I Survived Real Estate 2020 Residential Panel Pt 2


The Norris Group proudly presents it’s 13th annual, award-winning black-tie event, “I Survived Real Estate”. Industry experts join Bruce and Aaron Norris to discuss perplexing industry trends, head-scratching legislation, and opportunities emerging for real estate professionals headed into 2021. All proceeds from the event benefit Make-A-Wish and St. Jude Children’s Research Hospital.

Platinum Partners:


  • Norada Real Estate Investments
  • San Diego Creative Investors Association
  • The Outspoken Investor, Tony Alvarez
  • Think Realty Magazine
  • Wilson Investment Properties
  • Realty 411

Gold Sponsors:


  • 7 Figure Flipping
  • Inland Valley Association of Realtors
  • Keller Williams Corona Keystone CPA, Inc.
  • Las Brisas Escrow
  • Leivas Tax Wealth Management
  • Pasadena FIBI
  • Real Wealth Network
  • In A Day Development
  • Spinnaker Loans
  • uDirect IRA

See below for full video and resources.

Episode Notes:


Narrator  Welcome to the Norris group’s 13th annual I survived real estate Gala. The Norris group would like to thank the following Platinum partners Narada Real Estate Investments San Diego creative investors Association, the outspoken investor Tony Alvarez Wilson investment properties, think realty magazine and realty for one one. We’d also like to thank our gold sponsors seven figure flipping, and Linda Valley Association of Realtors, Keller Williams Corona, Keystone CPA, Inc. Last breezes, escrow laevis tax wealth management in a day development NorCal Ria and SD Rei Pasadena, Phoebe real wealth network. So Cal cash flow spinner girl loans and you direct IRA,

Aaron Norris  we are on Thank you guys, that’s a great way to set up what we’re about to do next. So at our very first residential Town Hall, when COVID first hit, a lot of these speakers joined us to sort of give us insights into what was happening and all the different areas of California and we are doing the same, I think in what is in reverse order. So this should be very interesting. First, we’ve got Lenska Bracknell, San Diego. And I just want to say first off, thank you for San Diego creative real estate investors Association for being part of this event since the very beginning in 2008. You guys have been such an incredible partner, even look at your background, you’ve pulled up I survived real estate 2019. Like you’re on the stage, I miss seeing your face right in the front. But thank you for joining us. I can’t wait to hear what’s going on in San Diego.

Lenska Bracknell  Yes, and thanks for inviting us and I certainly miss seeing everybody in person. But I’m sure Bruce will not miss my probing question this year. Maybe you have a probing question for me this time, Bruce. So I’m ready. I’m ready to share my screen. And I just wanted to say that we we we still are short of a million dollars, right. So hopefully, if you’re doing well, in real estate, you should have enough money to come up with it.

Aaron Norris  I didn’t say Atlanta did Thank you.

