For better or for worse, real estate investment is mired in the law. Legal statutes govern how you can purchase and what you can do with your property after you own it. Thereby, understanding the laws, such as those that concern landlord-tenant relationships and rent control, is necessary. Today, Monick Halm interviews Monique Rad-Stein, the Managing Partner at The Rad Firm, APC, to talk about rent control, specifically in Los Angeles. Monique is an expert in real estate investing and law. She shares her incredible real estate investing story and how building a community has attributed to her success. She also discusses a little about some legal issues to consider when investing.
Listen to the podcast here:
Rent Control & Other Legal Issues For Owners – Interview With Monique Rad-Stein
I am here with another incredible real estate investing goddess. I’m here with Monique Rad-Stein. She is an investor and also an attorney. For better or for worse, real estate investing is mired in the law. Legal statutes govern how you can purchase and also what you can do with your property after you own it. You need to understand and know these laws or otherwise, you might find yourself in some trouble. It’s particularly important to know laws concerning landlord-tenant relationships and rent control if they’re applicable where you’re purchasing. Our guest is an expert in real estate investing and the law. She’s going to share with us her incredible investment story as well as talk a little bit about rent control, and some other issues that might come up as well.
She’s the founding attorney for The Rad Firm, a real estate and business law firm. She maintains a portfolio of investment properties in Downtown Los Angeles and has overseen millions of dollars in real estate transactions. She received her JD from Loyola Law School in LA in 2011 and has been a member of the California Bar since December of 2011. She believes in a holistic approach to practicing law that spans multiple practice areas. She further applies this approach as an adjunct professor for the University of Southern California, where she teaches an undergraduate course in law and ethics. I’m thrilled to have her with us. Welcome, Monique.
Thank you. I’m thrilled to be here.
It’s easy for me to remember your name. It’s a more traditional spelling of Monique. How did you get started in real estate investing?
Admittedly, it was a begrudging start. My family has been investing in real estate since I was a young child. My father met an older gentleman at a family party and he suggested to him, “You should get into the apartment business. I want to get rid of my apartment building. Can you please buy it off of me?” It all started with that one building. We still own that building in Downtown LA. We’ve been watching the area grow around it. It’s an amazing investment that he made and a big chance that he took but he is a little bit more welcoming of risk than I was. When I got to be a little bit more on my feet financially, he mentioned, “Would you like to start investing in some of our properties?” I was a little bit nervous about it, but the way we did it was we formed an LLC with a group of us investing in the property. It made it a little bit easier to feel that I was in it with other people. It felt a little bit more controlled and relaxed. That’s how I got my start.
You formed an LLC and that was a real estate syndication. I’m a big fan of investing that way and that’s how I own most of my property. I syndicate properties that way. I bring groups of investors together. In your LLC, was it family and friends or is it broader? How do you invest in syndications?
It’s a combination of family and friends. I’m lucky that I grew up half Persian. For anyone that has seen Shahs of Sunset, they know that the community is tight. I’ve had a lot of people available to me to bring together, put our heads together, and find investments. The one thing that I will say though is that we always make sure that we are the majority because we like to maintain control over the property in the future of the LLC. That’s one of the things that are important to us.
What was this first investment that you got with your father and some others?
It was a six-unit apartment building in Downtown LA. I had a small percentage of it. It was about 2.5%, but it was good enough for me at the time. We do our own managing of the property, so it was a good opportunity to learn the nuts and bolts of things without feeling like I was in the limelight in terms of the risk involved. That was the first one. We’ve also gone through the motions of making some improvements on the property and bringing it up to date. Over time, with tenant turnover, we’ve been able to bring it to market rate.
It sounds like you guys have a buy and hold philosophy because your father still has that apartment building since you were a kid. Is that mostly how you’re investing, you buy something, and then you hold on to it?In real estate investing, you must decide who you are and who you would like to be, stick with that person, and not waiver from it. Click To Tweet
We’ve been of the buy and hold mentality. This leans into the rent control conversation. If we find that property hits a certain point where it’s maxed out and it’s cashflow abilities, it looks like a lot of the tenants are going to be staying put and the rents aren’t going to shift too much. We would maybe consider selling it depending on what’s going on in the area around it in favor of getting something else. Potentially moving more into development, but it’s a slow jump to that.
Let’s talk a little bit about rent control because you’re mostly invested in Downtown Los Angeles. We have readers from all over the country and even different parts of the world. Tell us a little bit about how rent control works in Los Angeles.
Specifically, in Los Angeles, rent control determines the amount of rent that you can increase your rents by every single year. Also, it determines certain reasons that you’re able to evict people. It puts limits on what you’re able to do with your property because you know that the rents are only going to go up by X amount. You also know that you can only get rid of problem tenants for certain reasons. If there are other reasons like I want to move in on my own or something of that nature, I’m going to have to pay relocation fees. You’re boxed in, in terms of how much money you can make on your property. This applies to various cities around LA in different ways. The nexus is that it’s going to be impeding upon how much you can raise the rent and also for the reasons that you can evict people. That’s true across the country in cities with rent control.
