Ramin Ghaneeian @RaminGREP Twitter profile

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Ramin Ghaneeian

@RaminGREP

9 months

Mayor Karen Bass told real estate developers, via ED1, that 100% affordable housing projects are statutorily exempt from CEQA. So, our team invested in land and design to get a 100% affordable housing project approved. The approval letter reiterated that the project was

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Ramin Ghaneeian

@RaminGREP

2 years

Hi everyone, new to RE twitter. I'm a GP in LA. Here's a recent 24-unit ground-up multifamily development we completed during COVID. 22 market-rate units, 2 affordable units. We purchased two adjacent lots from two separate owners (an art and a science). More below...

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Ramin Ghaneeian

@RaminGREP

2 years

We're seeing a 10-15% cost savings in construction costs when we, as the ownership team, call the subcontractors ourselves (with GC approval) to ask for discounts, ask for creative ways to save costs without compromising quality, and directly buy finish materials in-house.

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Ramin Ghaneeian

@RaminGREP

2 years

I'm near the end of developing a 33-unit multifamily building in Midcity LA. At the time, I got a const. loan @ 3.9%, fixed for 10 years, while adj. rate loans were low 3's. Now, at full draw, I'm saving ~$37k/mo in interest expense and will save ~$10k/mo on my perm loan.

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Ramin Ghaneeian

@RaminGREP

1 year

Here's an example of how Generation Real Estate Partners structures its 4-5% development fee. It's based on specific development milestones, split between entitlement and construction. We haven't had an issue with it yet. Feel free to use it for your deals. Happy to answer

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Ramin Ghaneeian

@RaminGREP

9 months

Los Angeles accepted a CEQA appeal on a 100% ED1 affordable housing project that is statutorily exempt from CEQA. Trust in our institutions is what gave us the confidence to invest. When that trust erodes, there is less investment. The Real Deal covered the story as well:

Ramin Ghaneeian

@RaminGREP

9 months

Mayor Karen Bass told real estate developers, via ED1, that 100% affordable housing projects are statutorily exempt from CEQA. So, our team invested in land and design to get a 100% affordable housing project approved. The approval letter reiterated that the project was

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Ramin Ghaneeian

@RaminGREP

2 years

Our GC thought we were crazy when we put wine fridges in all of our units for a recent development project. Here are some of the economics: + $400/fridge (maybe a 5-10yr lifespan) + $0 added costs for kitchen cabinet line item + ~$50/unit in added electrical costs (one time)

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Ramin Ghaneeian

@RaminGREP

2 years

@KarenBassLA Agreed. Nor should it take 2 years to entitle a 20%+ affordable TOC housing project in LA. The roadblocks to nearly by-right entitlement disincentivize developers from building more housing in LA. Would be great to create shorter entitlement timelines in the planning department.

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Ramin Ghaneeian

@RaminGREP

2 years

Thankful on this day for America opening its borders and welcoming my and my wife’s parents to immigrate here. Together, we are doctors, lawyers, and businessmen. We pay taxes, give back, and pursue the American dream. I owe a lot to the people around me and our country.

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Ramin Ghaneeian

@RaminGREP

1 year

Many sophisticated real estate investors think buying a 6% cap multifamily deal and developing a 6% cap (yield on cost) multifamily building yields the same financial benefit (assuming a long-term hold)🤯 Wrong! Developing is MUCH better Here's why 🧵 Reply if you want excel

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Ramin Ghaneeian

@RaminGREP

2 years

@KarenBassLA The thing that would help the most is if you sped up the planning department multifamily approval timelines.

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Ramin Ghaneeian

@RaminGREP

2 years

Many single-lot multifamily development deals in LA pencil, now that TOC has adjusted parking requirements. A standard R3 deal, to me, now looks like a slab on grade, four stories of Type V construction + a rooftop deck if space permits. No parking, no Type I, no underground.

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Ramin Ghaneeian

@RaminGREP

2 years

We have a few buildings where not every unit is allocated a parking stall: There are fewer potential tenants and rents are less, but the decrease in const. costs by eliminating Type I parking makes up for it. We're seeing similar returns to projects with parking. And...

