you know, we have 40 properties and we need to, take the credit cards and make sure they're all going to the right place.
01:07:10:11 - 01:07:38:19
Far
So that was taking people like two to 3 to 4 days. He took he created a macro in ChatGPT via ChatGPT, even though he doesn't know how to build macros. But he knew enough to be dangerous. Yeah. And he figured out a way to do it in an hour. And then we checked it. It was a little off, did a couple things, and he added three, like a job that takes three days.
01:07:39:00 - 01:07:39:17
Taylor Avakian
In that career.
01:07:39:19 - 01:07:41:05
Far
Like an hour or 2 or 2 hours to.
01:07:41:05 - 01:07:42:07
Taylor Avakian
Build it once and like.
01:07:42:08 - 01:07:43:06
Speaker 2
01:07:43:08 - 01:07:45:09
Taylor Avakian
I mean it is really.
01:07:45:11 - 01:08:08:20
Far
And then he showed me the ChatGPT what he was putting in there, I was like, I don't know what this is like. No one knew what it was but it was, you know, he's, he was 20, 21 years old. And you know, I think that goes to if you're a young person trying to break into industry, that these are ways that like if you could figure out problems like this.
01:08:08:22 - 01:08:25:20
Taylor Avakian
100%. That's a great point. I think, for young people, because I have a lot of people calling me like, should I be a broker? Should I go into asset management? Should they go property management? Should I do join a big firm and work as an analyst or whatever it is? And I think you can do all those things.
01:08:25:23 - 01:08:52:07
Taylor Avakian
But if you have this base set of skills and understand technology of where we're at today, like you can add so much value to me, even myself, I'm 28 and like there's this stuff that I just it's over my head. And imagine a 50, 60, 70 year old, you know, person who has a bunch of this real estate and you can come and save him hundreds of thousand dollars a year by just doing a few things that are not that difficult.
01:08:52:09 - 01:09:06:17
Taylor Avakian
Like, that's real value. So if you can and learn those skills now, I mean, real estate I think is is going to be they're not making any more of it, you know. Yeah. Unless you're in Dubai, I guess. Then there man, making all that stuff going underground.
01:09:06:17 - 01:09:07:11
Speaker 2
How how are you.
01:09:07:11 - 01:09:16:19
David Moghavem
Using AI like in your data? I'm sure with the podcast you're probably using and I use AI a lot to you on the podcast side. So like how are you using it maybe on the brokerage side.
01:09:16:19 - 01:09:35:17
Taylor Avakian
Yeah. So it's it's interesting. I've, I've been exploring a bunch of different things. So anything that I do more than once, I try to figure out if there's a way that I can do it more efficiently with. And I'm like, that's my barometer is if if I've done this multiple times, let me just mess around with it for a little bit and see if I can streamline that process.
01:09:35:22 - 01:10:00:23
Taylor Avakian
So it's a lot of the ChatGPT is Claude I found really helpful for writing. It's really good at like being more human. The tone of voice for Cloud. So like I'll write something for LinkedIn or something like that. And, I'll put it through ChatGPT and Claude and figure out, okay, can you improve this? Write it in the style that's a little bit more persuasive or write a better hook or something.
01:10:01:04 - 01:10:22:22
Taylor Avakian
So it helps me with the clarity of thought in writing something for at least social, which for me, branding is such a big part of what we do and making it more enjoyable for my audience and the readers. And I'm just scratching the surface like if I went super deep into downloading all the people who follow me, you could technically scrape like their profiles.
01:10:23:01 - 01:10:31:22
Taylor Avakian
You could figure out what they like, what they care about these through line puts with the data, and then have something that's almost personally tailored to that individual audience, like.
01:10:31:22 - 01:10:32:15
Far
Without doing anything.
01:10:32:15 - 01:10:34:23
Taylor Avakian
Without doing anything. Yeah. And it just knows that.
01:10:35:01 - 01:10:37:01
Far
Yeah. How do you feel about that?
