Mynd, the tech-powered property management company with the industry’s first real-time data management and mobile app, announced today that it has acquired San Diego-based Pacific Shore Management’s 595 unit portfolio. The deal makes Mynd one of the fastest growing mid-cap property management companies in the US and will more than double their unit count to nearly 1,100 in just 10 months of operations. The expansion into Southern California, one of the nation’s largest rental markets, further demonstrates the company’s commitment to overhaul the rental management industry.“The acquisition of Pacific Shore Management is an exciting opportunity for Mynd to continue our expansion into the massive Southern California market and to enable more property owners and residents to experience the benefits of our tech-powered property management service,” said Doug Brien, CEO and Co-Founder of Mynd. “We are proud to partner with the outstanding team at Pacific Shore Management and look forward to expanding further into the San Diego market.”Launched in 2016 by real estate veterans Colin Wiel and Doug Brien, Mynd marries homegrown software with industry-leading operations to offer owners a simpler, more profitable solution to manage their rental properties.“We have been in the real estate business for 15+ years and have always felt like technology was underutilized. When we met the Mynd team and saw how they had leveraged technology to make their management platform more efficient we were extremely impressed. We think Mynd’s approach to management will be game-changing for investors in San Diego,” said Krystle Moore with Pacific Shore Management.“Acquiring property management firms around the country provides a compelling way for Mynd to seed new markets so they can leverage their 21st century approach to management,” said Rich Boyle, General Partner with Canaan Partners.
Oakland-headquartered Mynd, which describes itself as a “tech-powered” residential rental property management company, has acquired San Diego-based Pacific Shore Management for an undisclosed price.
A statement from Mynd, which currently operates primarily in the Bay Area, said the acquisition of Pacific Shore Management, based in Mission Valley, enables the company to continue its expansion into the Southern California market.Mynd acquired Pacific Shore Management’s 595-unit portfolio of single- and multi-family properties currently under management, doubling Mynd’s unit count to nearly 1,100. Pacific Shore will retain its current name.Mynd was started in 2016 by real estate veterans Colin Wiel and Doug Brien, who also founded Waypoint Homes, which provides nationwide listings of single-family rental homes. Mynd is backed by Cannan Partners, Jackson Square Ventures and Lightspeed Partners.Mynd offers what the company calls the rental property management industry’s first real-time data management and mobile app, designed to give property owners “a simpler, more profitable solution” to manage those assets.Pacific Shore Management is led by Krystle Moore, who is also president of locally based Pacific Shore Capital. “We have been in the real estate business for 15+ years and have always felt like technology was underutilized,” Moore said in the Mynd statement.
By Lou HirshSan Diego Business JournalAugust 30, 2017
----------------Read article on San Diego Business Journal.
California has some of the most expensive housing in the nation, and San Diego is no exception. Since 2002, rents in San Diego have increased 32 percent and now average between $1,500 and $2,800 per month, depending on unit size.Costs are rising, in part, because the city can’t keep up with demand. Developers were expected to bring 5,800 new units online in 2017, but this still isn’t close to enough. According to a recent report by San Diego Housing Commission, the city needs to almost triple the amount of housing it builds each year just to keep pace with demand.And the development that has occurred, hasn’t translated into units that are affordable to the masses. The bulk of the units coming online are affordable to just 15 percent of local renters, according to Marcus & Millichap.
The City of San Diego does have an inclusionary housing ordinance. The ordinance, adopted in 2003, requires housing developers of two units or more to set aside at least 10 percent of their projects for low- and moderate-income residents.However, since 2009, the portion of the ordinance has rarely been enforced. In 2009, a state appeals court ruled that a similar affordable-housing set-aside requirement in Los Angeles was effectively an illegal expansion of rent control.Instead, in 2011, the City of San Diego began collecting one-time impact fees “in-lieu” of developing affordable units on site. The current fee varies, from $1.41/SF to $7.03/SF depending on the project’s size. The city then uses those fees to provide loans to support affordable housing projects. In practice, though, the ordinance allows for a number of exemptions, waivers and variances – which means that this provision of the ordinance has had a limited impact on the city’s affordable housing stock.