Lenska Bracknell  Yes. And if if and it is still tax deductible. So either way, you cannot lose by still donating. So I’m going to have my slides and I think Yeah, I am not as good as the guys talking without slides. And especially Aaron put the pressure on this time. He said yes. We’re dressing up. Yes. Make up Yes. Here. And yes, do please do do do a TED talk. So I googled TED Talk. And here we are. This is my first attempt to do a TED talk. It’s supposed to be entertaining. It’s supposed to make you guys think so. Let let’s see if I get five stars at the end. So I’m representing SDCIA, which is the San Diego Creative Investors Association. We always say we’re the largest one in Southern California, and certainly location location in San Diego. We really are the bright spot and kind of the insider tip of the real estate industry. So my name is Lance ska, and here we are nine months later, and I’m ready to burst. For all you people that think I’m still in a childbearing age, thank you so much. But it did feel a little bit like a pregnancy the last nine months. Because waking up with morning sickness, watching the unemployment numbers and GDP numbers, then bursting probably more out of my pants because the refrigerator is too close to my home office. And then the constant headaches of what do we what do we name it? Here? First of all, why do we name this recession? Right? And then what do we name the recovery? Is it a V? Is it the EU? Is it an Alice’s smoosh? Is it a W we went through all of this, we finally ended up with naming it a K recovery. And nobody ever explained what that straight up line means for the K recovery. I know what it is. It’s the one percenters their net worth went straight up. Actually we should put right the government and Congress in that too. But after I have thought a little bit about it, I came up with x recovery. And here we go. That’s alright, it’s coming in, it’s coming in. So x, because x has actually a lot of different meanings. First of all, we lost a lot of jobs, a lot of loss of a lot of career. We destroyed some dreams, we destroyed the middle class. We, it is really hard right now to predict which direction are we going to, but we know there will be opportunity, and also x actually stands for a transformation or for a cross road in to a new dimension. And I think this is where we exactly are we have the choice now to really bring this country forward or not. So we have a lot of volatility, and we still don’t forget, we have a lot of debt. And also as a real estate investor, you know, we like the 10 x returns right? 1% in interest. lower interest means the prices go up 10% or vice versa. And then don’t forget about the show social effect about the x o x O. So here is my kiss, and we still will have Christmas this year. I believe. We all know that the California housing market was a shocker is surprised and it outperformed. So one of our investors, Jesse from AJ x investments, says like this, the unknown was my biggest challenge since COVID. Started adapting and changing quickly to new ways of life has been our biggest reason that we’ll still have a successful business. So he does a lot of fixin flips, and does very well. Now, shocking is obviously right now we are measuring our new normal our new economy with old methods. As we know, California’s unemployment numbers they can’t they haven’t even processed claims from last month. Okay, so all the numbers, whatever anybody is saying is probably not quite correct. But California, and San Diego has an unemployment rate of 14.4% right now. And as you can see by the yellow coloring, that’s pretty bad. But when was the last time we had a shock to the labor market when we actually lost the manufacturing jobs, right. So this time, the service industry are the unlucky ones. And also the shock is happening much faster. So what to do, so workers can either change careers, which might require expensive and time consuming education, or move, which means it might actually help us with getting some inventory. Where did all the jobs go from the manufacturing? Look, they all ended up in finance and real estate. So where the question is, where do they end up this time? I think this is not such a big secret that it will end up with the five big tech companies and you see it that California is not on the list of the top performing markets anymore. But wait. San Diego still has the best one of the best beaches in the US. So shift happens and there is a big city Exodus in this time San Diego really does not count to the big city. So we have seen some Exodus and we have seen about 13,000 companies actually leaving California in the last four years and about 300 people thousand people have moved to and taken their politics and their cars with their California license plates to Texas to Salt Lake City and actually my personal friends are moved up to Idaho. Now San Diego is still cheap compared to San Diego to San Francisco. Okay we offer a great quality of life. But migration is always driven by affordability as we have the the godfather of affordability Bruce Norris on on the panel right here. So really the haves and have nots the people that have a vacation home move to their vacation, home, the super rich are buying up the Hamptons, Aspen Lake Tahoe Jackson Hole. But still we got Bill Gates that move to Del Mar. So we are not quite as as rich So, which means we have a great Jason and Vanessa that I call them the $2 million team. They do high end fix and flips and had about eight showings on their $2 million listing. And a lot of those showings were from Redfin agents, people moving down from San Francisco, the myths about urban and suburban in San Diego. And overall, if you really look, there’s a lot of talk in the news. But if you go by the mind move data that shows permanent address changes, it just was about 1% 1.9% year over year, whether they’re still driving with their California license plates around, you know, that is to see, but look who is the winner, Texas, Georgia, Florida in Idaho, actually, the winners in that. But permanent moves are flat. So I personally think working from home and the whole sub urban is a little overrated. We in California here in San Diego, we’ve had that that fan phenomena for the last 12 years because people move to more yetta from San Diego and sat in traffic for two hours. Now San Diego is special not only because we have the best real estate club here, and I’m one of the board members. But we also have a very strong defense and military base for a lot of zero down. I totally agree with you, Bruce zero down. VA loan right now. It totally switched, when 10 years ago, somebody made an offer with the VA loan and some agents went like, oh, VA, we don’t want to deal with it. today. This is the golden ticket because job security and it’s zero down. So we do have technology Life Sciences, Life Sciences, you can work from home, you got to go into the office and do the tests with a little and we do have some manufacturing jobs. But it does take $131,000 for a median home price. Oh, and by the way, nobody really asked who the father is. is a Donald Trump, Charles Darwin, Darth Vader or Sharon power or Stephen Venusian? These are just right now the people that are really have an effect on our economy. And thanks to these two guys, in minuchin I hope