This Thanksgiving, I’m Thankful for You



With Thanksgiving just around the corner, now is the perfect time of year to pause and reflect and be
thankful. And one of the things I’m most thankful for in life is you—my valued friends and clients. I
appreciate the incredible support you’ve shown me this year, and look forward to continue serving as
your real estate resource in the new year ahead and beyond. I hope that you’re able to spend this holiday
season surrounded with those you love, and that you have a very happy Thanksgiving. To hear my full
message of thanks, watch this short video.

How to Prepare For Proposition 10 Rent-Control Changes

In our latest message, I’ll be discussing the potential changes of Proposition 10 and why you should consider increasing rent.

With votes being cast next month, Proposition 10 could potentially change the way rent control works
in Southern California. As the balloting comes closer, I’m being asked more and more about what
should be done in preparation for these changes.

The simplest solution? Raise rent periodically to reflect economic and market trends.

Employees receive wage increases for cost of living and inflation, and utility companies
increase price based on growing infrastructure costs. It’s no different in real estate—costs rise
over time.

Let me provide some examples:

The median price for a West Covina home in 2014 was $435,000 with an average price per square
foot of $278. In September 2018, the median price had risen to $568,000 with an average price per
square foot of $361.

To get a return of 5%, account for 6.5% to cover your costs of tax, insurance, and maintenance. In
2014, rent was around $1.50 per square foot per month, and for 2018 it’s up to $1.95 per square foot
per month.

In a recent survey, the median rent for a 3-bedroom house is $2,325 with a square footage of 1,400
square feet (about $1.65 per square foot per month). You can see the price increase from $1.50 in
2014 to $1.65 now.

If you’re a new buyer and are wishing you were at the $1.95 point, don’t worry! Over the past 35
years, home value has seen a roughly 6% appreciation. For the average owner who puts down 20%
on a new home, that appreciation of 6% amplified over 5 years is a substantial 30% return. On top of
this, a $60 monthly rental increase becomes $720 annually, adding even more value to your
investment.

If you’re looking for guidance in raising your rental prices, have questions, or need information,
contact me by email or phone and I’ll be more than happy to help. I look forward to hearing from you.

What I Learned About Our Market at a Recent Conference

I attended the largest default servicing conference in the country. Here are three things that I learned

I recently spent three days in Dallas attending the largest default servicing conference in the country.
Here are three specific takeaways from this conference that I want to share with you:

1. Fannie Mae has reported a very healthy gain. They have returned $193 billion to the treasury of
the $119 billion that they took out as a loan. At the height of the great recession in 2010, they had
a 170,000 home inventory. Right now, they only have an inventory of 22,000 homes.

2. Future trends. As you might recall, from 2012 to 2014 we saw the initial rate cast down to 2.5% for
five years. Now, those have been recast back up to 5% or 6%. Will homeowners be able to afford this?
We should know about a year from now, however, this won’t affect the market much aside from an
increase in distressed properties.

3. Demographics. This has a very important impact on our marketing and the economy. There are 75
a million millennials out there aged 19 to 34 and peer research has shown that over 50% of them are
still living with their parents. This explains why the home building industry hasn’t recovered like it has
in the past after past recessions.

Currently, the housing market is healthy overall, but there are definitely things to keep an eye out for
in the future. If you have any questions for me about the market or any of these takeaways that I’ve
discussed, don’t hesitate to give me a call or send me an email. I look forward to hearing from you
soon.