Last fall, Governor Jerry Brown signed Assembly Bill 1505 into law. In doing so, he provided cities like San Diego with another tool to combat the housing affordability crisis. Under the legislation, cities can establish inclusionary housing requirements as a condition of development—regardless of whether the development receives governmental assistance ().AB 1505 specifies that cities and counties may adopt ordinances that “require, as a condition of the development of residential rental units, that the development include a certain percentage of residential units affordable to, and occupied by” households at or below moderate-income levels.AB 1505 took effect on January 1, 2018.
San Diego City Councilor Chris Ward is urging his peers to waste no time. AB 1505 opened the door, he says, and the city should act swiftly. In a letter to the Mayor, he urges the city to “take advantage as soon as possible of the opportunities available from the implementation of AB 1505 and to maximize tools for the immediate production of new affordable housing.”Specifically, Councilman Ward has proposed the following slate of changes to the city’s inclusionary housing requirements:
It remains to be seen whether these changes will be adopted and if so, what the specifications around the changes will be. The City Council has tasked city staff with exploring these options, and others, to come up with a more comprehensive plan on improving housing affordability.We will continue monitoring proposals such as these, as any changes to the city’s inclusionary zoning requirements could certainly impact San Diego property owners and investors.
Rents in San Diego, like the rest of Southern California, continue to climb. And according to a new study, there’s no end in sight. The 2017 University of Southern California Casden Multifamily Economic Forecast predicts that average monthly rents in Southern California will increase through at least 2019.Higher rents aren’t necessarily a bad thing. In fact, rising rents are usually indicative of a strong economy. The unemployment rate in San Diego, for example, is under 4 percent – and is lower than it has been in nearly a decade. More than 17,200 new jobs were added between July 2016 and July 2017 alone, and San Diego’s economy is expected to continue its expansion over the next two years.But the USC study also finds that, despite a strong economy, income growth isn’t keeping pace with multifamily rent increases. Yes, more people are working. They just aren’t earning enough to afford SoCal’s rising rents. Real rents increased by 13% since 2005, while real incomes only increased by 5%."It's certainly no surprise to anyone — developers, landlords, tenants and elected officials — that available units are becoming more scarce and more expensive in Southern California,” said USC Lusk Center Director Richard Green, who co-authored the forecast with economists at Beacon Economics. “As employment and wages improve in the region, homeownership remains stagnant. This combination is a key stressor in the availability and cost of apartments and has an increasing impact on the local economy.”The study projects triple-digit rent increases across most of Southern California over the next two years.
One of the other reasons rents continue to rise in San Diego County is because the population continues to swell. Since 2015, the population has grown by 1.5 percent and it is expected to continue to grow as long as the economy continues to grow.While there’s significant new multifamily construction underway or in the pipeline, it isn’t enough to meet growing demand. There were 3,123 multifamily residential permits pulled in the first half of 2017, but this is down by 33.1 percent from the same period the year prior.Here’s a snapshot of the multifamily outlook for San Diego County compared to today:2017
2019
The study also looked at a number of submarkets within San Diego County.The City of San Diego-Coastal area led the County’s submarkets with the highest average monthly rent in the second quarter of 2017 (), followed by the City of San Diego-Inland area () and North County (). Countywide, rental growth rates have ranged between 1.5 and over the past two years. The North County submarket had the fastest growth (), followed by the City of San Diego-Inland area () and City of San Diego-Coastal area ().City of San Diego-Coastal Area, 2008 to 2019
City of San Diego-Inland Area, 2008 to 2019
North County Area, 2008 to 2019
These stats may not seem alarming to the untrained eye. But for those of us watching the data closely, one thing is crystal clear: absent wage increases, this rental growth is unsustainable.And it could very well strain SoCal’s otherwise strong economy.“Labor markets in California aren’t as smooth as they should be,” the report notes, “as move-induced changes in housing costs could discourage people from moving to take on new jobs.” In other words, while there may be plenty of new jobs to be had, these jobs may go unfilled if people can’t afford to live here. Over time, this could drag the economy down.Rising rents also point to demand for multifamily housing – both existing housing and new construction. As noted above, San Diego is increasing its multifamily housing stock at record rates. This will certainly release some of the pressure on the rental market, but vacancy rates will still hover around 4% given pent-up demand.Given these market conditions, we expect both rents and home prices to continue rising for the foreseeable future.“Developers have been paying top dollar for land over the past 12-24 months and construction costs have been on the upswing which has created an influx of high-end rentals. With the heightened demand for rentals by those who now cannot afford the climbing prices of homes, assets with overdue renovations are getting the attention they need. This has enabled landlords to capitalize on the rent increases while improving the value of their assets.”These projections are important as they can help guide real estate investors as they evaluate various investment opportunities in San Diego County and beyond.
