By this point, many of you know I am running for City Council.

Year To Date Activity

Properties Sold (single and multifamily): 38

Sales Volume: $57,813,500

Cumulative Value of Fund Properties Sold: $4,634,500

Homes/Units Managed: 270

Properties Leased: 65

Gross Collected Rent: $7,183,289

Brokerage Listings

Property Management Rental Listings

By this point, many of you know I am running for City Council. I spend a lot of time talking about how hard it is to do business in Costa Mesa, how that affects our business community, sales tax revenue, and the quality of life for our residents. It goes beyond that. The city has also lost its ability to effectively maintain its own infrastructure.

I want to share a story so absurd it might help explain why I would do something so obviously against my own self-interest as to run for City Council. It is like volunteering for an HOA board, only on steroids.

I currently serve on the City’s Finance and Pension Advisory Committee (FiPAC). We are tasked with advising on fiscal issues, and earlier this year, we were asked to weigh in on which capital improvement projects should be pushed off until next year to help fill a hole in the City’s budget.

My position was simple: prioritize projects in this order

1. Items critical to public health and safety.

2. Items that will either save the City money or generate income.

One of the projects the City proposed postponing was the Lakes at TeWinkle Park, which has been leaking water for the past five years.

I asked whether the City had calculated how much money was being spent each year to refill them due to the leaks (as opposed to normal evaporation). I was told the cost was approximately $100,000 per year, about $500,000 to date.

Flabbergasted by that number, I pushed to move the repairs into the category of projects that needed to be addressed this year. The rest of FiPAC agreed, City staff followed through, and now the City Council is being asked to approve the contract to repair the lakes.

Mission accomplished, right? Well, if you recognize this image, you probably already know the mission was not actually accomplished.

While taking my proverbial victory lap with a few folks around town who are plugged into the local political scene, I learned that the repair of the lakes falls under the Community Workforce Agreement (CWA). This agreement essentially requires certain projects to be completed by union labor. The problem? There is exactly one local contractor both able and willing to do the work while remaining compliant with the CWA. Their bid came in about as competitive as you would expect when there is zero competition.

Since the CWA expires in January 2026, the City appears to have made the rational decision to kick the can down the road, spending $ 100,000 a year to refill the lakes in order to avoid paying several million dollars in above-market repair costs.

Here is a well-written article from Goat Hill Rodeo.

Tonight, I’ll be at City Council, asking them to vote against approving the contract and to prioritize resident interests over union interests when the CWA comes up for renegotiation later this year.

If you’d like to share your perspective with City Council, you can email all of them at [email protected]. Be sure to cc Brenda Green, the City Clerk, at [email protected].

For the rest of this month’s newsletter, I’ll try to spare you more local political wonkiness.

I’m also skipping several of my usual categories this month. There’s just too much going on, and honestly, my brain is fried (though, to be fair, that’s pretty much my normal state).

Good news, though: help is on the way. After two years of trying, I’ve finally recruited a good friend to join us as our Controller and Director of Operations. She officially starts on October 1. In addition to strengthening our company operations, she will manage our corporate and entity taxes. She’s a licensed CPA with deep tax experience 😍. She’ll also be able to offer similar services to our clients, bringing tax strategy fully in-house adds significant value to every part of our business.

We are beyond excited.

If you’d like to connect with her on tax matters, let me know, and we can set something up after October 1.

Single-Family Transactional Market: I don’t think this is a national trend, but locally we’ve seen a significant number of buyers re-engage over the past few weeks. What we’re hearing from them is that they want to get into a property before rates drop. This uptick in demand has had a noticeable impact on our already supply-constrained market. One teardown in an A+ location was recently bid up more than $300,000 over asking.

Real estate is a hyperlocal business. While demand is picking up and supply is tightening in some markets and product types, buyer beware, you could still be catching a falling knife. Here is an example on the opposite end of the spectrum.

We recently considered purchasing one of the small cottages on leased land in Newport. And yes, I know what you are thinking: WTF am I doing reading a real estate newsletter from a guy trying to buy a mobile home on a ground lease? This is not an investment play; it is 100 percent for utility. I do not judge you for going on Disney cruises, so do not judge me for wanting to buy a mobile home.

Moving on, there are currently 11 listings in that little pocket, which is roughly 8 percent of the entire inventory. For context, in my own neighborhood, that would be the equivalent of 80 listings hitting the market at once.

Do you know what would happen to prices in my neighborhood if there were 80 listings?

Fortunately for me, there are only 2 listings right now, which is just 0.2% of homes in my neighborhood.

I've never seen a market so fragmented by product type and location. It is crazy to think these two locations are only 4.5 miles apart.

Mortgage Market/Interest Rates: Because of the comment above about buyers jumping back into the market to get in before rate cuts, I want to make a very simple public service announcement.

Federal Reserve rate cuts are not directly correlated to mortgage rates.

Mortgage rates are tied to the 10-year Treasury yield, not the federal funds rate that the Fed controls.

While the two often move in the same general direction, they do not always move together. Most notably, last year the Fed cut rates and the 10-year yield spiked. With inflation concerns still lingering, it is possible we could see a similar move in mortgage rates this time around.

Macro Observations: I will keep this section exceptionally brief this month. Over the past few years, the primary goal here has been to anticipate the Federal Reserve’s next move. As I sit down to write this, their next step appears to be well telegraphed.

The market consensus is that there is an 85 to 90 percent chance of a rate cut on September 17 (Morgan Stanley puts the odds closer to 50 percent). This would be welcome news for those with floating-rate loans, though it may or may not translate into lower mortgage rates.

What's The Good Word: The last wonky policy topic I’ll touch on this month is the concept of Pink Zones. The idea is rooted in the most basic rule of behavioral science: if you want someone to do something, make it easy for them to do it. Pink Zones are one of the policies I hope to enact when I am elected.

Costa Mesa has several major corridors that absolutely suck—which, in urban planning terms, means they are undesirable. The concept is straightforward: reduce the unnecessary red tape (think “pink tape”) in areas of the city where we want to attract private investment. I’m looking at you, Harbor and Newport Boulevard.

While the concept is simple, the execution is not. Much of the code is well-intentioned, so there will need to be significant negotiation with both the fire department and the building official to separate what is truly necessary from what is merely nice to have.

Project Updates: We have several active projects. Here is a quick update on a few of them.

Pegasus, Newport Beach: We are closing escrow on this project today. It's a 2,563 sf home on a 7,200 sf lot, exactly the type of home we like to buy

Lillian, Costa Mesa: We are cooking on this one.

Here are our proposed floor plans. I think this floor plan will be super desirable.

We really do not like the initial elevation the architect proposed, so we are going to have him try to rework it in a French contemporary style. If that doesn't look significantly better, we will have to consider removing the playroom to bring the roofline down and create a more symmetrical structure.

Thanks again for reading, and I would like to thank our agents and property managers who provide valuable insights from their day-to-day in the field. Without them, this email wouldn't be very useful or interesting.

If there is anything you need: vendors, lenders, or others, please let me know. We have an extensive network of the best and brightest in the industry.

I geek off this stuff; if you want to grab a coffee or chat about anything related to real estate, the market, or investing, please do not hesitate to reach out.

If you don't want to receive these updates in the future, please smash the unsubscribe button below. No hard feelings; I do it ruthlessly. Lastly, if you found the above informative, please share it with a friend or drop me a line.