I delayed getting this email out a few days, because I wanted to be able to share

Year To Date Activity

Properties Sold (single and multifamily): 21

Sales Volume: $37,661,000

Homes/Units Managed: 248

Properties Leased: 39

Gross Collected Rent: $5,292,507

Brokerage Listings

Property Management Rental Listings

I delayed getting this email out a few days, because I wanted to be able to share that we have officially closed escrow on the first two deals from our fund, and we are very pleased with the outcome. More on that below.

California lawmakers passed one of the biggest rollbacks of the California Environmental Quality Act (CEQA) in state history, a move widely seen as a game-changer for urban housing development.

Tucked into the state’s budget housing bill and quickly signed by Governor Newsom, the new law exempts most infill housing projects (on parcels under 20 acres) from CEQA review. That means no more mandatory studies on traffic, air quality, noise, groundwater, or historical impacts for qualifying urban projects. In short: less red tape, fewer lawsuits, and faster timelines. CEQA is arguably one of the most abused laws in the State and a primary cause of the housing affordability crisis.

This is a huge victory for the pro-housing crowd (YIMBYs) and a potential unlock for California’s ambitious goal of building 2.5 million homes by 2030. Transit-oriented and student housing, often targets of CEQA litigation, will now move forward without being tied up in court for years.

Assemblymember Buffy Wicks, who introduced the overhaul, put it bluntly: “Saying ‘no’ to housing in my community will no longer be state-sanctioned.” And she’s right—this change removes one of the most notorious bottlenecks in the housing approval process.

CEQA was never about banning development; it was about disclosing environmental impact. But over the years, it became a weapon to block housing. This reform shifts the state toward “yes in my backyard” in a very real way.

Is this the silver bullet for affordability? No. But for those of us trying to build housing in California, this is the most meaningful structural change in decades.

The last thing I want to share before getting into our regular content is this map; it is devastating for Texas and Florida. Keep this map showing the percentage of homes with negative equity per market in mind whenever you read statistics about the national housing market. Negative equity is a very bad indicator for a housing market.

Coastal California negative equity is essentially non-existent; Texas and Florida, not so much.

Real estate is a hyperlocal business.

Single-Family Transactional Market: The only pricing strategy that is working in this market is price to sell.

TLDR: DO NOT try to test the market at a higher price.

Buyers have zero sense of urgency right now, especially if your home doesn't appear to be competitively priced.

We had a home listed at a stretch price - we received two offers, $300,000 and $500,000 under the asking price. Neither bidder believed that there would be serious offers at the price the home was listed at.

The seller agreed to drop the price by a considerable amount, and we immediately received multiple offers from serious buyers. We ended up closing at a very fair price. However, if the home had been listed at the lower price initially, we would have most likely ended up with a higher sales price for the seller.

Single-Family Rental Market: Perhaps bolstered by some waning demand, the rental market showed improvement last month, particularly for higher-end single-family homes. Generally, higher-priced leases take 30 days or more to lease. We leased out a property in Eastside Costa Mesa (asking $9,500 - both the owner and I agreed this was a stretch price) within a week and a half. It wasn't a one-off prospect; we had three very qualified applications within the first 7 days.

While we do an exceptional job without leasing, the depth of prospects and applications (especially at the higher price point) is a clear indicator of pent-up demand for home purchases. I've seen their financials; they can afford to buy a home but are choosing to rent for the time being.

Mortgage Rates/Market: We’ve just made a significant upgrade to our mortgage platform by partnering with Qoru Capital (pronounced Core-Ru).

I've known Qoru’s founders, Mike and Clark, for years. It wasn’t until a recent lunch with my banker (s/o to Citizens Private Bank, essentially First Republic 2.0) that the light bulb went off. He told me,

“Of all the people you've introduced me to, Mike and Clark have been by far the most valuable.”

That caught me off guard. This guy gets paid off deposits, and I’ve sent him a ton of clients with serious deposits. So much so, the bank is opening a Newport branch before LA. I've been told they are going to dedicate a chair or plaque to me in the lobby. I'm not holding my breath on that.

I asked what made that intro so valuable. He said he’d been stuck on a few complex loan scenarios—things no traditional lender could solve—until he called Qoru. They got it done.