01:10:37:03 - 01:11:05:18
Taylor Avakian
So I'm, I think that it's extremely exciting and scary at the same time. And what I mean by that is I know who I'm competing against, and I know that very few of them are even scratching the surface of what this is. They're not spending the time. They're not doing this. And I have to be cognizant because I recognize the power and what it is of not having it distract me from the day to day, which I've done a very good job at it.
01:11:05:18 - 01:11:29:21
Taylor Avakian
Being able to, like, make these times where I can explore it. But if if you're able to unlock even a little bit of this, like the amount of efficiency that I can get and what I do as a broker will blow everyone out of the water when I can have automated market reports. Automated rent reports. Yeah, directly to an investor where I know that you're buying in Silver Lake and Echo Park.
01:11:29:23 - 01:11:46:19
Taylor Avakian
I know you're looking for 5 to 15 units. You like 1 in 2 bedrooms. If I have a report that automatically generates when a new lease comes up or is leased through whatever platform it is, and it sends it in a pretty package, like I'm doing 50 of those a day, that would I would never be able to do any of that stuff.
01:11:46:19 - 01:11:50:20
Taylor Avakian
And that's value. Like I'm constantly thinking about how I can add value to people.
01:11:50:20 - 01:11:52:00
Speaker 2
Yeah, I would say.
01:11:52:02 - 01:12:01:11
Taylor Avakian
What's the most valuable piece of information besides deals that you can get that will either from a broker or someone else that helps you in your job?
01:12:01:13 - 01:12:04:07
David Moghavem
Yeah, data for sure. Just data like.
01:12:04:07 - 01:12:05:11
Speaker 2
Rent. Yeah.
01:12:05:12 - 01:12:09:00
Far
Occupancy, rents for renovated units.
01:12:09:00 - 01:12:09:14
David Moghavem
Comps.
01:12:09:14 - 01:12:15:19
Taylor Avakian
Stories like what's what actually happened there. Was there a credit there. Stuff is in the ground information or.
01:12:15:21 - 01:12:19:16
Far
Yeah, maybe like early on developments you know.
01:12:19:17 - 01:12:44:04
Taylor Avakian
Is a company moving in over here. Is there going to be $1 billion. Yeah. You know. Yeah I guess, yeah. Stuff like that. I mean that if you have a way to have a system that keeps an eye out for what's happening and can analyze all this stuff and make a strong judgment or a pretty strong case that like, hey, we think that X is going to happen, which is going to cause why historically, which would be good for investing.
01:12:44:04 - 01:12:44:22
Far
Yeah.
01:12:45:00 - 01:13:07:15
David Moghavem
Like that value. And by having more efficient process of making all of this, it goes back to a foreign was saying it gives you more time to meet people in person and foster those like in-person relationships, because you're so efficient, in the back office, things that you need to do. Totally. So that's what's important. I think people shouldn't lose sight of that.
01:13:07:18 - 01:13:19:05
Taylor Avakian
Yeah. No, I, I if it's fun and exciting and scary at the same time, but I'm, I'm excited to see where it comes in. Yeah, I definitely will be using it. And we're already using it, and.
01:13:19:05 - 01:13:58:18
David Moghavem
We're already, I mean, we're talking we're by the way, we're talking just like LMS ChatGPT. But we're able to do this podcast. Yeah. And deal flow Friday through AI. And like the editing and the automated editing, it's able to do. And you're seeing this renaissance in podcasts and this uprising podcast. Because for people to have a decentralized platform, to find information where they can listen to you, me for on anyone instead of mainstream off the shelf type of info because of the capable cities AI has been able to bring for us.
01:13:58:18 - 01:14:22:09
Taylor Avakian
So yeah, I completely agree. AI is changing the game for everything. And speaking of kind of, the branding and what we're doing, I'm curious to know from you guys how much has it changed from building a personal brand as an investor because, I've seen a lot of investors who have had previous personal brands, like they've raised a lot of money.