you guys all are educated on who he is and that he is in the White House. He was the one that bought indymac bank or not bought that he was given by the government so I’m sure he’s waiting for another gift this time around. So September key statistics year over year. And I’m I don’t want to say we love San Diego real estate is on fire because we do have a lot of fires. And it also is a burden on our real estate market, at least north. So we are right now at 665,004 detached 753. But the average house in San Diego is a million dollars. So let that sink in. So we have 22 we sell a house within 22 days. Last time we had a high increase that was in 2004 then we leveled off and then we had a very big decline. It only took us 18 months to lose half the value. I just want to have people remember that. Okay, so August 2018. Why did I circle this? That was when prices dropped 10% because they increase the interest rate. Right now from February to October. We gave we have about a 10%. Now, when you listen to Case Shiller the average is still about seven about I think six or 7% for San Diego. Now. If the prices really go up everything as I would say everything hinges on interest rates. So if you look at the payments, the payments in August 2018 just go down here the payments right now are still less than they were in 2018. And for median home price, our rental rates of this so some you actually still make sense To buy. And so the purchasing power is just did it you know, they, but also, not everything went up that that the devil is in the data. And the data is right here that in Rancho Santa Fe considered a rich zip code. They didn’t do much on median sales price, actually just the opposite they have a 14 months supply bottom left. Now, there’s a little bit more hope there they’ve been selling a little bit better, but they always were the zip code with the most listings, no sub urban on sale in San Diego. No, it’s not just you could say you can get a good deal. But it takes 10 months to sell a property in one of the suburban neighborhoods. So again, a myth that is not true San Diego downtown at least it’s flat with an upward hope. Nick Davis and one of our members Sterling investment, he says data determines direction and diversification. He has flipped over 500 houses pivoted his business to also flip apartments and now actually is offering real estate education. So, his concerns are obviously like we all How is the government influencing the business? Because if you if I I if I have written a report two days ago, it I would have had to change a totally today because the stock market tanked and a lot of other things happened in the meantime. And also will banks keep lending because banks are not lending right now because they are getting ready to save the money to take care of the losses. So obviously all this is driven by inventory. So inventory of dies, can you see that? This is down 53% from 2019. Attached units are down about 30%. So we practically have no inventory in San Diego, which are Leo Clark, you probably all know him says no problem. No, no inventory, no problem. I’ll create some of the problem really is the cities the city still have not gotten the memo. And we are in a housing crisis. And that that 10 to 12 offers on every decent house in San Diego. So this one was not COVID delayed, because real estate was declared essential so was construction, all our subs, everybody else on this project, wanted to go back to work wanted to build out those homes. So and so this is a few of these success stories that people have done. But we do need to watch obviously the new COVID numbers Europe specially my hometown, Germany is unfortunately suddenly not doing too good. The National delinquency rate are at the highest that it has ever been. We’re not quite sure about the forbearances some people might have just taken the precaution to take out a forbearance. And also we need to watch the unemployment line numbers. California accounts for about 25% of national numbers and it is still at an elevated level of over 200,000. And may I remind you that does not include the a the pandemic unemployment assistance for gig workers. Last week, we had about 1.2 million in the US total initial claims. And we are seeing it now going into the white collar workers mortgage rates are on the discussion blog about that they might jump up next year. I’m really excited about that you guys have a commercial division because the appraisals on the average when they are when they are all securitized they get appraised every so often. Right? And so that appraisal just came back and a 27% drop in value. So this is going to be a huge problem. Now can we can we just convert a mall into a distribution center at all Sounds great. But it’s really not the type of real estate nor is it the right location. If people don’t want an ad, you and your background just guess if you converting a mall to a con, to a distribution center now, I’m really actually excited because of the internet, we are really digitizing real estate, the FinTech companies, the IPOs, in the mortgage markets are just out of this world, where we’re trying to be purchasing asset classes as much as it allows us we have a lot of issues on them on the ballot, I just want to make one to the commercial property tax bill. Now, if commercial property values tank, wouldn’t it be good then to have them assessed lower? Because if we have that proposition come up. So I think there will be some price discovery. So we really have to watch for future policies and stimulus from our, in the trenches property management company, where we found out the professional managed single family homes are doing better, then the investors that are managing their own properties. So we have the property managers tell me we are collecting 98%. So there are not a lot of people behind. But there is a new company that is called arrived, which is democratizing the ownership of real estate, it’s a new tech start up where you can just with $1,000 invest into a rental home. So these are all exciting news. And then obviously, the godmother of all trends in real estate are at us. So then cities that now adopted more pre approved plans, actually the appraiser, the Fannie Mae change, the guidelines to also improve include manufactured homes, and the appraisers are being educated. It’s not quite how we want them to appraise it. But there is actually on the grid form no and a edition where they do their adjustments for the ad you. And how much I understood is that the value really didn’t catch up yet, the soon we have more comps in that neighborhood or in the in the ad use space, that will increase the value. So our investors have been really cranking and up and adding the ad use for an increased ROI from anywhere from 10 to 16%. And that is probably one of the smartest but how it’s practically done. I give that to my co share county Derek harms. And thank you on behalf of stca to be a part of it. And my name is Lynn ska, you can find more in depth analysis is on San Diego on my YouTube channel. And my last thing I wanted to do say is take off the two months until the new year. That’s what I’m planning on doing. And then because we have to see how the elections to play out, I never thought it is such an important moment moment in time. So thank you so much.


