{"id":9387,"date":"2014-08-11T05:00:03","date_gmt":"2014-08-11T12:00:03","guid":{"rendered":"http:\/\/www.yardi.com\/blog\/?p=9387"},"modified":"2021-02-03T15:50:23","modified_gmt":"2021-02-03T23:50:23","slug":"the-problem-solver","status":"publish","type":"post","link":"https:\/\/www.yardi.com\/blog\/the-problem-solver\/","title":{"rendered":"The Problem Solver"},"content":{"rendered":"

Editor’s note: Last fall, we introduced you to Kyle Kazan, CEO of Beach Front Property Management<\/a> and a former law enforcement officer. Kazan’s stories of dealing with problem tenants and difficult situations at his properties stood out – he is upfront and honest about real-world situations that other executives might not want to talk about. As a result, we interviewed Kazan for Multi-Housing News Magazine<\/a>. Here’s a follow-up to his story.<\/p>\n

\u201cA good B or C quality building, like a nice quality used car, doesn\u2019t lose value. It\u2019s i\"Kazann high demand, and if the majority of people are your target market, I think you\u2019re in the safe spot,\u201d said Kazan, whose firm has been recognized regionally for their efforts to turn around troubled units. A former policeman and inner city school teacher turned successful owner-manager, Kazan operates in real world property management.<\/p>\n

\u201cWith all due respect to my friends out there in some of the big REITs that like to stick to Class A and sinking to Class B is not where they want to be, I feel like I am right in the sweet spot of society,\u201d he said.<\/p>\n

His company, Beach Front Property Management, is based in Long Beach, but Kazan travels the globe to oversee assets on behalf of his investors. Back in LA, he can slip back into police officer mode and lead a team to throw out drug dealers or other troublesome tenants. It\u2019s that skill that prompted recent calls from brokers about a very troubled apartment building in Anaheim, not far from Disneyland.<\/p>\n

\u201cThe previous owner had a stroke and had been overseeing the property himself. He had six units not paying rent, and a police shooting had killed a gang member on the corner of the property. There was a gang shrine where his friends would come and pay their respects by dumping out their 40 (oz. beers). It came on the market, and I got several calls saying: \u2018This is right up your alley. This is what you do,\u2019\u201d Kazan recalled.<\/p>\n

Three months after escrow closed, new residents were in place in the delinquent units, a new roof and decking had been installed, and most importantly, the shrine had been removed without insulting the deceased\u2019s mother\u2013who continued to live in the neighborhood (or immediate vicinity\u2013if you\u2019d rather), but had scared off her son\u2019s former friends in exchange for a small plaque, marking where he had fallen, that she could visit quietly.<\/p>\n

\u201cIt wasn\u2019t obvious to everyone what happened there, but she could still mourn her son. One of my managers knew just how to approach that woman in a respectful way,\u201d Kazan said.<\/p>\n

It\u2019s all in a day\u2019s work for the team at Beach Front, which has grown from 10 people when Kazan went full-time in property management in 1999 to nearly 200 today. The majority of those staff members are bilingual, to better serve Southern California\u2019s diverse rental marketplace.<\/p>\n

Kazan shared his insights on working with challenging properties and achieving success with MHN<\/em>.<\/p>\n

MHN: What are your best practice tips for owner\/managers dealing with troubled properties?<\/b><\/p>\n

Kazan:<\/b> If you are the management company, be diligent about screening your residents. Go into every unit at least once a year.<\/p>\n

Make sure either you, the owner, or good people on your management team stay in tune with your community. Even with the best resident screening practices, you may find that a tenant who has been there five years might have started with a son who was an 11-year-old sweet kid, but now five years later is a 16-year-old gang member. Usually that doesn\u2019t happen overnight. That\u2019s a process that takes some time.<\/p>\n

Even in rent control areas where it\u2019s harder to remove a tenant, most of the time there\u2019s a way to work things through. You can\u2019t go to sleep on your buildings. I know anybody reading this will say: \u2018Of course, you don\u2019t go to sleep on your buildings,\u2019 but it\u2019s more than that. It\u2019s being diligent and caring about what it is going on at the properties and to the residents. If you don\u2019t care about them, they\u2019re not going to care about you, or your property.<\/p>\n

MHN: How do you train your team to deal with an eviction or criminal situation?<\/b><\/p>\n

