Monday Morning Quarterback

(Monday, August 7, 2023)

Talk about poor taste! Netflix just opened an opulent restaurant in the midst of two Hollywood strikes. The experience starts outside, with diners queued up behind the velvet rope as if they're headed into an exclusive movie premiere or a buzzy nightclub. Instead, people are waiting to enter “Netflix Bites,” the streaming service's pop-up restaurant in Los Angeles' Mid-City neighborhood. That's the idea behind Netflix Bites, to give fans a "screen-to-table" experience (did I just really write that) where they can bite into dishes crafted by chefs featured on unscripted Netflix culinary shows. But sometimes, it's reality that bites. The splashy marketing expenditure behind Netflix Bites certainly clashes with Hollywood's biggest labor fight in decades, and the timing and opulence of the promotional campaign couldn't be more inappropriate. This month, after contract negotiations between the actors' union and major studios (including Netflix) collapsed, actors joined writers on strike, forcing a pause on production of most scripted films and TV series. That reality provides a jarring contrast to the escapism of the Netflix Bites experience. The thought of dining at a Netflix event while many of the company's own employees are fighting for better pay and protections has left fans uncomfortable. "I support the actors, I have a lot of friends that are in the unions, especially in SAG-AFTRA, and seeing what they're going through sucks," a guest says. The temporary restaurant exists in its own bubble — outside of protests, password crackdown and negative publicity. The event space, which occupies the bar and courtyard of a hotel, looks like a theatrical set. Worse, Netflix Bites isn't cheap. Which means writers and actors will not be dining there anytime soon. Striking writers have been able to pierce the restaurant's bubble, if only temporarily. On Netflix Bites' opening night, striking WGA members picketed in front with a pop-up of their own, within feet of diners lined up to go in. In other real estate investor news, let’s get under the hood…

Rent Hike Limits Are Coming For LA And OC Renters. Landlord covers your eyes. Laist reports that many renters in Los Angeles and Orange counties are about to get a slight reprieve from large rent hikes. Starting Aug. 1, the maximum allowable rent increase under a key statewide tenant protection law will decline from 10% to 8.8%. The change is due to the state’s Tenant Protection Act. Passed in 2019, the law puts a ceiling on how much landlords can raise rents each year. It covers many, but not all, rentals in California. Under the law, allowable rent increases rise along with inflation. The higher inflation gets, the more landlords can raise rents — which is why the law’s maximum allowable rent hike of 10% has been in effect for the past 12 months. Now, lower inflation figures are set to dampen allowable rent increases in L.A. and Orange counties. The region’s new 8.8% rent hike limit will remain in place until July 31, 2024. Legal Aid Foundation of Los Angeles staff attorney Jonathan Jager reminded me that, “Rents are not allowed to increase more than 5% plus the change in the consumer price index,” a common measure of inflation. And they can never go above 10%. Here’s how the calculation works. You start with the Consumer Price Index for the L.A. metro area, which was 3.8% in April. (That month is used each year to calculate the law’s new rent hike limits, which go into effect every August.) Add 3.8% to the law’s additional 5% increase, and that brings the total to 8.8%. Back in April 2022, the Consumer Price Index for the L.A. area was 7.9%. When the additional 5% was added to that number, it triggered the law’s maximum allowable rent hike of 10%. Even with allowable rent hikes slightly down from last year, Jager predicts many renters will struggle to keep up with 8.8% increases. The Tenant Protection Act generally applies to apartment buildings constructed more than 15 years ago. If you own a newer building, as landlord you are allowed to raise the rent even higher. However, the law is superseded in about a dozen Southern California cities by stronger local rent control laws that further limit annual rent increases. 