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Ramin Ghaneeian

@RaminGREP

2 years

Not all multifamily development lots are created equally. Base zoning and zoning overlays have major influence in how you underwrite deals. When we analyzed one of our 30+ multifamily developments, we worked through the following limiting factors: 👇

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Ramin Ghaneeian

@RaminGREP

2 years

Los Angeles City and California State Legislature has recently banned new apartment buildings from installing gas appliances. This is a good step for more sustainable energy buildings while also more cost effective construction strategy to avoid expensive gas piping.

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Ramin Ghaneeian

@RaminGREP

2 years

@KarenBassLA I recommend chatting with developers who have scar tissue from dealing with the historic application process. Many tenants weaponize the historic application process to stifle development on properties that clearly don’t rise to the level of historic designation.

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Ramin Ghaneeian

@RaminGREP

2 years

Occasionally, brokers feed us "off-market" deals not zoned for the typical multifamily development Generation Real Estate Partners builds If we smell opportunity, we draft an LOI with a long diligence period to see if we can get planning entitlements before closing LOI below👇

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Ramin Ghaneeian

@RaminGREP

2 years

Happy New Year Angelenos --> Tier 1 and Tier 2 TOC properties have joined the ranks of Tier 3 and Tier 4 TOC deals by removing parking requirements. I think this will transform the business of multifamily development in LA, in that many single-lot deals will pencil. 👇

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Ramin Ghaneeian

@RaminGREP

2 years

This project costs ~$2.4m for the land, $7.2m in per-construction & hard costs, and was valued at $14.9m from two separate appraisals. We utilized the TOC ordinance (Transit Oriented Communities) in LA to get more density.

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Ramin Ghaneeian

@RaminGREP

2 years

Teams you need to be successful in real estate development: + Architecture/Design + Civil/Structural/MEP + Entitlement/Permit running (best to do in-house IMO) + Utilities (extension of Entitlement/Permit) + Accounting/Tax + Legal + Lobbyist + Broker + Finance + Construction

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Ramin Ghaneeian

@RaminGREP

9 months

@sam_d_1995 Correct. Gavin Newsome even discussed this on the recent Bill Maher episode.

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Ramin Ghaneeian

@RaminGREP

2 years

It's hard to say how much incremental rent we added. But we're also competing (without amenities) with new buildings in the area (with amenities). We still feel like it's worth it, and all of our projects in nice parts of LA are getting wine coolers.

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Ramin Ghaneeian

@RaminGREP

2 years

I went to a real estate conference years ago and the panel was filled with developers. I couldn't help but sense that the biggest players were the ones relying the most on gut feeling and napkin math. That being said, I'm still cranking 10MB excel docs, probably to my detriment

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Ramin Ghaneeian

@RaminGREP

2 years

@pathfinder17m Why feel bad? They chose the unit and they pay less rent. Most of these people don’t own cars and prefer to bike to their work or grocery store nearby. There’s a growing demand for tenants who don’t want to pay parking premiums.

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Ramin Ghaneeian

@RaminGREP

2 years

@KarenBassLA It would be beneficial for the city, Angelenos, people experiencing homelessness, and entrepreneurs if you were able to speed up planning entitlements for multifamily infill development projects. Win win for all.

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Ramin Ghaneeian

@RaminGREP

2 years

Of all the wealthy real estate families I’ve become acquainted with this past decade, they all share one thing in common: They don’t sell. Once a dollar of fresh equity is invested in real estate, it’s only returned via cash out refinances or dividends. In the rare case…

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Ramin Ghaneeian

@RaminGREP

2 years

On one of my projects currently under construction (with 5 stories of Type V construction on 1 story of Type I) switching from TJI joists to traditional framing floor assemblies saved me ~20% on my lumber material line item, netting me a $200k savings in materials. I had to...

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Ramin Ghaneeian

@RaminGREP

9 months

@Real__State Yes 100%. Litigation is long, costly, and uncertain though.

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Ramin Ghaneeian

@RaminGREP

2 years

And entitlement timelines are cut in half or more. You won't trigger CEQA, you don't need planning department approval, and you can generate rental revenue up to 1 year sooner. 6+ mos on entitlements and 4+ mos on construction (depending on on-grade or sub-grade parking)

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Ramin Ghaneeian

@RaminGREP

2 years

We're rarely putting carpet into our new multifamily developments in LA. The upfront cost is marginally higher, but we get more life out of the flooring, and it looks better. We feel like we're getting a pump in rents relative to neighboring carpeted units.