I have a duplex in Los Angeles, but otherwise, my properties are in other markets. Part of it is because of the rent control. I wasn’t a huge fan of that. I have an apartment building in Dallas and Mexico. If you get a new building there, you can give somebody 30 days’ notice to leave if they’re the renter on the market. That’s not how it works in LA. Correct me if I’m wrong. You can move out one tenant in a building, but you still have to pay relocation fees. Otherwise, people that are substantially under the market, they can only raise rents 3% per year. That can keep you under the market for a long time, so that can be a tricky thing to figure out when you’re investing.
There are a lot of ever-changing laws that are happening too. One of the biggest things I know that come up a lot is the Ellis Act, which is the ability to go out of business and the rental market. Essentially, a lot of the developers are coming in. They are opting for this particular process, taking the units off of the market, demolishing, and then building a new structure. Even that is starting to get regulated by the city because they’re noticing that our housing stock is low. It’s something that you have to completely be on top of at all times. For me, why Los Angeles rent control is a pain in many ways, but it comes down to the level of control that we wish to have over our properties. We want to be the people managing the property. We want to see them and drive by them. Being based in Los Angeles is important. That’s the main reason why we hold on to them. Also, Los Angeles is such a market that holds value but it’s always worked out for us here that things continue to climb so we feel most comfortable here.
There’s something to be said for being able to drive to your property. It’s a little harder if you’re like me. I live here and I have properties in Atlanta or Louisiana. I have ownership of some property I’ve seen once, but I don’t manage them. I have third party management. That is something that you want to look at, figure out what you would like to do in real estate, and invest accordingly. This is a question I like to ask all our guests because when things are going great, fabulous, and wonderful, you don’t learn as much. When things go wrong, you learn a lot more. What would you say is your biggest mistake in your real estate investing career and what did you learn from it?
There was one particular transaction that we entered into. We were a little bit cocky about it. We didn’t necessarily do as many inspections as we usually did. We purchased it in an auction. There was that added bit of excitement involved if we’ve got to win. We got this multifamily property and it ended up having major issues with the elevator that took us out for a good six-month period of time because, by the time they get those parts, it’s ridiculous. The biggest thing that I learned from that situation is to ask more questions and sometimes, to slow down and not get caught up in the emotion. Especially being in this market, which is fast-paced. It’s important to feel that you know what you’re getting yourself into. I would have done a little bit more homework and not gotten as excited about jumping into that one. We got the elevator fixed and everything’s good. I turned it to a silver lining moment, but it was a little hairy there for a bit.
Due diligence is always important to fully vet a property beforehand. Sometimes, you don’t have that much time to do it. The more, the better. That was a good one. On the flip side of this, what are you most proud of in your real estate investing career?
I’m most proud of the way that we manage our properties and how we do our best to maintain an ethical point of view while doing it. It’s easy to fall into certain pitfalls and become the stereotypical slumlord, especially when you’re dealing with rent control properties and capital. It can be squeezed a bit tight. One of the things I’m most proud of is that we’re conscious of maintaining our properties well, making sure that we’re acting in the most respectful way, and have good relationships with our tenants. That’s something that comes out and jumps out to me.
That’s important. My mission is to always have a purchase property where we can leave the property and the community better than we found it. This is the opposite of doing the slumlord thing. I find that it pays off in the end. People can be penny-wise and pound-foolish. If you treat people well, make it a place people want to stay, and good people create a good space for other good people to come, it is going to work out better in the end. You have these properties in Downtown LA in an investment portfolio. You have this successful law practice. To what do you attribute your success?
My success is rooted in the community. Not only the community that I was blessed to be born into but it’s also the community that I’ve created for myself. I’ve been conscious in my career to make a lot of different contacts with different people from different areas of real estate. I’ve always been able to call upon them and cultivate them when I run into an issue, I have a question, or if something is a mistake and I need somebody to commiserate with. The biggest thing for me that’s been helpful is creating that community. That also would be my advice to anyone. Make sure that you do create that community so you don’t feel like you’re alone in something that you’re putting multiple heads together and you can figure out resolutions to problems that way.
I always say real estate is a team sport. We can’t do it alone. That’s huge. How do you build community? What do you do to create a community for yourself?
It’s tough sometimes because there are those moments where you want to hang out on the couch, wear your sweatpants, and binge on reality TV. I do try and set goals for myself in terms of going out to networking events and going to meetups. Sometimes, what I’ll do is I’ll send a cold email. If there’s somebody that I want to meet, I will look up as much as I can about them on LinkedIn, Google, or whatever, and then I will send them an email and say, “I’m interested in XYZ. Would you be willing to meet for coffee?” It’s a combination of different things, but the key part of it is not being afraid to put yourself out there and ask. It’s something that I struggle with a lot. You have to continue to push yourself and I found that setting goals saying, “I’m going to go to at least one networking event a week or once a month,” or whatever it is, helps get you out the door and move towards creating that community.