Apartment Association Files Lawsuit To Stop Rent Freeze. Bisnow reports that the Apartment Association of Greater Los Angeles (“AAGLA”) filed a complaint last week in Los Angeles County Superior Court seeking to void the rent freeze (see above), which prevents rent increases that would normally be allowed once a year on roughly 650,000 rent-stabilized units – almost three-quarters of the apartments in the city. The percentage that rents on those units can be raised normally changes yearly but can be as much as 8%, based on inflation. Additionally, for some renters (who were given a rent reprieve during the early days of the pandemic), back rent is due beginning August 1. The rent freeze began in connection with the pandemic. When the city ended the local emergency, it declared following the arrival of the coronavirus, it began the countdown to end related programs. AAGLA Executive Director Daniel Yukelson said the association is asking for the court not only to void the rent freeze (causing it to end before February 2024 as planned), but also have it declared inconsistent with the state constitution. Doing so would "leave the door open for our members to seek what I believe is about $2.6B of lost rent increases over a four-year period and also to be sure that the city never uses this type of tool against property owners ever again," Yukelson said. Under state law, tenants who missed rent payments beginning in the earliest days of the pandemic have two deadlines to meet, with the first rapidly approaching. Back rent accrued between March 1, 2020, and Sept. 30, 2021, must be repaid by Aug. 1. Any back rent accrued between Oct. 1, 2021, and Feb. 1, 2023, must be repaid by Feb. 1, 2024. Those new regulations were instituted in an attempt to take the place of some of the stronger renter protections that the city enacted at the height of the pandemic. AAGLA received a preliminary injunction in late 2022 that impacted the county of Los Angeles' eviction protections, but those are separate from the city's. 

Real Estate Developer In Huizar Bribery Case Sentenced To Six Years In Prison. Last Friday, a federal judge sentenced a downtown Los Angeles real estate developer to six years in prison for providing cash bribes to former City Councilmember Jose Huizar, and then attempting to hide the transaction from investigators. Dae Yong Lee (who also goes by David Lee), was found guilty last year of giving $500,000 in bribes in exchange for the approval of a 20-story residential tower on Olympic Boulevard and Hill Street. He was also convicted of wire fraud and obstruction of justice. Lee, appearing before the judge, apologized for his actions, saying he had created “much pain and heartbreak” for his wife, his family and the people around him. U.S. District Court Judge John F. Walter said he took into account letters sent to the court from Lee’s family and supporters, particularly his wife’s characterization of him as “a good man who made a huge mistake.” But Judge Walter said Lee’s crimes (bribing an elected official and then ordering a subordinate to falsify his company’s internal record of that transaction) merited a sentence that would serve as “a warning to others.” Lee, the first figure in the Huizar scandal to go on trial, was also ordered to pay a $750,000 financial penalty. His development company, 940 Hill, was separately sentenced to five years of probation and fined $1.5 million. The case against Lee and 940 Hill was among the more sensational of the schemes spelled out in the federal indictment of Huizar, who pleaded guilty to racketeering and tax evasion charges earlier this year. During Lee’s trial, a former Huizar aide testified that he twice picked up paper bags of cash from a consultant working for Lee, saying the money was for Huizar and distributed in stacks of $100 bills. George Esparza, who worked as Huizar’s special assistant, described during the trial how, in 2017 he delivered $100,000 cash in a Don Julio tequila box to the council member’s Boyle Heights home.

300 Goats Placed Around Glendale To Help Prevent Wildfires. KABC reports that a herd of unlikely heroes will be helping Glendale clear the dried-up hillsides this summer. They may not look like it, but Glendale's 300 newest goats are ready for fire season. All that dried-up vegetation that grew on hillsides after this year's rain is a fire hazard, as well as a tasty feast for the domesticated species. The residents of Glendale actually suggested the idea to the Glendale Fire Department three years ago. The goats are in essence creating a buffer. If Glendale were to have a fire it would lower or hopefully stop it. Goats have an endless appetite and will quickly devour wildfire fuel such as tall weeds, bushes and low hanging tree leaves, which makes them an ideal (and environmentally friendly) alternative to heavy equipment and herbicides. "Goats are natural mountaineers. They can climb up steep hills with no problem, they get all into the nooks and crannies that would normally be very difficult for people, and they eat almost everything," said Michael Choi of Fire Grazers. During an event last week at Brand Park in Glendale, residents of all ages got a chance to meet a few of the younger goats. The event had lots of petting and tender green grass to go around.