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Ramin Ghaneeian

@RaminGREP

2 years

In my experience, the major value generated in our new construction deals are in the lot assemblage + entitlements + unit mix/site design. $1m lot + $1m lot = $2.5-$3m of value when combined. $3.5m+ when entitled. *This assumes market driven site design + maximized unit mix

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Ramin Ghaneeian

@RaminGREP

9 months

Affordable Housing Push

New challenges to efforts in L.A.

laist.com

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Ramin Ghaneeian

@RaminGREP

2 years

I sent this hail mary email (see screenshot). I explained to him how his lot would be worth a lot less the moment I developed my lot, since he'd be stuck with his duplex for eternity. It finally resonated with him. We negotiated back and forth and landed at $1.411m (7)

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Ramin Ghaneeian

@RaminGREP

2 years

Involve your general contractor early on in the architectural design process to value engineer materials, collaborate on construction practices, and figure out ways to avoid costly site issues to save tons of money on your development projects.

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Ramin Ghaneeian

@RaminGREP

2 years

@KarenBassLA Please speed up planning entitlement timelines for infill multifamily development projects. NIMBYism is rampant in LA and exacerbates the homeless issue.

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Ramin Ghaneeian

@RaminGREP

2 years

When we look for development sites, we're partial to building near current and future city transportation hubs. New zoning laws in LA (including TOC tier 3 & 4) allow for reduced or no parking. This opens a world of possibilities for single lot multifamily deals to pencil.

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Ramin Ghaneeian

@RaminGREP

9 months

@CRELeasingLawTX @rohindhar That CEQA appeals are not allowed for this type of project.

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Ramin Ghaneeian

@RaminGREP

2 years

When we look for long-term multifamily real estate deals in LA, we're partial to building near the LA 2035 Mobility Plan, which shows where dedicated bike lanes will be. Although it feels like buildings without parking don't make sense, in the future, they might. Link below 👇

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Ramin Ghaneeian

@RaminGREP

2 years

Frosting the front door of our buildings has reduced package theft. When thieves can't see unattended packages, they usually don't attempt to break in.

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Ramin Ghaneeian

@RaminGREP

2 years

Lumber trading at the same price as 5 years ago! Wish this was the case 6 months ago when I was framing one of my projects. 🤦‍♂️would’ve saved ~$400k

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Ramin Ghaneeian

@RaminGREP

2 years

@Levijameshere The ultimate real estate book!

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Ramin Ghaneeian

@RaminGREP

2 years

Want to make money investing in real estate? Here are 5 basic tools to take advantage of + what I do: • Cashflow from rents • Tax deductions & deferrals (depreciation & 1031s) • Amortization • Appreciation • Value-add (rehab, development, repositioning) There’s more 👇

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Ramin Ghaneeian

@RaminGREP

2 years

I agree with traditional real estate folks who say "You make your money on the buy". But the reality is, as a developer & operator, I also make money on the lot assemblage, entitlements, construction management, operations, and the long-term hold (in CA bc of prop 13 & more).

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Ramin Ghaneeian

@RaminGREP

1 year

AB 1287 will be a boon for multifamily developers and significantly support the efforts of building housing faster, without the threat of triggering CEQA in LA. I'm happy to see strong leadership move this along in CA.

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Ramin Ghaneeian

@RaminGREP

1 year

I've analyzed over 25 potential affordable housing ED1 development sites in LA and I've spoken with 10+ architects/owners working on ED1 projects. I'm seeing 2 of the same pitfalls over and over again: 1 - people are underwriting their rents to be the max allowable rent in

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Ramin Ghaneeian

@RaminGREP

2 years

In my experience, engaging a general contractor to value engineer new buildings isn't enough. When we engage sub-contractors to review our building & safety plans, we get better insight into changes we can make to reduce cost without reducing quality.