Qoru handles everything from straightforward home loans to the truly complex. Their team is sharp, creative, and reliable. And best of all? Their pricing is competitive, as their pricing model is a lower margin than most of the groups I have worked with in the past.

We’re excited to bring this resource to our clients, agents, and investor network. If you’re looking for more innovative lending options, Qoru is now on deck.

Qoru Website Here

By the way, I receive nothing from the referrals to Citizens; it's just the best thing to happen to banking since First Republic (RIP).

If you're interested in an introduction, let me know.

Commercial Real Estate (CRE): One of my favorite real estate investing maxims is:

Every time you invest in real estate, the municipality you invest in is your partner. Make sure you pick a good partner.

San Francisco isn't a good partner.

Before we move on - 5% interest on security deposits is insane.

If property owner's invest the security deposits in the nations highest yielding Certificate of Deposit accounts, they will need to come out of pocket to fulfil their interest rate requirement. 👇

It's probably better not to hold a security deposit. Actually, you are probably better off not owning a rental property in San Francisco at all; maybe buy ETFs.

But if San Francisco is bad, I'm not sure what word would be appropriate to describe New York. New York's rent stabilization law, which went into effect in 2019, was one of the major contributing factors to the failure of Signature Bank (the 3rd largest bank failure in US History).

And now New York has a very good chance of electing a Mayor (Mamdani) who seems to have more disdain for property rights than perhaps any of his predecessors.

If you invest in real estate, you might not care about politics (local), but politics (local) certainly care about your property.

If you're thinking to yourself, 'San Francisco and New York, sure, but this is Orange County. That would never happen here.'

I'd encourage you to speak to people who owned apartments in Santa Ana in 2021.

Macro Observations: This is consistently the most challenging section of the newsletter to put together. Right now, I'm pretty jet-lagged (I just got back from Japan and Taiwan) and as a result, feeling pretty dumb, so I'm going to punt this on the macro section this month.

But here is the TLDR. There are some positive developments in the economy, and some less favorable trends are also present. From my perspective, labor and the CPI are the two most important trends to watch right now. Inflation came in slightly hotter than expected, and the unemployment rate came in slightly higher than expected.

Hot off the press 👇 - not a great data point, I have to imagine this increases the odds of a September rate cut; however, the 10-year yield is currently up 0.044%, which makes no sense.

Here is a visual representation of ADP payroll numbers going back to early 2023. 🤢

What's The Good Word: This might be the most valuable section of this email: understanding how buyer psychology drives value. I want to unpack that using our recent 36th Street project in Newport Beach as a case study.

When we first came across the property, it was being marketed as a tenant-occupied duplex with an unpermitted ADU and severely under-market rents. Not exactly a magnet for strong offers. Most buyers viewed it as a headache, rather than a value-add.

We didn’t flip it in the traditional sense. There was no major renovation. We spent under $100,000 to vacate the tenants, make some required repairs and legalize the ADU. That’s it. But that modest investment changed the psychology of the offering.

Suddenly, we weren’t just selling to investors chasing yield (or the lack thereof; yield is a mythical creature in Newport Beach), but we were speaking to multiple buyer personas with very different motivations. Parents of Chapman or UCI students saw the appeal of housing their kids with built-in rental income. Others saw a way to own a beach-area property while offsetting costs by renting out two of the three units. These buyers aren’t driven strictly by cap rate—they’re motivated by lifestyle, security, and long-term utility.

Neither group ended up being the final buyer, but both were active bidders. That activity sent a clear signal to our ultimate buyer, a 1031 exchange investor, who ultimately increased his offer by over $150,000 to stay in the game.

Understanding what drives different buyer profiles—their fears, desires, and dealbreakers—is often more valuable than any physical improvement. Sometimes, the highest return comes from repositioning a property so that more people can picture themselves owning it.

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

Nantucket, Tustin & 36th Street Newport: We have officially gone full cycle on our first two deals in our fund. These sales figures are not reflected in the summary above but will be included next month as they closed in July.

We are very pleased with the outcome. The market has shown some signs of softening, which is good news as it means we are likely going to have some entry points on our next few projects.

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.

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