Aaron Norris  Thank you. Thanks, guy that was hilarious, per usual. And you know, SDCIA has really been on the forefront of the conversation. Have you put on a few sessions and earlier this year, I got to participate as MC in an event that you put on Saturday is SDCIA going to be doing that again in 2021.


Lenska Bracknell  If I am getting ready of Yes, because they’ve in February, we’re hoping to have another event maybe not like a big one, but probably obviously more like maybe a zoom call. And because there are certain updates. But it is still the cities are just holding things up. So it’s not an 60 or 90 days. It’s just not just especially there are certain cities that are really on the ball like Oceanside and San Diego tries, but it I think they’re overwhelmed.

Aaron Norris  Well, I can’t wait. Some of the things going on in San Diego are pretty interesting then willing to go even with more units. I don’t think some people are paying attention to some of the opportunities on upzoning. So if you have a duplex, you could technically build two at us. So basically go from a single family residence that had an up zone to a duplex. You could possibly get four units on that property. So I think there are some unique opportunities in the ad space specific to California that are Wall Street competitors just won’t touch. They don’t want that.

Lenska Bracknell  And they don’t Yeah, they don’t want that because they’re waiting for the rental properties to become available. And that’s been such a huge money raising is from BlackRock and other companies. You know, people are afraid that we are heading into this big foreclosure crisis and stuff. There’s so much money out there invitation homes owns what 100,000 rental units, so it’s Yeah. Okay.

Aaron Norris  All right, Derek, Derek harms he is the chair of the North San Diego real estate investors Association. We’re gonna walk our way up the state. Welcome to the show.