Looking for an incredible live-work-play environment? Look no further than San Diego.Nobody realizes this quite like Millennials, the generation born between the early 1980s and 2000. Millennials, who are now aged between 18 and 34, are flocking to San Diego in droves.A recent study finds that nearly one-third of San Diego’s population consists of Millennials. That equates to more than 1 million Millennials living in San Diego County, and earns San Diego the #2 spot in terms of cities with the largest share of Millennial residents – behind only Austin, TX.Millennials are largely to thank for San Diego’s population growth in recent years. Between 2010 and 2017, San Diego’s population swelled by 7.5 percent.The bulk of people moving to San Diego are young, working professionals in search of a high quality of life. For those considering where to live, San Diego checks all of the boxes: robust employment opportunities, relatively affordable rents, an abundance of amenities, and year-round weather that can’t be beat.
Between 2010 and 2017, San Diego-area employers added 160,000 jobs to their payrolls. The city’s unemployment rate at the end of last year – below 4 percent – was the lowest it had been in a decade. Bank of America recently surveyed Millennials: More than half () of those living in San Diego cite employment opportunities as one of the city’s biggest draws. Nationally, only 39% of Millennials ranked the job market as a top benefit to where they live.Biotech, defense and engineering are among the industries driving employment growth in San Diego. And in recent years, San Diego has really established itself as a hotbed for tech startups. Entrepreneurs have started to realize that office space in San Diego is a fraction of the cost of space in San Francisco or Silicon Valley. The changing nature of work makes it easier to work from anywhere in the world. Participating in the tech economy no longer requires a physical presence in the Bay Area. People can live in San Diego and if need be, hop on a plane and be in the Bay Area in less than an hour.San Diego also has a highly skilled workforce. UCSD, San Diego State University and the University of San Diego have impressive entrepreneurship, biotech/life sciences, IT and engineering programs. These schools are constantly churning out qualified, eager-to-learn grads so entrepreneurs need look no further than their own backyards for talent as their companies grow.
It’s a stretch to say San Diego rents are affordable—but we can say, with confidence, that San Diego rents are relatively affordable when compared to other coastal cities. Millennials, when evaluating where to live, will find that rents in San Diego are still significantly less than rents elsewhere. This is particularly true when comparing rents within California.“Compared to other California markets, San Diego is a relatively cheaper alternative with a high standard of living,” explains JLL senior research analyst Patrick Ashton. “For example, apartment rents and housing costs are lower, as compared to San Francisco, Silicon Valley and Los Angeles. Other California cities’ apartment rents range from $2,500 to $2,800, while San Diego’s average is at $1,900 a month.”
Millennials are a generation that tends to prefer experiences over things, and San Diego has so much for them to experience. The city is home to a long list of art and cultural institutions, including Balboa Park. Balboa Park, often referred to as the “Smithsonian of the West,” is one of the largest urban parks in the U.S. and features 17 different museums. Over on the waterfront is the USS Midway Museum, which Trip Advisor has named one of the top museums in the country.Aside from the more formal arts and cultural institutions, San Diego also hosts a variety of festivals, concerts, and theatrical performances throughout the year. Whether you’re into film or folk rock, there’s always something to do.And that only scratches the surface. With more than 150 craft breweries (), San Diego has rightfully earned its reputation as the craft beer capital of the U.S. In recent years, a surge of new, eclectic restaurants has helped to revitalize downtown. Now, the downtown is truly a vibrant place attractive to Millennials wanting to live in the urban core.