Secluded Treehouse in Atlanta, Georgia. This unique treehouse was just honored to be named Airbnb's "#1 most wish-listed property in the world"!!! Yes, the world! This is the ultimate treehouse because it (built into a 165-year-old Southern Short-Leaf pine tree near Atlanta’s Memorial Park) is pure luxury and high design, with French doors opening to the outdoors and filled to the brim with antiques. This one-bedroom, one-bath property is a sanctuary for seclusion set among the trees. Just minutes from downtown, this secluded property is an urban retreat like no other. The treehouse has a Southern nature - gracious, calming, and comfortable. Centrally located within the heart of in-town Atlanta, the treehouse is a hidden gem. It has been the subject of innumerable articles, blogs, and reviews. It has also been the subject of TV and magazine features including the Today Show, "Treehouse Masters: Ultimate Treehouse IV", Architectural Digest, Travel + Leisure, Harper's Bazaar, and numerous others. It is often described as being the most relaxing, romantic, dreamy and unique place you'll ever stay. After all, what could be better than falling asleep amidst the trees and waking up to birds singing around you--all within the city limits? The treehouse consists of 3 separate areas - Mind, Body and Spirit - each connected by rope-bridges. Mind (the sitting room): Antique furnishings and artifacts including 80 year-old windows of pressed butterfly wings, a plaster cast of a Siberian Tiger paw, fossils, a couch and chairs. It’s a great place to read or talk and has a balcony overlooking an acre of lush woods. Body (the bedroom): Sleeps 2. What could be better than a great bed up in the trees? The comfy double bed is outfitted with the world's best bedding: Parachute. These cozy linens are made of 100% long-staple Egyptian cotton and pure Linen. The bed is equipped with wheels so it can either be inside the room or rolled out onto a platform that overlooks the stream below. The Haiku Fan is silent and better than an air conditioner to keep you cool in summer. The mattress has a warmer for cool nights and the tin roof makes rainstorms something to be enjoyed. Spirit (the hammock deck): Open to the elements and immersed in thick greenery, the deck surrounds the spirited 165-year-old Short-Leaf Pine tree (the largest of the 7 trees that support the treehouse suite).

Cher Launches Her Own Gelato Company 'Cherlato.' Have you heard? Cher announced in an Instagram post that she will be launching her own line of gelato. “This is real," she assured her fans. “All started 5 years ago and now it’s finally HAPPENING,” Cher wrote in her announcement. If she could churn back time, Cher likely would have launched her new endeavor sooner. The “Believe” singer, 77, posted a short video to Instagram showing off a bright orange and pink ice cream truck featuring black and white photos of herself enjoying a cone. The brand's name “Cherlato” is featured on the side in big bright blue letters. The Cherlato ice cream truck will travel around LA to different locations every day throughout the summer months so everyone can get a taste of her frozen treats, according to a release. Fans can track the Cherlato truck on their website. Flavors including the "Snap Out of It! Kefir and Cardamom," “Breakfast at Cher's Coffee & Donuts" (that gets topped with an actual glazed donut) and "Chocolate XO Cher" are just the start of the singer's wacky gelato menu. Cher and her partner Giapo Grazioli also came up with a zanier option like "SoCal's Coldest Avocado on Toast," which features creamy avocados and crunchy breadcrumbs, plus a vegan creation called "LA, I Love You" made with vibrantly colored pluots to symbolize the Lakers' colors. On the official Cherlato Instagram, the first post, revealed that Cher collaborated with New Zealand-based ice cream company Giapo (known for making ice creams in a gluten-free facility), to bring her gelato to life. “A few years ago, Cher met Giapo and together, the pair brainstormed, taste-tested, experimented and eventually conceived Cherlato,” reads the caption showing off a cup full of gelato sprinkled with toppings. The ice cream will be making its initial appearance in Los Angeles, with a focus on local ingredients. “We’ve partnered with local farmers and artisans who share our passion for quality and sustainability,” another post on the Cherlato Instagram reads.