Derek Harms  Thank you, Aaron. Thank you, everyone else that’s presented. This has been really cool to watch and insightful. And it’s, it’s amazing how much you learn in like, an hour’s time here. And even though you know, you like to think you’re in the trenches on the forefront of this business, but there’s just so much that you just can’t absorb. So an event like this is truly important and is imperative for us in our growth, man. So thank you guys, for what you do. Thank you for the charities that you support and everything you put on here. And I’m bummed that we can’t come out in our fly gear to the Nixon library. And you know, have a good night and drink some wine with everyone break bread. But hopefully next year, we can get back to that because I look forward to that every year. So I’m actually going to pick up where you guys left off on at us. But before I do that, tiny bit of housekeeping so yes, and with the North San Diego real estate investors Association. Typically we meet at the El Camino Country Club up in Oceanside, we’ve had to go virtual since COVID. Started we’ve had a pretty good turnout and a lot of really cool speakers. One of which is on this call, two of which I should say is on this call Bruce and Aaron, thank you guys again for your support. And I’m doing this a little different. So instead of putting a bunch of data on the screen, and I knew Lenski was going to cover most of San Diego’s data. But she did, she showed you inventory and sales numbers. And that’s relatively indicative for North San Diego as it is through the county as a whole. And I have a few slides, I want to share that that kind of paint the picture a little more. But what I did was is I called every investor. I know in town, I called every property manager I know in town with thousands and thousands of units. I’ve called every agent, I know some of the Top Producing agents in the county. And I just basically took everyone’s temperature, and I wrote them all down in some notes, and then kind of summarized the sentiments from everyone in town here in San Diego, and just basically got the feeling for what the hell is happening right now and what people are doing about it. So that’s kind of how I’m gonna approach this. But first, I’m gonna get in here to a few slides to kind of show what’s happening in the north part of our state. And again, it’s nothing too different than what we’re seeing in in the county as a whole. So you guys, you got audio visual on the slide. Yep, thumbs up. We’ve got Okay, detached pending sales right now. So this, these red bars are North San Diego County. And right now, everything is pending. That is just if your home is listed, it’s pending. And that’s that’s what we’re seeing across the board here. detached percent of original list price we are at 100% of list price is what sellers are getting right now further home. And the overall sentiment is so indicative of what you see on this chart. it’s it’s it’s very good for real estate agents with listings. And it’s very good for sellers. It’s difficult for investor buyers that want to get quote unquote good deals or a discount on a property because sellers are starting to see this trend, even if they’re not the most educated seller and on the front lines of following what’s happening in their local markets. But this is starting to become mainstream news. So detached average days on market in North San Diego 25 days that’s an average that isn’t insane. You know, the North San Diego has been pretty fortunate compared to some of the other counties over the last three years but 25 days detached on average days on market is is amazing for the detached and honestly it’s like way less than that in reality like your home is not staying on the market for longer than a week. Right now if it’s like priced anywhere, somewhere appropriately, or unless it has some major issue with the property or the location or some sort of negligent issue on the property, it’s just they’re selling fast. Um, the detached median sales prices in North San Diego County, we’re at 719. Right now, that is up 12%, which, you know, you is a lot. And it’s you see some of these numbers throughout the county. But they’re all very similar. And we’ve just seen so much growth. And the last slide I want to show you because this one is pretty interesting. I like this slide. So it shows 2020 actives, which is the light blue here, and then 2020 pendings, which is a little darker. Here, you can see the Delta has gotten very small, between active and pending here. Whereas you go back to this time last year, the Delta was a lot more way more than triple. So essentially, right now, it’s in San Diego and the north part of the county. And overall, if your home is listed, and it’s reasonably priced, and it’s Reese, and it’s in reasonable shape, you are getting multiple offers, you are selling it quickly, and you’re getting some really aggressive buyer tactics now. So on multiple deals that I’ve either flipped or listed recently, we’re seeing a bunch of offers come in with no appraisal contingency, no inspection contingencies. And we’re seeing that now. We’re seeing escalation clauses, most of you know what that is. But if not, essentially buyers are willing to pay 3000 or $5,000, higher than the next highest offer as long as you show them proof of the next highest offer. And, and I mean, it’s getting to a point where everything just feels extremely frothy. And and it’s just this hysteria in the marketplace. And at least for me, it makes me think, like, hey, how long can this this music, keep going and hold on timeout, take a second eyes wide open, let’s make sure I’m making smart moves. And I’m gonna dive into that in a second here. So I’m gonna stop sharing my screen now. And I’m going to pull up some notes that I took. And because I’m kind of on this, this market topic right now, I’m gonna finish here, then we’ll circle back to at us. But overall, you guys, this market is insane here in San Diego, and in North San Diego County. You know, a bunch of the guys I talked to today, were saying, Derrick, everything right now is worth at least 100 k more than it’s listed for. And that’s real. I mean, we’re seeing we’re seeing a lot of homes get get priced at where they should be priced based on the data and the comps. And we’re like hundred k more than list price in what we call affordable homes, you know, six $700,000 price points San Diego, which that’s a lot of money, it’s more than 10%. Over list, it’s crazy. A lot of investors in San Diego house flippers are seeing more $100,000 profits on deals than they’ve ever had before. And it’s simply because of this this supply and demand and inventory and balance. And people are just getting really loose with their offers. Overall, most people I talked to were cautiously optimistic about q1 or q2 2021. But an overwhelming theme I got from people was a we’re not going to add appreciation into