Millennials are moving to San Diego for what the U.S. Weather Bureau has described as “the closest thing to perfect weather in America.” Warm, sunny days are more often the norm than not. The weather makes it easy for Millennials to live active lifestyles. Surf before work. Hike on endless trails. Or just soak in the sun on San Diego’s world-class beaches. It’s up to you.While San Diego already offers a strong quality of life, the weather is the icing on the cake. For Millennials in search of their next adventure, the weather in San Diego usually cooperates. Now, the question remains: will Millennials stay in San Diego? Affordability is going to be a major factor. Despite assumptions to the contrary, Millennials still place a high value on owning a home – particularly as a means of achieving financial security. Yet over the past decade, San Diego County experienced the second largest millennial homeownership rate drop among the nation’s largest 50 metros. Less than 20% of San Diego-area Millennials own a home.We expect this number to increase as Millennials age, pay down debt, and become more established in their careers. Unless the underlying market fundamentals change, San Diego will remain an attractive place for Millennials to live, work, and play.
San Diego’s economy is booming, but don’t just take our word for it. Look at the cranes dotting the skyline, indicative of new development. Notice restaurants packed to the brim, a sign that disposable income is on the rise.Or, just look at the data.
Recently released data find that the region’s unemployment rate, which had already been trending downward, fell yet again at the end of last year. In Q4 2017, the unemployment rate dipped to 3.3%, down from the quarter prior.San Diego’s unemployment rate has now reached an impressive 17-year low.To put that in context: the region’s unemployment rate is lower than both the state () and national () averages. More locally, San Diego fared better than its neighbors in both Riverside () and Los Angeles ().San Diego’s unemployment rate is the 7th lowest in the nation among the 25 most populous metros () San Francisco earned the top spot in Q4 2017, with an unemployment rate of just 2.7% -- not all that much lower than San Diego’s.What’s more, among that same group of 25 metros, San Diego experienced the second largest year-over-year decline in unemployment ().So, what’s driving this trend?There are a few employment indicators worth highlighting.First is the net new number of jobs added to the private sector payroll. In Q4 2017, the region added approximately 22,100 jobs – a 1.5% increase in total number of jobs. This puts San Diego about squarely in the middle of the pack relative to other metros ().Second is the shift in seasonal employment. San Diego’s unusually low unemployment rate is driven, at least partially, by seasonal hiring that occurred in Q4 in advance of the holiday shopping season. San Diego’s retail trade had the largest month-over-month increase of all the employment sectors, according to BLS data.Yet when adjusted for seasonal swings, the San Diego unemployment rate still hovered around just 3.5%, and “showing a jobless rate well below 4% underscores the tightness of San Diego’s labor market,” explains Lynn Reaser, chief economist for the Fermanian Business & Economic Institute at Point Loma Nazarene University.In order to sustain this near rock-bottom unemployment rate (), the city will need to attract more workers to San Diego. Employers are ready and eager to put down roots in San Diego, but there’s growing concern that if they do so, they won’t be able to find the workforce they need.“Growth in the long run is really based on bodies, having more workers,” says Chris Thornberg, economist and founding partner of Beacon Economics. Thornberg explains that more housing is necessary if San Diego is going to attract more people to the region.Thankfully, San Diego IS building more housing. In fact, San Diego apartment deliveries hit a record high in 2017. This might not be enough to satiate pent-up demand, but it is at least a step in the right direction.The strength of the local economy is an important indicator as to how well a local housing market will perform in the near future. By all accounts, it seems as though the underlying market fundamentals in San Diego will ensure robust employment for the foreseeable future—great news for anyone interested in investing in San Diego-area real estate.Interested in learning more about the San Diego market? Sign up for our newsletter on the right or contact us at denia.ray@mynd.co.
Read the feature on Mynd CEO Doug Brien written by De La Salle High School, his alma mater.
Property management is a large and fragmented market. Buildings with 50 units or less generate ~$29 billion of PM fees generated in the US alone. Yet it’s also highly fragmented. The largest player in the market represents 0.14% of the market, and the majority of property management companies are locally-owned and operated with only a handful of employees.Sometimes this isn’t by choice. There are certainly property management companies out there that would love to scale. They just don’t know how to—or at least, don’t know how to effectively.In our experience, when a property management company is first getting started, it will take on anything that comes their way. The end result is a scattered, difficult to manage portfolios. A property management company may grow to 1,000 units under management, but only a fraction of those units may be a good fit for that company’s business. These property management companies can quickly find themselves in over their heads.Growing through acquisitions is not a bad strategy. In fact, it can make a lot of sense. It’s a lot easier to grow a property management company through acquisitions than to try and grow the business organically, one building at a time. But if you’re going to try to grow your property management company through acquisitions, there are a few things to consider.