01:14:22:14 - 01:14:34:05
Taylor Avakian
They've been able to do a lot of deals. How have your guys perceptions changed on personal branding and getting your name out there and networking with brokers and all of that stuff?
01:14:34:07 - 01:15:05:15
David Moghavem
I'll I'll just say one thing. What we've learned is people, again, they want to they want to invest in people they trust. And what I've learned through it is that it's not just about Max and Mitch, it's also Farhan and David. And who are the people that are as a team working on these deals? And do I trust the people who are putting from the from the analysts all the way up to the CEO to I trust everyone and putting the numbers there.
01:15:05:15 - 01:15:10:18
David Moghavem
Do I trust the team? And so I think that's that's an important part of it.
01:15:10:21 - 01:15:13:03
Taylor Avakian
Is building trust at a scale that.
01:15:13:08 - 01:15:24:06
David Moghavem
So personal branding back to personal branding is like you want to brand yourself to build that trust, not just the company's trust, but who the person is behind the company and not just the CEO, but everyone on the team.
01:15:24:08 - 01:15:49:18
Far
Yeah. So what you guys are doing with both your pods, you're I think you're creating familiarity, which might make it easier to eventually, you know, earn someone's trust. Yeah. Right. Because someone's going to know how you think. Know how you think about things, what's important to you, all that kind of stuff from, you know, the stuff that you guys are doing and it's going to pay dividends.
01:15:49:18 - 01:15:56:10
Far
Like you both you guys are doing awesome stuff. Like I already talked, I've listened to every podcast.
01:15:56:13 - 01:15:58:03
Speaker 2
And I know you said that.
01:15:58:03 - 01:15:59:22
Taylor Avakian
I was like, oh my gosh, it's amazing.
01:16:00:00 - 01:16:05:22
Far
And and it's fantastic. And and demos running with it too.
01:16:05:22 - 01:16:26:17
Taylor Avakian
Yeah. Yeah. Right to love. I love the details. You're so much more like detail oriented than me. And I because I'm fascinated by, how institutional players think. Right. And like, how you're structuring deals. Because when I sell a $2 million property, like, I don't get to look at an IRA, like, I don't have to run what the the costs are going to be for, returns.
01:16:26:17 - 01:16:49:22
Taylor Avakian
And like, I, it doesn't the deal doesn't need it. Right. But the stuff that you guys are doing, you have to look at every percentage point. And so I can learn from you and the institutional space and take that into what I do. And it becomes even more powerful because then I can have that much more confidence when I'm selling a listing or doing this to articulate to a buyer like, hey, you know, did you have you looked at this way like, here's actually what's going on?
01:16:50:00 - 01:16:51:14
Taylor Avakian
Yeah. So I love learning from and.
01:16:51:14 - 01:17:10:20
David Moghavem
You get to see that through the podcast lens. Right. It would be hard for a lot of people to internalize that through just a conversation. By seeing these podcast, you get to see how I'm looking at deals, how our guests are looking at deals, and other people that are viewing it. Do they see the world the same way?
01:17:10:20 - 01:17:21:21
David Moghavem
And it builds trust, it builds credibility. And who's behind the numbers? Anyone can make a model spin out of return that you want it to return. It's about who's the person behind the numbers that's going to execute this business plan.
01:17:22:02 - 01:17:36:13
Taylor Avakian
100% for hand. How West Coast, California, Los Angeles, long L.A. what over the next ten years like are you focusing on trying to make happen with investments in your portfolio?
01:17:36:14 - 01:17:58:14
Far
Oh, man, that's such a good question. I mean, we should have these long term plans. You know, I, I hope first off, I hope that I do investments that were, now I have a lot of friends and family that are investing. I did a small deal personally where all my best friends came in. Awesome. You better believe I'm going to knock that out of the park.
01:17:58:14 - 01:18:25:13
Far
Yeah. You know, and so first off, to be a good steward of capital of the people who are investing with me. So important I don't take anyone's dollar for granted. That's really important. Now, if we do it right, you know, ten years from now, you could get to a point where you have enough passive cash flow that you could you have financial freedom.