our underwriting when we’re looking at deals, we’re going to write it in as the data shows us now not based on 1% a month appreciation or however we’ve been seeing over the recent past, which I think is smart. You know, if the deal makes sense today, then, you know, maybe do it. But you know, what we are seeing too is and I’ve personally seen this on quite a few properties lately is you know, I make an offer on something. And then you know, you’re competitive. It’s based on the data, you have a relationship with the agent. And you know, it looks like you’re going to get this property and then all of a sudden someone comes in 4050 k higher and you’re running your numbers and you’re scrambling and you’re like wait, whoa, we need there’s no way they’re not going to make any money that 50 k that they offered over over my offer was the profit that was going to get made on this deal. And and then you do a little research on the buyers and you ask around town like Hey, have you heard of this group? And what we’re seeing is this a lot of either new investors or unknowns kind of get into the space and and overpay at least what we’d call overpaying. I mean, I don’t have a crystal ball and neither do the people I talked to you but it seems like it’s overpaying unless this sort of appreciation keeps going and it’s been so hot and so heavy. It’s hard to really bank on that, at least in my opinion. Overwhelming themes, you know, let’s not do a deal rather than Do you want to risky and, you know, I think that’s really sound advice. And one investor who’s doing huge volume. I mean, they got 40 deals currently, you know, they’re staying in a certain buy box, right? That they they’ve carved out their box of what they’re buying, they’re not going out of that box, any contracts they get outside of that box, they wholesale the rest of them. And whether that’s a risk or to location by box, whatever that is, it’s their buy box. And they’re just going to simply wholesale a contract. And we’re seeing pretty high wholesale fees. Right now, I’ve seen, I personally paid $40,000 in a wholesale fee lately, and I’ve seen plenty even higher than that, because the deals still made a lot of sense. So but we’re in you know, that was a very successful field. But we’re seeing a lot of that right now. So you mentioned a little bit about it. And I’m not going to get too into it, Aaron, but we’re seeing city of San Diego recently made it much easier to add density in San Diego, if you’re willing to rent constrain to moderate or low income housing. And we’re talking a massive increase in density like potentially unlimited number of units if you’re willing to guarantee low income, and the parking requirements have been loosened tremendously as well. So there is a big opportunity in this assuming you can make it pencil. Now I’ve had some conversations with people, you know, cool, we can add 20 more units, but they’re not going to have any parking, there’s not going to be any common space, it’s going to be a really cramped unit, are people still going to want to rent it. And it seems like the overwhelming theme are getting this Yeah, because that product doesn’t exist, there is no new B class rentals that that are new to the market. And all the construction is in luxury. And right now we’re seeing a little bit of a pullback on the luxury rental market, especially in downtown San Diego downtown is essentially being evacuated. Prices, the rental prices have gone down there a lot. And so if you can find a way to take advantage of some of these new density options that the Sydney San Diego has added to moderate or low income housing, there’s a huge play there. Also, now I want to shift into the ad use because it kind of goes into the density and the zoning changes here. So um, you know, I want to give a shout out to ruined design group, they’ve got caught, they’ve got multiple media projects going. And they gave me a lot of their time, recently to go sift through some of this recent legislation. And so I had some notes talk to everyone here about tonight. And so things just changed like a week and a half ago. And I believe that was statewide, and there is still a bunch of gray area. And it’s still being deciphered, interpreted in San Diego, and almost every municipality I imagine. So it’s a, it what just happened was a bunch of things just change down the pike in Au, au space. And in San Diego, we have 20 plus minutes policies here. And each one of them interprets the state law slightly differently. And if you can remember, at us are three years old, at the most right January 17, three years ago was when this whole thing started. So right now we’re still kind of the Wild West and things are being interpreted differently. And being on the forefront of this and being in front of some of these curves is going to create a massive opportunity for people. So a couple friends of mine, one of their civil engineers, they sat down lately with the building department here in San Diego got a bunch of information. And essentially, it’s determined that it’s they still know things determined, it was just there was a lot of stuff that seems like this is gonna be cool, but no one’s willing to give you like a green light, obviously, until you submit a set of plans, throw through all the reviews and you know, you can get a preliminary review, but you’re already pregnant with a deal at that point. So so it’s been pretty interesting. So a couple key points that I took away from all this. If you are going to be doing a new project, it’s much easier to get an existing area permitted as an Edu than it is to get a non existing or non conforming area or space permitted as a habitable living space for an Edu so for instance, you have a detached garage that was permitted that’s much easier to get through the gates rather than a you know a Home Depot shed that was just kind of scabbed on to the back that you know wants to have as an ADU. I got quite a few at you. Projects personally in the city as we speak. And what I will tell you is that it is not quick, right part of this whole ad thing initially was, Hey, this is going to be faster to get your permits processed then, than any other sort of development that we’re going to that we’re going to look at. But that’s not true. months and months through the wringer. And even if you have a slight slight plan change, it’s just it’s forever to to get any sort of answer. For instance, I have one project right now, I bought a duplex converted the garage detached garage to a third unit. And we made a very, very small plan change that unit is completely built is sitting there ready to go. All systems in it, you have utilities, I don’t have the meters, the meter yet, but I Excuse me, I don’t have the address yet. I have utilities, because I’m piggybacking off the front unit. But I can’t get an address. And I can’t get a final certificate of occupancy, even though thing is completely