It does make all the difference, which I have found with real estate.
I met you at an event.
It’s one of those Saturday mornings that I was like, “I can either hang out or I can go out.” I’m happy I did.
I never regret it. I also like real estate people. It’s a sign that you’re doing the right thing if you’re going to these events and you like the people that are there. I have fun at these events. I always meet people that I resonate with, and then I get to meet cool people like you and then invite you on to share with the audience. There are all sorts of wonderful things. You have a law firm, which is a real estate and business and you work around multiple practice areas. What kind of law matters do you work on and you help people with?Creating a community can attribute to your real estate success. Click To Tweet
I work on a combination of things from soup to nuts. It comes from my background in real estate investing in multifamily. We’ll do commercial real estate litigation and residential real estate litigation, whether it be a contract dispute, property damage, or an eviction action. We will also do generating contracts for on-site managers and things of that nature. We run the gamut of being that point person that you can call upon and say, “I’ve run into this particular issue with my investment. What is it that I need to do?” We’ll point you in the right direction.
For people out there that need some legal advice, especially in California, you can contact Monique. You had started to talk about this a little bit in terms of advice that you would give. Building a community is something that you would recommend for somebody starting out. What other advice would you give for a woman starting out in real estate investing?
It’s important for us, especially as women, to take stock and decide what our values are and who we are, and make sure that we stand true to those. It’s interesting when you’re a female investor, how there are going to be different approaches to dealing with you, that are different than dealing with male investors. There’s going to be a tendency to want to act a specific way, whether it be more or less aggressive or what have you. It’s important to decide who you would like to be and who you are, and stick with that person and not waver from it. That’s the most important thing because when you try to put on a certain front, it’s never going to remain consistent. It’s never going to feel right. If you say, “I’m more aggressive,” or “Maybe I’m more of a collaborator,” stick with it.
Be who you are, that’s good advice. What do you wish you’d known at the beginning of your career that you already know?
People are a whole lot nicer and more receptive than you would think initially. People are there to help and to collaborate. It’s easy to see a bunch of stop signs when you’re first strategizing or starting out in something new. When you realize that people are out there to collaborate and figure out mutually advantageous solutions to things, it opens a lot of doors. It makes you a lot less afraid to move forward. The biggest one is to be less afraid and to realize that people are not all out there for themselves. There’s a way that you can have an in with everybody.
I find it a win-win business. It’s amenable to that. If you can go out with that framework in mind, looking for how other people can win, how you can help them. Even without that, people are willing to help, for no other reason than they just like helping. That’s what I have found. There are lots of people that will go for coffee or take that phone call and give you advice. There are many men and women that are there to help. That’s great advice to remember. People are there to help you so you can just ask. What is the best way for people to reach you and find out more about what you do?
They can check out my website. I have a website, RadLawyers.com. I’m also on Facebook and Instagram. They can find my phone number on there, reach out to me, and give me a call. There are multiple ways to get in touch with me.
What’s your Instagram handle?
I have two Instagram handles. I’ve got one that’s @TheRadFirm and then I’ve got one @RadLawyer, which I’ve been playing. Although my students tell me I need to switch it up a little bit. They were telling me about the Sinsta and the Rinsta. I don’t know if you’ve heard of that, but there’s one that’s a little bit more curated and one that’s more personal. It’s funny. They were saying, “You’re getting it confused, professor.” If you looked it up, you’ll see lots of pictures of my dog and cat.
Sinsta and Rinsta, what does that mean?
One is the more curated version. The Sinsta is the fake Instagram and then the Rinsta is the real Instagram that you’re supposed to be private and only show unattractive photos of yourself. Mine was the picture of my dog and cat periodically. They were saying it’s not on brand. It’s a little bit Rinsta. It’s me. If you check me out on Instagram, you’ll be getting me. You’re getting the Rinsta Monique.
We always end each show with the Trinity, which is a brag, gratitude, and desire. What’s one thing you’re celebrating? What’s your brag?
I brag that I have hired my first full-time employee, Emily. I am incredibly excited about it. She was part-time with me for about six months and we’ve grown to the point where she can come on board full-time. I’m excited about it.
What’s one thing you’re grateful for?
It’s the same thing. It’s Emily. What keeps coming up is I love the community. Emily has been a great welcome addition. She’s always incredibly positive and she’s been great with clients. I’m grateful to be able to have that person that I can count on so that I can go out, meet new people, and expand to new clients and new areas. I’m grateful for that.
Last, but not least, what’s one thing you desire?
I want to be a little more fearless. I want to get into a couple of riskier investments and see where that takes me. We’ll see where that goes.
So shall your desire be or so much better than you can imagine.
You’re welcome and thank you for being on. That was awesome. If you guys want to connect with the Rinsta, you can find her on RadLawyers.com and @TheRadFirm and @RadLawyer on Instagram. To connect with me, you can go to RealEstateInvestorGoddesses.com or go to our Facebook page, Real Estate Investor Goddesses. There are goodies for you either place. I love you guys. I will see you next episode.
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