01:18:25:14 - 01:18:47:05
Far
And so I got into real estate. I wanted to own. I wanted to own something. Didn't know what that meant. But owning, real estate was important to me. Now that I'm in, I want to have passive cash flow that gives me freedom. You know, there's a lot of things I think. I think, you got, you know, and, we're talking about that I care about a lot.
01:18:47:06 - 01:19:08:23
Far
I want to, you know, if I can make enough money to have passive cash flow, I could, you know, do things for my community, maybe do something in politics, maybe become a teacher. You know, I love restaurants. I'm in a restaurant investor. Do more of that. You know, it. It opens opportunities. I have a ten year timeline to do it.
01:19:09:05 - 01:19:29:18
Far
Yeah. And I think if I know what the number is that I need for, like, a passive cash flow, I know how much equity I need to get there. I know how many times each of the average deals needs to flip to get to that point. And I encourage you guys, you know, being about ten years younger than me to try to figure that stuff out.
01:19:29:18 - 01:19:34:17
Far
Also. Yeah. Because the earlier get started, you know.
01:19:34:21 - 01:19:35:18
Taylor Avakian
100% the.
01:19:35:18 - 01:19:42:10
Far
Better it is. Yeah. And I wish I would have got started a little bit earlier, truthfully. But I'm not that old. I just I just look old next to you guys.
01:19:42:10 - 01:19:43:09
Speaker 2
Yeah. It's like 50.
01:19:43:09 - 01:19:47:16
Taylor Avakian
One and you're making, you know, 50, 60 K passively a month. You're like, oh yeah.
01:19:47:19 - 01:20:11:23
David Moghavem
That's the holy grail, right? It's also to have that financial freedom and being an owner. Yeah, you get so many tax advantages with it. Right. So we love what we're doing and breaking into new markets and doing and learning and like I fell in love with the industry through breaking into markets, seeing how people live and just the dynamic of multifamily and improving communities.
01:20:12:05 - 01:20:16:01
David Moghavem
Like that's what's made me love this job.
01:20:16:03 - 01:20:37:14
Far
The tax benefits are crazy. Tax benefits is really, and the depreciation, accelerated depreciation. The real estate professional up status. And that's not cheating the system. The system saying we want you to invest in real estate and we want you to be transactional. We think it's good for the overall economy improving communities. And and we're going to incentivize you for that.
01:20:37:14 - 01:20:50:20
Far
The government is incentivizing you to buy real estate, to sell real estate, to trade it, to keep on reinvesting those dollars that you make on it. And we we should know that back and forth, and we should, take advantage of it.
01:20:50:22 - 01:21:07:13
Taylor Avakian
I know we're all multifamily guys, but I'm curious to know, is there another asset type that you are either bullish on or think has an incredible amount of room to grow, that if you know you didn't, if you had to start over, you'd be like, that's the one that I'm going to go after.
01:21:07:15 - 01:21:08:05
David Moghavem
What do you think?
01:21:08:05 - 01:21:24:02
Far
Oh man, I love retail. You know like really the right guys. Do you know the right I don't I don't know them. I don't know who runs it. But like the stuff that they do to the retail and sons, they take these old centers and like breathed life. Are you friends with those guys? No. Okay. I feel like.
01:21:24:02 - 01:21:25:21
David Moghavem
What's your last name?
01:21:25:23 - 01:21:29:14
Far
I, I forgot, I think you might know one of those guys, but I'm.
01:21:29:14 - 01:21:30:23
David Moghavem
If I know, like, the last.
01:21:31:01 - 01:21:35:05
Far
Yeah, I don't I don't remember, but they, they see the.
01:21:35:07 - 01:21:35:18
Speaker 2
They see.
01:21:35:18 - 01:21:44:23
Far
These assets, they breathe new life into it and they make their neighborhoods better. That's actually what got me into real estate in the first place. So that's like super exciting, you know.
01:21:45:01 - 01:21:45:19
Taylor Avakian
So retail.