ready to go. Because the building inspector simply needs to set to have the city look at the plan change, even though the building inspector recommended this. So it’s just a lot of little things. And we’ve had this in back in there now for almost three months. But we’re seeing very slow, very slow things happen right now. And now another big deal is city, San Diego, absolutely zero parking requirements. Now for any au, that there is no restrictions now on that. So if you’re going to build a new, you don’t have any parking requirements, it used to be that it needed to be near a transit zone or within a mile from a high priority transit area. But that has since loosened. Another interesting deal here is that you can now have a primary residence with an au and then a junior at you on site as well. So you can essentially, I mean, this is big for someone who’s living in their own home, their primary residence, create a second unit along with a junior at you. And that for that unit has to you have to be owner occupied, it’s an owner occupied exemption. But you know, a homeowner could have just gone from a primary residence to to more income producing residences on their same lot. And that’s, that’s really big. Couple more, Aaron, you mentioned this on a little bit. But this, this is really cool. So you now you could potentially add two new ad use on your property. And there’s a 25% rule. And so essentially, let’s say you have and this applies to some small multifamily as well. So let’s say you have for a four Plex, well, you now have the ability to take 25% of that. So that would be one unit, you can add one more unit to your four Plex. And assuming that you have a non habitable existing attached space, so you have a garage or something like that, boom, you can now convert a fifth unit. And if you have the extra space on your lots at you can now add two more detached units, assuming you have the enough room for the proper floor area ratio and setbacks and maybe the parking requirements and assuming that applies to that lot. So essentially, you could go from four units now to almost seven to seven units, if you have the right setup on your lot. So there is a lot that can be done with this. And it seems like you’re gonna really need some really good consultation on this are really good civil engineer, really good architects and really do your homework, because you know, big caveat here is, you know, this, this is still kind of gray area. And so do your own due diligence, but it’s seeming like there’s some opportunity here for those that are willing to dig a little bit, find the right property and then do their diligence and take a little risk. So you know, this is this is really cool stuff. And lastly, on the use of the city of San Diego now they have 30 days, from actually two weeks ago, so almost two more weeks to release their updated bulletin, which highlights their changes and how it’s going to be interpreted. So we’re going to see more here in the next couple weeks in San Diego is exactly how all this is going to get dialed in. But it’s exciting and there’s opportunity. And these are the these are the ways to create a bunch of equity and value add in my opinion. And if you’re going out there looking to buy a house to flip or property to flip, or you want potential multiple exit strategies, which give you a little bit more safety when you’re buying. Like to me a project like this has that margin and has other options for you. in case something were to happen in the marketplace, really quick couple more things here guys, property managers, I talk to managers around the county with thousands and thousands of doors and they’re averaging between 93 to 98% collection rates and none of them really seem to have too many issues collecting rent right now. They the smaller groups a smaller management companies were actually close. To get 100% it was the ones with thousand plus doors that were in that 93 to 94% range. The mom and pop property manager is struggling through all this and I know this was talked about earlier but we’re seeing that with COVID protocols with laws of code laws that are taking place now because of COVID contracts etc You know, the whole enter entering a unit thing has changed now you need p forms you need mass you need some you need anyone that’s coming in to sign these documents. So the mom and pop property managers really not up to date on on a lot of these things. And one common thing we were seeing was slower lease up and longer on market activity. So it was a little harder to lease up these buildings than it was before. And last thing guys I talked to a bunch of real estate agents in town we’re talking some of the top producers in San Diego County and it all kind of boiled down to a couple things really it’s listings are the key right now if you’re an agent, you can get a listing it’s sold and it’s a it’s an easy commission check, right it’s a you don’t have to do too much outside the box marketing right now to to get these properties sold. If you’re a buyer’s agent. On the other hand, you’re having so much trouble finding properties for your clients, it is just so difficult to find inventory and you look at your time ROI spent with buyers right now and it is not very high. So we’re seeing buyers coach their clients into some pretty outrageous tactics and sometimes you just got to do what you got to do to get the deal these days so buyers are stepping up their game a little bit in terms of what they’re having to offer so we’re seeing a huge activity in the 600 to 900 k price point right now it’s just on fire in San Diego and so if you have anything in that zone like I said earlier, it’s reasonable reasonably priced. And I mean if it’s not reasonably priced you’re probably still gonna get offers right now but it’s uh overall guys San Diego is a is hot and the last thing Aaron wanted me to mention was like the the compass concierge program and its capital essentially that that the brokerage I work for compass is willing to give to a homeowner unsecured to increase the value of their home through renovations before we list the property. So essentially, we just need a listing agreement and we’re gonna give you up to 5% of your list price in cash to not in cash but to your vendors to to increase the value of your home through curb appeal through upgrades etc. And boom put on the market and it’s been extremely successful and the actual amount of money you put into that that program. It contracted a little bit back in March and COVID happened but it’s now back up to higher than it was before so overall you guys it’s just been hot down here. Thanks again to Jerry Ryan. And Brian daily the real report for all your data and stuff on this guys. You guys are awesome. It’s just I’m really happy to be surrounded by so many awesome people here again, Aaron, thanks for everything and if anyone has any questions I’m more than happy to answer