Property management companies often make the mistake of acquiring 200+ units and assume that their existing infrastructure is sufficient. Maybe they’ll add one more staff person, but otherwise, they think they’ll be fine with the team they already have in place.This is a huge mistake. See, buildings each come with their own history. Each unit has its own story. That knowledge is generally stored in one or two people’s brains at the existing property management company. So while it may be the case that the last property management company was able to service this portfolio with just one staff person, the transition may actually require significantly more staff capacity – at least at first.Evaluate your existing operations. Are you a team of specialists or generalists? A team of specialists may be better equipped to absorb a portfolio without adding significant new capacity. For instance, if you have someone devoted to accounting, maintenance, etc. then your team can divide and conquer the new units under management. If you expect a generalist to manage it all, it may cause a rapid drop-off in service. You should aim to service this portfolio to the same level, if not better, than how it was serviced before.
As alluded to above, there’s usually someone at the existing property management company that has a host of institutional knowledge about the portfolio you’re looking to acquire. All too often, that information is never written down or transferred to the new management company.That’s why it’s a good idea to consider bringing on one of the staff members () of the company you’re acquiring. Ask for a three- to six-month commitment to assist with the transition. Spend time pulling all of that knowledge out of their heads, and get it down on paper! Be sure that information now lives with the property and not the property manager.
Growing through acquisitions is a great way for a property management company to expand into a new market. It’s much easier to gain a foothold in a market when you manage a substantial portfolio of properties vs. trying to acquire management contracts one-by-one in a new market.This approach gives you instant credibility. Let’s say you’re a property management company in Oakland and you wait to expand into other Bay Area markets. You call Mr. Smith, the owner of a 6-unit building in San Jose. One of the first questions he’s going to ask you is what other properties do you manage in San Jose? “Nothing,” you say. Mr. Smith laughs and hangs up the phone.When we evaluate acquisition opportunities, we always consider what impact that acquisition will have on our market reach. In our experience, if the acquisition will give us a substantial presence in that new market, it could be worth paying a little more for that portfolio. Once you have a footprint in that territory, you can begin growing organically.
Not all property management companies service the same type of units. If you’re looking to acquire a residential property management company, that portfolio may include some mixed-use, commercial and or some otherwise funky residential properties. Is your team equipped to manage a diverse portfolio? Do you even want to manage these types of properties? Be sure you know what you’re getting yourself into before signing on the dotted line.
There’s no surefire guarantee that your acquisition will be a good one. But there ARE a few tip-offs that an acquisition won’t be a good one. Be on the lookout for these red flags:
Remember: there’s a difference between acquiring a company and acquiring their contracts; if you acquire a company that has pending litigation, you could potentially be on the hook for damages down the road.
Growing through acquisitions can be a smart business decision. But for this growth strategy to be fruitful, property management companies need to take a thoughtful approach. We hope, by sharing some of the insights to our approach, that others will be able to avoid some of the pitfalls that can ultimately cripple a once-successful property management company.Interested in learning more about our acquisitions approach or want a free valuation of your company? I am happy to further discuss, reach out at vincent.deorio@mynd.co.
It’s no secret that major metro areas in California are among the hottest rental markets in the country right now. As we move into 2019, the San Diego rental market is a prime example of a market performing at its peak. Not only is rental demand soaring, but Business Insider recently ranked San Diego as the fifth-best best rental market in the nation.
So, let’s take a look at why the San Diego rental market is so hot as we head into the colder winter months.
The rental market has been fairly consistent in California, with the Bay Area and San Diego specifically growing by leaps and bounds. San Diego rents have risen to an average of $2,028 per month, marking a 3% increase from last year’s average of $1,963 per month, according to a recent report from Apartment List. For a more specific breakdown, the average rent for a studio apartment in the region stands at $1,479 per month. Monthly rent for a 1-, 2- and 3 bedroom apartment in San Diego is $1,793; $2,190 and $2,773 respectively. As rental rates continue to rise, this is a trend property owners and renters will want to keep an eye on now and in the near future.