01:21:45:22 - 01:22:07:17
David Moghavem
I would say I would say retail as well. I have a lot of friends, family, generational wealth in retail. And like, obviously that's great. Money's great. But like the excitement kind of like of creating a new community is like creating a new experience. Yeah. And lifestyle retail is very exciting.
01:22:07:19 - 01:22:12:22
Taylor Avakian
You guys are so much better than me. I'm like, why? Or where the money is? I'm like, yeah, data centers.
01:22:13:00 - 01:22:13:16
David Moghavem
Yeah.
01:22:13:18 - 01:22:15:06
Speaker 2
Data center. Yeah.
01:22:15:06 - 01:22:22:01
Taylor Avakian
That's what tires, man. There's no fucking way. The data centers are not like that. Two times more valuable.
01:22:22:02 - 01:22:52:17
David Moghavem
I will I will say this, my my dad's not in real estate. I, we talked about journey. And part of my journey is I actually didn't come from a real estate family. Even though I'm a Persian Jew from L.A., I didn't come from a real estate family plot twist. But my dad, he is in manufacturing wholesale distribution, and he has a very successful company, but he also bought his warehouse in Vernon.
01:22:52:17 - 01:23:15:14
David Moghavem
And I would say I always make a joke on, like, that's appreciated more than any money you've made in your in your company. And that's a beautiful thing. And industrial has done in LA has has benefited from that. So from a money standpoint, sure. Like I would say industrial, but I would say from just like a vibe general standpoint, like retail, it's pretty cool.
01:23:15:14 - 01:23:21:21
David Moghavem
Look at and oh, my son and I are both foodies, filing probably even more of a foodie than I am. So like.
01:23:21:23 - 01:23:24:11
Speaker 2
Not from that angle. He's he's actually.
01:23:24:13 - 01:23:25:10
David Moghavem
He's an investor.
01:23:25:16 - 01:23:28:10
Speaker 2
I will write PJ pizza. Are you,
01:23:28:12 - 01:23:35:16
Far
You know, funny, as I, twice in the last, like, two months, someone came up to me thinking I was. I mean, not from Pizza Palace.
01:23:35:18 - 01:23:38:01
Speaker 2
No way. Are you, So. Yeah. Yeah, yeah, yeah.
01:23:38:01 - 01:23:49:22
Taylor Avakian
Just so funny. Yeah. No, but I'm going to have to ask you for some food. Rex. Yeah, sure. 100% did. Well, guys, this was incredible. I'm collaboration podcast.
01:23:50:01 - 01:23:52:07
Speaker 2
I love the collab. This is great. Really fun.
01:23:52:07 - 01:23:54:03
Far
Yeah, I forgot the. Yeah.
01:23:54:05 - 01:23:54:19
Speaker 2
Yeah, we.
01:23:54:19 - 01:23:56:05
Far
Should have had some tequila or something.
01:23:56:06 - 01:23:56:23
David Moghavem
I know it's.
01:23:56:23 - 01:23:59:12
Speaker 2
Friday. It's deal flow Friday Miami.
01:23:59:12 - 01:24:03:18
Taylor Avakian
When I come out there and we'll do round two. Then we're going to have some tequila booked.
01:24:03:18 - 01:24:11:01
David Moghavem
The flight to Miami, both of you. I'll handle the rest. Tequila on the beach. Maybe, you know, we'll get a little.
01:24:11:01 - 01:24:13:15
Speaker 2
Room at 11. Just a recording room and 11.
01:24:13:15 - 01:24:14:23
Far
You guys.
01:24:15:01 - 01:24:15:22
Speaker 2
Can record.
01:24:16:00 - 01:24:17:07
Far
I'm not putting that on record.
01:24:17:07 - 01:24:20:17
Speaker 2
Yeah, I look at that for you guys.
01:24:20:17 - 01:24:21:08
Taylor Avakian
Thank you so much.
01:24:21:08 - 01:24:23:10
David Moghavem
Yeah. Thank you. Awesome. Thanks, Haley.