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Ramin Ghaneeian

@RaminGREP

2 years

Under LA's Executive Directive 1 - you get 3 base incentives: unlimited density, 0 parking if half a mile of major transit, and an additional 33' in height. You also get a waiver for height, FAR, or open space. You can get unreal density, but all of your units are affordable.

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Ramin Ghaneeian

@RaminGREP

2 years

Infill lot assemblage in LA is part science, part art. Identifying opportunities to combine lots and reach economies of scale in multifamily design and construction is a recipe for success in LA.

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Ramin Ghaneeian

@RaminGREP

2 years

The electrical inspector on one of our construction sites wants us to get a supplemental permit for exit lighting when the architectural plans already have them, and all MEP & architectural plans were approved and stamped by the city. $1,400 to replicate plans and submit I ❤️ LA

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Ramin Ghaneeian

@RaminGREP

2 years

The love/hate relationship with LA multifamily. Getting entitlements is bone-crushing, so there's less new supply than there could be. The result is that our existing units and rents appreciate year after year. I love hearing from developers that they refuse to build in LA 📈

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Ramin Ghaneeian

@RaminGREP

2 years

Another major benefit of lot ties in ground-up multifamily developments is the reduction in space you need to allocate towards side yard setbacks. Since you're tying two lots, you gain the space between the lots and add it to your building. See image. Credit: @DonaldShoup

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Ramin Ghaneeian

@RaminGREP

2 years

Total project length was ~3.5 years from land acquisition to lease up/refinance. Happy to share details/answer any questions

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Ramin Ghaneeian

@RaminGREP

2 years

@DeanPreston It would benefit you to learn and understand what it takes to develop housing in SF vs anywhere else.

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Ramin Ghaneeian

@RaminGREP

2 years

That single email changed my life. I was going on to develop a 10-12 unit building, vs a larger 24-unit building. It brought my career to the next level. We were desperate and felt like it would be a waste if we weren't able to combine lots. (8)

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Ramin Ghaneeian

@RaminGREP

2 years

When we design our 2bed/2bath floorplans, sometimes we're forced to put the secondary bathroom far from the secondary bedroom. We'll spend hours playing with the floorplan, but it's the best we can do. What do @bobbyfijan and @seandsweeney do when you run into this issue?

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Ramin Ghaneeian

@RaminGREP

2 years

For every rehab or new construction we start, we get project-specific insurance. We had a bad experience with one of our early projects where the GC's insurance refused to cover the construction defects. They ended up paying after 6 years of litigation. The lesson here was:

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Ramin Ghaneeian

@RaminGREP

2 years

We aim for our Return on Cost to be 150-200 bps above market cap rates. Historically, for LA multifamily development, this has been around a 12 GRM or a 6% UYOC. Happy to answer any questions.

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Ramin Ghaneeian

@RaminGREP

2 years

Knowing tenant demographics is important when designing units for a new apartment building: When building in an area with a slightly younger demographic, where roommates are more prevalent, we design more uniform bedroom sizes.

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Ramin Ghaneeian

@RaminGREP

2 years

We recently had theft at one of our construction sites. We used "course of construction" insurance to cover the $60k cost. To mitigate future theft & vandalism, we hired a guard to show up at night to patrol.

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Ramin Ghaneeian

@RaminGREP

2 years

One $130,000 elevator spread over 24 units vs 12 units ~30% more Stucco/Scaffolding for 100% more units One mobilization for all trades for 24 units vs 12 units All of the headache, brain damage, and time spent on 24 units vs 12 units Larger projects get better financing (10)

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Ramin Ghaneeian

@RaminGREP

2 years

@KarenBassLA I think it would benefit the city, people experiencing homelessness, Angelenos, and entrepreneurs if you sped up planning department entitlement timelines for by-right TOC multifamily development projects. This would allow us to building housing faster.

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Ramin Ghaneeian

@RaminGREP

2 years

A common mistake early developers make: not accounting for plumbing walls in compact, ADA required accessible kitchens. Having to increase the wall size by 2 inches on both sides to accommodate plumbing can result in kitchens no longer being ADA compliant. Photo example attached.

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Ramin Ghaneeian

@RaminGREP

2 years

When trying to analyze deals quickly, to see if there's something under the hood for us to spend 50+ hours on before we purchase a development site, we see if we can reasonably hit lower than a 13 GRM. This includes all costs: land, holding, hard, soft, insurance, etc...