Kazan:<\/b> For us, it has mainly been trial by fire. When we were much smaller and just a few people, it was like going out there with a SWAT team. I would even enlist some of my police friends to join me in going out when it came to the takeovers and different operations as we were executing a plan to rid a building of the criminal element.<\/p>\n

My core group was trained that way. We\u2019ve added new people to these missions as we\u2019ve grown. It\u2019s a little bit like a police department mentality: We bring in the rookies and have veteran training officers show them the ropes.<\/p>\n

My graduate school education was in special education\u2014there\u2019s no (real estate) school anywhere where they say: \u2018OK, here is how you rid an apartment building of drug dealers and gangsters. Who, by the way, are profiting very nicely from being where they are, and are not going to want to leave because it will up-end their lives and their business.\u2019 You have to deal with that, and the desperation that may come with it, because this resident can\u2019t go to the police or the courts.<\/p>\n

It helps that having been a police officer and an inner city school teacher I was used to working with folks in trying circumstances. Over time, we\u2019ve created our own education system. Thus far, we\u2019ve not failed in turning around one building.<\/p>\n

MHN: Can the police help, or are they too busy with more serious incidents?<\/b><\/p>\n

Kazan:<\/b> You might try to turn it over to the police departments, but we\u2019ve managed properties in seven to eight states and in other countries. All over, police departments are getting squeezed. They don\u2019t have the budgets and resources they did. I\u2019m still good friends with a lot of active duty law enforcement officers all the way up to chiefs, and they don\u2019t have the community officers like they used to that are out taking care of business. Instead, they\u2019re very reactive. They will assist you if you have a plan and know how to talk the talk and work with them, but at the end of the day, you have to be the laboring oar. You need to plan, execute and use law enforcement as a tool.<\/p>\n

MHN: Tell us about one of your building takeovers.<\/b><\/p>\n

Kazan:<\/b> One significant turnaround we\u2019ve been recognized for by the Apartment Association of California Southern Cities was the clean up of The Karnak, a beautiful old property in Hollywood that was built in the 1920s. The exterior design was inspired by King Tut\u2019s tomb, which had been discovered in 1922.<\/p>\n

Well, The Karnak had been taken over by members of the Mara Salvatrucha, MS-13, which is a notoriously dangerous El Salvadorean gang. These guys used fear and intimidation tactics against the other residents, who were very nice people.<\/p>\n

We basically went in there, garnered good support from the LAPD, and went out there for some focused chats with the guys. We came to an understanding that their lives and mine would both be better if we separated.<\/p>\n

I have a really good solid team of people who have worked with me for a long time. They are the foot soldiers. I just come out and oversee the direction and have chats with some of the gangsters that are a little scary.<\/p>\n

MHN: How do residents help in these types of situations?<\/b><\/p>\n

Kazan:<\/b> They have to trust you if you\u2019re going to be successful. Most people want to live in a safe community. They don\u2019t want their kids or grandparents around dangerous people. Most people are law abiding citizens, they recognize trouble and they\u2019re scared. They don\u2019t want to get targeted by these people. You have to facilitate trust and you have to facilitate the understanding that we\u2019re not going to go away, and we\u2019re going to win this battle. The best sources we have are not only our own eyes and ears, but the good residents that support what we\u2019re trying to do.<\/p>\n

MHN: You describe yourself as a \u201ccontrarian investor.\u201d What does that really mean?<\/b><\/p>\n

Kazan:<\/b> Typically we have invested in most markets at a contrarian time. When we started in the 1990s in California, there were more sellers than buyers. The same thing when we went into Berlin, Shanghai, Austin and Atlanta.<\/p>\n

When the market is flipped on its head and we as the buyer are in the minority, and that usually makes me very happy. In Southern California right now, that is not the case. In that case we try and find deals that others would try to get away from, because of crime issues, because of massive vacancies, because of any number of items that would scare the majority of investors away.<\/p>\n

You\u2019ll never find me in a bidding war for a property in a great market that\u2019s already been turned around and someone\u2019s looking at like a bond investment. That\u2019s never going to be my deal. Mine is always going to be something with hair on it. Most people don\u2019t want to play with a Rubik\u2019s cube, which might seem impossible at first, but that\u2019s what I like and it has allowed my investors and me to profit handsomely.<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Editor’s note: Last fall, we introduced you to Kyle Kazan, CEO of Beach Front Property Management and a former law enforcement officer. Kazan’s stories of dealing with problem tenants and difficult situations at his properties stood out – he is upfront and honest about real-world situations that other executives might not want to talk about. 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