Aaron Norris  Yeah, please start filling up the question pipeline we will get to them great job you and let’s go Dad, if you can go on mute. I’m going to have a question for you quick breather really quick while we prepare Catherine Kramer as we march up to Orange County. A few things just real quick, accessory dwelling units. I’m Don’t be a cram, Lord. That’s the concept of cramming so many properties on a lot that you actually ruin livability and quality of life. I highly recommend using a design professional so you don’t do that. I was called a month ago by a San Diego investor that told me about this expansion. And she wanted to build seven new units because it was a large lot on what was a single family residence. I I cringed a little bit and laughed and thought that was sort of fun. I am very personally excited about modular homes I think with we don’t have we’re having a hard time with construction anyway. The cost increase in lumber. I just think it’s where it’s going. Even national builders are having to look at factory built housing or units to fill demand. triplex sizing something that Derek mentioned, where you do have to live in one of the properties but you could have a detached and a junior accessory dwelling unit. That is something look it up. It’s pretty interesting. And just watch for upzoning there’s so many interesting opportunities in the mix. Dad, I just what do you think about at us? You’ve never really told me either way if you’re, if you like if you don’t


Bruce Norris  know I do. Okay. You know, I talked to Michael Neal about it. And he said his concern was and he has, you know, quite a few rental properties. He said that he thought it might change the tenant willingness to be in the front unit now that they’re going to have someone in their backyard. So I don’t know that you have if you have a tenant in the in the main house and you say Guess what, you’re gonna have a neighbor that’s going to be in your backyard that may come causing some friction. If they both exist at the same time, you know it let’s say they were both vacant and that’s the way it was from scratch, then probably no have no impact. But that was his only concern. So asking Mike would he put eight views in his backyard? The answer was no.

Lenska Bracknell  Yeah. And don’t forget you have the owner occupied in five years issue and if we’re going down this road politically, so much, you know, it’s all you got to think a little bit more long term.

Joey Romero  Thank you for tuning into I Survived Real Estate 2020. To watch the full video in its entirety. Or to learn more about speakers and sponsors. Please go to I survived real estate calm and be sure to tune in next week for more isolated real estate 2020. Thank you.




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