IE Business Daily Business news for the Inland Empire.
This week on “Professionals of the Inland Empire” podcast Aaron Weiner with Weiner Property Services Inc. and KW Commercial, and Justin Brown with New Home Team join host John Tulac to discuss real estate, investment, and tenant representation.
Weiner is a commercial real estate broker with Weiner Property Services Inc. and hangs his license at KW Commercial, specializing in tenant representation. With 44 years of experience, he focuses on retail, various iterations of office, and industrial properties. As a tenant representative, he acts as an advocate for tenants or owner-users of real estate, guiding them through the processes of criteria development, market scouring, information gathering, property touring, and coaching. He excels in interpreting complex real estate transactions and contracts, particularly in the review of lengthy leases. Weiner’s background in property management allows him to offer a “360-degree view,” understanding landlord motivations to aid in negotiations.
Small businesses often encounter problems such as space mismanagement, with incorrect estimations of square footage leading to difficulties over a five-year lease term. While short-term leases appeal for flexibility, they diminish negotiating leverage, as landlords typically prefer a solid five-year commitment. Institutional landlords tend to stick to boilerplate language due to portfolio consistency, while larger tenants might negotiate more effectively. Shopping mall leases are particularly complicated, often involving terms like percentage rent and gross sales reporting. Subleasing poses its own issues, as timing can vary significantly, and landlords often prioritize filling their own vacancies before assisting tenants. The overarching goal for landlords is capital appreciation rather than just monthly cash flow.
Brown leads New Home Team, an umbrella for lending, acquisitions, renovations, and private capital. His specialization lies in solving complex real estate problems that traditional agents might overlook, dealing with distressed properties and difficult financing situations primarily in Southern California but also nationwide. His approach emphasizes underwriting, where he assesses financing, equity, exit strategy, and construction risk. Notably, he often uncovers financial disarray among property owners that necessitates thorough investigations of utility bills and rental proof. Private money lending primarily involves bridge loans with a focus on asset value and exit plans rather than conventional credit metrics.
A detailed analysis of a two-unit property in a rent-controlled area of Los Angeles highlights that, while the current rent is $900 monthly, the market rent is around $2,500. The property’s estimated vacant value is $700,000, yet its’ asking price is only $499,000. Brown assesses that costs could reach $100,000 to remove tenants and an additional $400,000 for repairs, leading him to consider a purchase price of about $200,000. The stringent landlord-tenant regulations in LA can severely impact a property’s market value despite high comparable properties.
The discussion touches on regulatory challenges such as ADUs, lot splitting, and evolving multi-unit regulations. Conflicts often arise between state mandates for high-density housing and local zoning laws. One project illustrated the inconsistencies across consultants, architects, and city officials regarding lot usage legality. These policy shifts represent both opportunities for investors and challenges for established neighborhoods.
The PIE podcast aims to showcase Inland Empire professional talent, foster local economic development, and highlight the Provisors networking community. Catch the full show on YouTube @ProfessionalsofInlandEmpire.