What’s old is new again, or at least a hot trend right now in San Diego. Logic says that older rental properties, many containing more outdated amenities and features, would be less desirable than newly built properties. It would also seem that these buildings should come with a lower rents. However, that’s not quite true – at least in San Diego. Older rentals, or vintage buildings, have commanded higher rents in recent months. In fact, rental rates for these properties are outpacing rents for new construction. Studies show that rents for units built prior to 1960 increased more than 20% in 2018. Rents for units built in the 1990s also rose 6.5%, according to a study by Apartment List. Moving into the New Year, we will keep an eye on this trend.
Millennials currently rank as the most dominant renter cohort, while the younger Generation Z has also started to enter the rental market in high numbers. Both generations are known for their tech savvy and interest. Real estate investors and property managers that offer smarter amenities during the leasing process, such as online videos and virtual property tours, appeal to these younger renters. Moreover, rentals with amenities like high-speed WiFi, smart locks, smart thermostats and more.
One of the most surprising trends in San Diego is the increase in rental demand among seniors. High demand among the 55+ cohort exists in areas like downtown San Diego. Locations in the region with high walkability scores and activity ratings are especially popular. People are living longer than ever, so building owners should keep the variety in age ranges and the specific needs of these various renter cohorts in mind when leasing rental properties. Generally speaking, seniors prefer hands-on customer service over virtual tours, smart home amenities, and other high-tech features.
Long-term rental property investing is an excellent way to diversify your investment portfolio, and protect it from stock market volatility. And one of the best places in California to invest with a long-term-hold mindset is San Diego, where rents are among the highest in the country and demand is strong. But what if you don’t live in this picturesque California rental market, with one of the most temperate climates in the world?
How can out-of-state investors protect their assets while living out of state? The short answer is: Hire a tech-enabled property management firm with local expertise.
Out-of-state investors are drawn to buying properties for either immediate yield or long-term appreciation. San Diego is a great market for long-term appreciation. According to Zillow, Q4 2018 year-over-year asking rents rose 3.4% to more $2,100 per month. Meanwhile, demand is expected to outstrip supply in 2019, based on data from the Q1 State of Mynd San Diego report. The region has the best supply/demand metrics in the entire country, the report states. The chart below shows significant rental appreciation since 2013 in San Diego County:
CoStar forecasts that rents will climb steadily throughout 2019 in San Diego. As a matter of fact, “San Diego landlords have no objections to raising rents upwards of 20% when a unit turns over in light of tight vacancies and low turnover. New investors are most likely to push such rent increases to compensate for such high property taxes."
The common belief that you should own investment property near your personal residence so that you can keep an eye on it, oversee repairs and manage your tenants is outdated. In today’s world of iBuying and advancements in proptech, you no longer have to worry about being located near your property. The notion of real estate as a hyper-local business has been turned upside down since the arrival of online platforms like Roofstock and HomeUnion, according to TechCrunch.
The same technology advancements that power e-commerce proptech platforms also enables great property management. Great property management makes out-of-state investing a reality. To ensure your piece of the California dream is managed as efficiently as possible, hire a property manager with decades of experience investing in and managing California rental properties, Mynd Property Management.
Being an out-of-state investor presents a unique set of challenges that can be best handled by a property manager in San Diego. They include:
If you’re out of state, how can you fill vacancies at your San Diego rental unit fast? You need an on-the-ground expert who understands the local market so that they can find the highest-quality tenants. Mynd’s comprehensive leasing platform uses technology to market your units on more than 40 websites, all from the comfort of your own home. You don’t have to lift a finger. We do all the work to lease your units, which means we fill your vacancies in 16 days on average across our portfolio of AUM.
Mynd diagnoses maintenance issues at your property, using technology and doesn’t dispatch a field technician to complete the repair until it is clearly identified. This saves you money as a remote investor. In fact, we save our owners up to 20% on repairs and maintenance costs by operating this way.
California has some of the most complex rent regulations and landlord/tenant laws on the books. That’s why you, as an out-of-state investor, should hire a property manager or advisor with expertise on state and local rental regulations. For instance, do you know if you’re within the law to evict a tenant who hasn’t paid rent in 30 days? Are you up-to-speed on current rental laws impacting San Diego? As a remote investor, the likely answer to these questions is no. But Heather Jones, Regional Director of Mynd’s San Diego office knows the answers to all of these questions, and more. She has more than 17 years of property management experience in the region.
Now that you can trust your valuable California investment with an expert even if you’re located in another time zone, you can focus on growing your California dream by purchasing more rental housing in San Diego and beyond.