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Ramin Ghaneeian

@RaminGREP

2 years

Engage subcontractors to value engineer, not just the general contractor. Better advice, direct from the source.

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Ramin Ghaneeian

@RaminGREP

2 years

... have my structural engineer and his team spend all weekend recalcing the building (we were supposed to start framing in a week), submit to Building and Safety, and get approvals ASAP! The change order for the framing labor was an additional $30k. I netted $170k in savings.

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Ramin Ghaneeian

@RaminGREP

1 year

Over the last 5 years I’ve seen UYOC on multifamily development deals in LA decrease 1-2% due to a combination of the following: 1 - Increased land costs 2 - Increased construction costs 3 - Increased interest rates (more recent) 4 - Increased tenant protections (makes it

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Ramin Ghaneeian

@RaminGREP

9 months

@archibaldcrane Neighbor

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Ramin Ghaneeian

@RaminGREP

2 years

There's obviously much more to the story I'm happy to share... for example tenant buyout negotiations, relocation fee amounts, how to deal with tenants that have been illegally subleasing, having tea with the tenants to learn about their needs, and much more! (11)

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Ramin Ghaneeian

@RaminGREP

2 years

One thing we always make sure of is whether the appliance manufacturer for the appliance set we buy has their own service team and whether it is operated locally. Getting replacements and repairs from non-local brands result in longer repair timelines. Bad for operations.

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Ramin Ghaneeian

@RaminGREP

2 years

When analyzing a single lot R3 TOC LA deal, one TOC incentive is height increase, which triggers CEQA, adding 6+mo to entitlements Options are: + 4 floors Type V, no parking, no CEQA + 1 parking on-grade, 4 floors Type V, CEQA + 1 parking on-grade, 5 floors Type III, CEQA 👇

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Ramin Ghaneeian

@RaminGREP

2 years

Good city planning can have dramatic positive impact on the success and property values of a city. For example, Beverly Hills and Irvine have benefited from stellar urban planning with ample parks, walkability, and thoughtful/strict zoning.

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Ramin Ghaneeian

@RaminGREP

2 years

That's a wrap! If you enjoyed this thread: 1. Follow me @RaminGREP for more of these 2. RT the tweet below to share this thread with your audience

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Ramin Ghaneeian

@RaminGREP

2 years

The IRS, CA's Franchise Tax Board, and CA's Prop 13 all have one thing in common - they incentivize the population to buy, develop, and rehab real estate. They incentivize you with depreciation deductions, 1031 exchanges, low & fixed prop tax increases. Take advantage of it.

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Ramin Ghaneeian

@RaminGREP

2 years

Though... if you're Tier 3 or Tier 4 TOC, it could make sense to do Type 1 parking on-grade, then 5 stories of Type 3. But you need to take advantage of the additional ADU units when designing your building.

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Ramin Ghaneeian

@RaminGREP

2 years

Things a good architecture team has done for my projects: + Efficient ingress/egress + Efficient floorplans + Maximizing rentable SF without compromising Feng Shui + Balancing amenity spaces with liveable SF + Identify most applicable entitlement incentives to maximize value 👇

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Ramin Ghaneeian

@RaminGREP

1 year

The major beneficiary of NIMBYism is the already well-to-do landowner --> neutering new supply causing abnormal increases in land value. The other 90% in LA is left paying higher rents and putting down larger down payments. It pays to be rich in LA.

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Ramin Ghaneeian

@RaminGREP

2 years

When creating your construction budget, it’s not enough to bid the approved set of plans. You need to factor in various inspectors demanding higher spec structural or MEP components than what’s on the approved set of plans. This should be in addition to the contingency amount👇

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Ramin Ghaneeian

@RaminGREP

2 years

Little less know cost saving measure for new LA construction buildings: designating a refuge area for fire safety to avoid expensive and space inefficient backup generators for your elevator. A good trade off for mid-size buildings. I learned this the hard way 🤦‍♂️

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Ramin Ghaneeian

@RaminGREP

2 years

A lot of real estate investors talk about holding their real estate assets indefinitely, myself included. This is market specific. The two main reasons this works so well in CA are Prop 13 and high transaction costs. I explain more here 👇

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Ramin Ghaneeian

@RaminGREP

2 years

Purchase price per SF land for Lot 1: $158/SF Purchase price per SF land for Lot 2: $270/SF Yes, Lot 2 costs us way more. But the economies of scale you get with construction costs make it worth it by a long shot. Allow me to explain with a few examples... (9)

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Ramin Ghaneeian

@RaminGREP

2 years

@DeanPreston I think it would benefit you and your constituents if you spent time managing property in SF and invested your savings in rent controlled apartment buildings.