Howard Hughes’s Former Spanish Colonial Lists for $23 Million. In 1928, Howard Hughes was fresh off the success of producing the Oscar-winning silent comedy Two Arabian Knights. Seeking a more permanent home in LA, Hughes and his wife, Ella, moved out of the Ambassador Hotel and settled into a Spanish Colonial in Hancock Park. Nearly a century later, the landmarked eight-bedroom, 12-bathroom house has reemerged on the market with a $23 million price tag, per the Wall Street Journal. It was this spot where Hughes spent the next 14 years. During that period, he produced the hit films Hell’s Angels and Scarface (the 1932 version), smashed the record for fastest flight around the world, and famously dated Katharine Hepburn, who then resided with him in the stucco and clay tiled home. The dwelling was built in 1926 by architect Roland E. Coate right off the eighth hole of the Wilshire Country Club golf course—a draw for Hughes, who was an avid golfer at the time. Current sellers Ash and Niroupa Shah bought the 10,179-square-foot home in 2011 and modernized the space. “When it was built, there was a clear delineation of, ‘This is where the family lived and this is where the staff lived,’” Ash told the Wall Street Journal. “We spent some time bringing it into one cohesive home.” Hughes’s wood-paneled study became a media room with jet black lacquered walls and his basement vault was repurposed as a wine cellar that can accommodate up to 2,500 bottles. At the heart of the home, an interior courtyard is paved with cobblestones and comes complete with a fireplace. The kitchen boasts a 24-foot-long kitchen island, polished brass countertops, and a shiny gold-tiled backsplash. Original details such as wood beamed ceilings and red clay floor tiles are still intact throughout the dwelling.

Accessory Dwelling Units (“ADU”). Our August general meeting will be held on Thursday night, August 10, 2023, 6:30 to 9:30 pm. Our very special guest will be Seth Phillips, California’s leading authority on “Accessory Dwelling Units” (“ADU”) and the new laws regarding 2-3-4 units on a single-family zoned lot. If you want to build more units and increase your rental income, you must attend Seth’s presentation. Our meeting will be held at the Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles 90034 (Culver City adjacent). FREE Admission. Please RSVP at www.LARealEstateInvestors.com.  

Vendors Expo Returns! Our carbon-neutral, bio-degradable, gluten-free, super-duper "Vendors Expo" returns on Thursday night, August 10, 2023. The Vendor Expo opens at 6:30 pm. We'll have 40+ of the finest vendors featuring real estate products and services you will want to utilize as a successful investor. Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, CA 90034 (Culver City adjacent). FREE Admission. Please RSVP at www.LARealEstateInvestors.com. 

4th Annual Los Angeles Real Estate Grand Expo. Our 4rd Annual Los Angeles Real Estate Grand Expo returns on Saturday, October 21, 2022, 9:00 am to 6:00 pm. This year we’re taking over the entire Iman Cultural Center – it’s all ours for the day! The north hall, the south hall, and the parking lot in the middle (with tents and food trucks). One entire day celebrating real estate investing. The theme of this year’s Grand Expo is “Hedge Inflation - Buy Real Estate.” There will be 14 national speakers in breakout sessions, and 70+ vendors in the North Exhibition Hall. The Grand Expo is a joint presentation of the Los Angeles County Real Estate Investors Association, Sam’s Real Estate Club, Ventura County Real Estate Investors Association, and Realty 411. Best of all, the Grand Expo is FREE to attend. Street parking is free or metered, and valet parking will also be available. But please RSVP at www.LAGrandExpo.com

“LARealEstateInvestors.com” Podcast. Are you enjoying our weekly podcast, "LARealEstateInvestors.com" (named after our domain) hosted by our very own Bill Gross? Bill has been a Realtor, broker and real estate investor forever! No one is more experienced in local Southern California real estate than Bill Gross. Each week, Bill interviews real estate professionals sharing their insights and advice for real estate investors. Every Tuesday live at 3:00 pm, and anytime thereafter on YouTube, Facebook, and Google.

This Week. Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy. For economic data, the most highly anticipated report will be the Consumer Price Index (CPI) on Thursday. CPI is a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services. Beyond that, the Trade Balance will be released on Tuesday and the Producer Price Index (PPI) on Friday.

Weekly Changes:

10-Year Treasuries:             Rose  015 bps

Dow Jones Average:           Fell    100 points

NASDAQ:                            Fell    300 points

Calendar:

Tuesday (8/8):                      Trade Balance

Thursday (8/10):                  Consumer Price Index

Friday (8/11):                        Producers Price Index       

For further information, comments, and questions

Lloyd Segal

President

Los Angeles County Real Estate Investors Association, LLC

www.LARealEstateInvestors.com

This email address is being protected from spambots. You need JavaScript enabled to view it.

310-409-8310