In this issue:
- Property Quarterly Financials
- Property Updates
- CSQ Core Value – Mutual Respect
Property Quarterly Financials
In a survey of over 11 million apartment units in the United States, the National Multifamily Housing Council (NMHC.org) found that rents collected for September were over 94% which is less than 1% below where they were in September 2019! This is higher than most investors expected during the Covid Pandemic. CSQ properties have been 99% collected with 100% occupancy from March – Sept 2020. This has provided for solid financials and monthly investor distributions. Please login here and click the “Documents” tab to see the Q3 financials for the respective properties you are invested in.
We are currently evaluating several properties and keeping a close eye on the multifamily real estate market to take advantage of these opportunities when they arise. We also believe there will be some good buying opportunities in the near future and are encouraging CSQ investors to maintain a strong cash position to take advantage of these opportunities.
1955 Locust Ave
1955 Locust has been performing great. We’ve had some turnover at this building but no units were vacant for more than a week and one unit was even pre-leased before the tenant moved out. In all instances the rent was at the same rate as pre-Covid numbers. This type of market has been further illustrated with recent data.
According to CoStar, from March to August 2020, rent for Los Angeles Class A apartments has fallen 4.3% yet for Class B and Class C apartments, the drop has only been 2% and 0.2% respectively. This is part of the reason CSQ has chosen to focus on Class B and Class C apartment buildings. Traditionally, these buildings perform very well during downturns.
8455 Eton Ave
As luck would have it, one of the three A/C units for this property failed during a San Fernando Valley heat wave. Temperatures reached 115 degrees in the Valley and it proved too much for an older unit. $7000 later, the house was back to being cool. This is another reminder of the importance of maintenance. The unit had been improperly maintained causing it’s final demise. A couple hundred dollars a year could have extended the life by another 10 years, not to mention the increased efficiency from running cleaner coils. We’ll have to chalk this up to another lesson learned!
Despite the high temps, this crew of loving Moms and Kids did a great job of keeping their heads up!
Reseda Medical Arts Building
This property continues to perform well and 100% of the rent payments were collected through September!
1470 Elm Ave
This property continues to perform great with 99% collections and 100% occupancy through September. One of the units has vacated and the rehab is underway which should be complete in 3 weeks. Along with 1470 Elm, there is still significant construction (as shown below) and investments being poured into the rest of Long Beach. As we’ve said, Long Beach is on it’s way to having Santa Monica real estate pricing without the Santa Monica rent control or restrictions.
CSQ is on the front side of this wave acquiring C Class properties and improving them to become B Class properties.
CSQ Corporate Value - Mutual Respect
CSQ Corporate Value – Mutual Respect
I have always grown up being taught not to ask someone else do something I wouldn’t do myself. A tangential lesson I learned along the way is if you want to get something done right, you need to do it yourself. Although these lessons have helped me work hard and perform high quality work, it can also be a crutch to business growth as I’ve learned running different businesses. Like most things, striking a good balance tends to be the best approach. I’ve learned to be happy with others getting me, or the company, 80% of the way there. I’ve had to learn to let go and not have unrealistic expectations of others. One aspect of this I have not been able to break away from is asking others to do something I wouldn’t do myself.
Hiring my brother-in-law to re-roof my house last month was no exception. Although I’m a General Contractor, I had never redone an entire roof. So, in the heat of summer, I worked alongside my brother-in-law for the whole project. We worked 10-12 hour days, 7 days a week for a month. There was 8 tons of debris removal, took 18,000 roofing nails, 16,000 screws, and 4,200 sq. ft of shingles! Temperatures were well above 100 degrees most days and it was real work – real “grab a drink at the end of the day” work! He is a 3rd generation roofer so I learned a lot.
I would not have been able to sit inside an air conditioned house while he worked in such rough conditions. To me, this is mutual respect – one of the core values of CSQ. Fortunately, I’ve done a lot over the years so I don’t have to do everything myself any more, but it does allow me to relate to others who have difficult jobs to do. I can be compassionate while at the same time demanding for results. I can speak the “language” because I’ve been there. And when these demands for results come from a place of Mutual Respect, I find the outcome tends to be much better. Projects can be difficult, but with this type of understanding, I’m able to keep others motivated and working the best they can to deliver results.
As Dwight Eisenhower once said, “By mutual respect, understanding, and with goodwill, we can find acceptable solutions to any problems which exist or may arise between us.” In real estate, there are always problems, or as we like to say, issues, between different parties. But by addressing these issues from a place of mutual respect, there will always be acceptable solutions. If you are interested in incorporating real estate as a solution to your long-term wealth goals, please keep CSQ in mind.