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Ramin Ghaneeian

@RaminGREP

2 years

One of the many things I love about investing in real estate is the lack of direct competition with other real estate investors. I've started and run a few operating businesses in the past decade, all of which require you to position yourself around competition. Not real estate

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Ramin Ghaneeian

@RaminGREP

2 years

Insurance clauses include: + Attorneys are paid for from the start of any litigation + Attorneys are appointed from the start of any claim filing + Insurance doesn't have any "gotcha" clauses that give them outs in case XYZ happens

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Ramin Ghaneeian

@RaminGREP

2 years

Bike parking requirements are becoming more prevalent in metropolitan cities across the United States while parking requirements are beginning to relax. One thing our team always does to avoid letting bike parking get in the way of valuable, leaseable SF is to... 👇

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Ramin Ghaneeian

@RaminGREP

2 years

Feel free to DM if you have any questions! Always happy to help. A rising tide lifts all ships. 🚢

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Ramin Ghaneeian

@RaminGREP

2 years

How many weeks does it take to pile drive steel lagging and dig a 15,000 SF hole in the ground down 16'? 6 weeks for our job site. Here are some drone shots. There was a line of dirt haulers on the street for over a week hauling dirt out of the lot. More photos below!

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Ramin Ghaneeian

@RaminGREP

2 years

Developers are agreeing with the approach and GCs/Subs haven't been too happy about this tweet.

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Ramin Ghaneeian

@RaminGREP

2 years

Lot 1, which was for sale, was being sold by an elderly lady retiring and cashing out her real estate chips. My team and I had just sold a ground-up single-family spec home in LA and rolled 100% of the equity and profits into this new property, with some cash left over. (2)

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Ramin Ghaneeian

@RaminGREP

2 years

So, my team and I reached out to the landlord who owned Lot 2 (the adjacent lot). After weeks of emails, calls, and voicemails, we got a limited response saying "not interested in a sale". I was fed up with the process, so I wrote a hail mary email to get his attention. (5)

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Ramin Ghaneeian

@RaminGREP

2 years

Lot 1 is 6,334 SF, which amounts to a land price of $158/SF. Lot 1 had a 50' width. Lot 2 is 5,227 SF, not for sale. Lot 2 had a 47' width (this is important, more later). Both lots are zoned R3-1, which is a medium-density residential zone in the city of Los Angeles. (3)

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Ramin Ghaneeian

@RaminGREP

2 years

@moseskagan The threat of litigation for condos, even with a bulletproof wrap insurance policy is painful. Also, condos rely on market timing more than merchant apartments or long hood term apartment development.

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Ramin Ghaneeian

@RaminGREP

2 years

First Republic Bank wrote the loan (you can easily find this by pulling title). I always recommend perm financing options for const. loans. But given where today's cost of capital is at, I'd consider getting a variable const. loan with hopes of falling rates over a few years.

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Ramin Ghaneeian

@RaminGREP

2 years

It's easy to get upset with your design team when they miss coordination on your permit plans, causing change orders, stress, added costs, and/or missed design opportunities. But at the end of the day, it's on the ownership team/GP to spot these inconsistencies and avoid issues.

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Ramin Ghaneeian

@RaminGREP

2 years

The depreciation deduction schedule for residential properties is 27.5 years The schedule for non-residential properties is 39 years There's more incentive to invest in residential real estate so you get your depreciation benefit faster (all else equal) Money now > money later

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Ramin Ghaneeian

@RaminGREP

2 years

+ Gives you time to assemble your capital stack + Reduces deal risk + Higher return % on your equity since money is invested at a later date + Anything else I'm missing?

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