I’ve Started Conducting One-on-One Sessions With Our Team Members and Their Significant Others

Year To Date Activity

Properties Sold (single and multifamily): 21

Sales Volume: $32,098,000

Homes/Units Managed: 253

Properties Leased: 30

Gross Collected Rent: $4,494,754

Brokerage Listings

Property Management Rental Listings

I’ve started conducting one-on-one sessions with our team members and their significant others to discuss their goals and develop real estate investment strategies tailored to help them achieve them. Whether you’re just beginning your investment journey or already managing a portfolio, I’d like to invite you to schedule a one-on-one conversation about where you are at, where you want to go, and how real estate may or may not help you get there.

These conversations are designed to provide you with a clear understanding and actionable next steps, as well as map out how we can support you in achieving your goals.

Here are a few scenarios where these sessions may be beneficial:

Planning for inheritance or transition to heirs: We can help navigate Proposition 19—the California law that affects how property taxes are reassessed when real estate is passed down—and ensure you're maximizing value in the process.
Considering the sale of a property: We regularly advise clients on how to avoid common missteps that can reduce a property's value or limit buyer interest.
Evaluating financing options: Whether you're exploring a refinance, HELOC, or new acquisition loan, we can help you assess the landscape and connect you with trusted lenders.
Weighing renovation or repositioning strategies: If you're considering improvements, we can help identify cost-effective upgrades that enhance returns.
Expanding or exiting your portfolio: Whether you’re looking to grow your holdings or simplify them, we can craft a plan that aligns with your goals and current market conditions.

These sessions can be held in person or via Zoom. If you're interested in scheduling a time to talk, please don't hesitate to reach out.

Now, before we get back to our regular programming, I want to digress for a moment—because, well, I want to, and this is my newsletter, and I can do what I want.

My wife and I have a not-so-secret dream of getting off the grid and living that farm life. I’ve been told I’m not cut out for it, and honestly, that’s probably true. Christine bakes incredible sourdough, we grow a few things, and we have some chickens. (Here’s my favorite—her name is Loco, and it fits her perfectly.)

Where am I going with this? We often find ourselves scrolling Zillow for ranchettes in Southern California because it's fun to dream.

One of our sales partners, Melissa, just listed one. I want that Farm Life.

Now that I've gotten that off my chest, we can move on.

Single-Family Transactional Market: I will keep this brief this month.

The problem is - every seller (myself included) thinks their real estate is special.

Single-Family Rental Market: No, I did not accidentally post this twice.

Mortgage Rates/Market: I'm in the process of redoing my Home Equity Line of Credit (HELOC), so let's discuss. I have used my HELOC to finance the majority of the acquisitions we have done (we own our office and have a meaningful interest in 30-something apartment units and a substantial stake in our Marterra Residential Ventures FUND I -- which primarily focuses on flipping homes).

HELOCs are one of the most powerful tools for building wealth.

Thanks for the reminder, Uncle Ben.

DON'T USE YOUR HELOC TO BUY JET SKIS. Let's be a little more specific: ONLY USE YOUR HELOC TO BUY ASSETS THAT GENERATE MORE INCOME THAN THE COST OF DEBT. If you want to have a more nuanced conversation on this, reach out to schedule a one-on-one.

Every bank is different. Some have maximum loan amounts of $250,000, others will go up to loan amounts in the millions.

Generally, a bank will loan you up to 80% of the value of your home. Let's say your home is worth $2M and you have a $500K mortgage (you clearly bought your home before COVID in this scenario).

The bank could lend you up to $1,100,000.

$2,000,000

$1,600,000 (80% of the value)

$1,100,000 less the $500,000 outstanding

The interest rate on a HELOC is priced off the Prime Rate. The Prime Rate is the interest rate that commercial banks charge their most creditworthy customers, and it typically moves in tandem with the federal funds rate set by the Federal Reserve. So when the FED cuts rates, your rate goes down; when the FED raises rates, it's not as fun. Prime is generally about 3% above the Federal Funds rate, which is currently 4.5%, so Prime is 7.5%.

Interest rates on HELOCs vary dramatically from bank to bank and change over time. At one point, my line of credit was Prime minus 1.6% (those were the days). The rate I am being quoted today is Prime minus 0.1%. My interest rate on my HELOC would be 7.4%, which is pretty solid.

The HELOC allows me to offer on a cash basis with very aggressive terms. I always say, you can compete on price, or you can compete on terms. I would rather compete on terms.

Commercial Real Estate (CRE): Here is the Good news. We did it! We defeated 1157 (the rent control proposal I discussed last month).

The bad news? Many of the other very dumb proposals (eg, AB 1248 and AB 863) are still being considered, and inevitably, the knuckleheads in Sacramento will bring forward some well-intended but very misguided rent control proposal in 2026.

Speaking of well-intended but misguided rent control policies, the new allowable rent increases for AB 1482 were just released.

If you own property in California and you are self-managing, please consider reaching out — the ever-changing regulatory environment is increasingly complex and can expose landlords to significant legal and financial risk without the right guidance. We spend an insane amount of money with our attorney, the California Apartment Association, and the Apartment Association of Orange County to make sure we are on top of all the required regulatory compliance. The risk isn't just for apartment owners; I can't tell you how many single-family homes we take over the management of that are missing state-required addendums/disclosures.

Macro Observations: The macro picture in May offered something for everyone: a cooling inflation narrative, strong equity performance, a steady labor market — and just enough political and fiscal chaos to keep things interesting for investors. While recession chatter is back in rotation following a -0.2% GDP print for Q1, it’s worth noting that most of the decline was driven by a flood of imports ahead of the administration’s proposed tariffs — not crumbling domestic demand. Exports and business investment were actually up, suggesting the underlying economy still has legs.

Inflation continues to move in the right direction, with April’s Core PCE falling to 2.52% — the lowest level since early 2021 — and CPI coming in at 2.3%. That’s welcome news for the Federal Reserve, which now has firmer footing to justify potential rate cuts later this year. While they haven’t committed to any action, the tone has shifted. For real estate investors, this is critical: rate cuts tend to benefit HELOCs, bridge loans, and floating-rate debt structures, while longer-term fixed-rate loans (like conventional mortgages) are more tied to the 10-year Treasury yield — which remains stubbornly high but relatively stable at 4.42%.

Speaking of the 10-year, that’s where a lot of the action (or inaction) is. The Fed hasn’t blinked yet, but the bond market is starting to price in the potential for easing — not just because inflation is cooling, but because of growing concerns around growth, fiscal policy, and credit quality. And yes, Moody’s downgraded the U.S. credit outlook to “negative”, citing unsustainable debt and rising interest burdens. Should you panic? Probably not. This is the same Moody’s that kept Lehman Brothers at investment grade until, well... the day before it didn’t exist anymore.

Still, the downgrade matters on the margin. It introduces a bit more volatility into the Treasury market and raises the question of how long the U.S. can maintain historically low borrowing costs with structurally higher deficits. If investors demand a higher risk premium for holding Treasuries, that pushes yields up — which in turn drives up mortgage rates, slows deal volume, and increases the hurdle rate for real estate investment. On the flip side, if the Fed cuts and demand for Treasuries remains strong (especially amid global uncertainty), we could finally see meaningful downward pressure on the 10-year yield, creating some breathing room for long-term financing.

The labor market remains firm, with April adding 177,000 jobs and unemployment holding at 4.2%. We haven’t received updated JOLTS data since March, when job openings declined to 7.19 million — the lowest in over six months. That data point suggested employers were pulling back on hiring plans, but without April’s numbers (due next week), it’s hard to say whether that trend has continued. Either way, it’s not signaling a crash — more like a slow glide toward normalization.

Markets reacted positively across the board. The S&P 500 (SPY) jumped over 7% in May, closing at $589.39, while QQQ surged to $519.11, up more than 10% on the month thanks to persistent enthusiasm around AI infrastructure spending. That equity rally is a double-edged sword — it supports confidence and risk-taking, but also gives the Fed less urgency to intervene, particularly if asset prices are roaring ahead.

Finally, the proposed “Big Beautiful Bill” — a sweeping trade package that includes expanded tariffs and capital controls — is adding noise to an already complicated global picture. While the real estate implications are more indirect, policies that restrict capital movement and inflate import costs could weigh on GDP and investor sentiment, adding another reason for the Fed to tread carefully.

What it means for you: We’re at an inflection point. Inflation is cooling, but geopolitical risk and fiscal dysfunction are muddying the waters. If the Fed does move to cut rates in the back half of the year, floating-rate borrowers and HELOC users will be the first to benefit. Long-term fixed-rate borrowers, meanwhile, will continue to watch the 10-year — and hope that Moody’s isn’t steering the bond market with the same precision they once used on Wall Street’s biggest implosion.

Key U.S. Economic Indicators – May 2025

What's The Good Word: 100% bonus depreciation is poised to return under a new tax proposal recently passed by the U.S. House of Representatives.

And if it does

The legislation, which is included in the “One Big Beautiful Bill”, would reinstate 100% bonus depreciation for qualified property placed in service between January 20, 2025, and January 1, 2030. This opens the door to immediately deduct the cost of certain components of a building that typically depreciate over 5, 7, or 15 years, such as appliances, flooring, cabinets, and even landscaping, if identified through a cost segregation study.

Sounds cool, what does that actually mean?

Let’s say you purchase a $1,000,000 multifamily property in early 2025, and you put down 20%, or $200,000. You then hire a firm to perform a cost segregation study, which breaks down the building components into different depreciation categories. I have a few good referrals in this space.

Breakdown from Cost Segregation Study:

Land (non-depreciable): $200,000

5-year property (e.g. appliances, flooring, cabinets): $150,000

15-year property (e.g. landscaping, parking lot): $50,000

27.5-year property (structure): $600,000

Under standard depreciation rules, you’d only deduct a small portion of the $800,000 building value each year over 27.5 years (~$29,000 per year).

With 100% Bonus Depreciation (if reinstated):

You can immediately deduct the full value of the 5- and 15-year property:

$150,000 (5-year)

$50,000 (15-year)

= $200,000 total first-year deduction

Tax Savings:

If you’re in a 37% federal tax bracket, the $200,000 deduction could reduce your taxes by $74,000 in year one. In this scenario, you get 37% of your down payment back.

Three very important caveats:

1. Real Estate Professional Status (REPS)

Bonus depreciation creates large losses, but you can only use them to offset active income (like W-2 wages) if you or your spouse qualify as a Real Estate Professional. Otherwise, the losses are limited to passive income or carried forward.

2. Depreciation Recapture

When you sell, the IRS recaptures accelerated depreciation as ordinary income—especially on 5-, 7-, and 15-year assets. This can create a large tax bill unless you use a 1031 exchange or step-up in basis through inheritance.

3. Example Numbers Vary by Deal

Illustrations showing big write-offs (like $200K in year one) are for example only. Actual results depend on property type, asset mix, tax status, and state law. Always run the numbers with a CPA.

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

Nantucket, Tustin: We are on the market. This is probably one of the prettiest homes we've ever done—big shout-out to the team for their work here.

Property Website

36th, Newport: I refuse to tempt the real estate gods, so no update here. 😉

Property Website

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.