The Real Estate I Actually Buy in Los Angeles (And Why Rent Ordinances Come First)

I'm David Bellairian, founder and CEO of Glencore Associates. I've written in this space about how I structure a five-asset-class portfolio, income real estate being one of them. What I haven't written about yet is the part that trips up almost every first-time investor in this asset class: real estate isn't one market with one set of rules. The rules change by city, by the building's age, by unit count, and sometimes by whether you own it as a person or through an entity. Get that part wrong and it doesn't matter how good the deal looked in your spreadsheet.

Why I default to small multifamily

Given the choice, I lean toward two-to-four-unit multifamily buildings over single-family rentals, for reasons that have nothing to do with romance about real estate and everything to do with structure. A single-family rental is binary: it's either fully occupied or producing zero income, and every dollar of vacancy is one hundred percent of that property's revenue. A fourplex with one vacant unit is still collecting seventy-five percent of its rent roll. You're also spreading fixed costs, one roof, one foundation, often one set of major systems, across multiple income streams instead of one. And two-to-four-unit buildings are the sweet spot where conventional residential financing is often still available, before you cross into the commercial lending world that comes with five-plus units.

Rent ordinances are not one system

This is the part that catches people. In the City of Los Angeles, the Rent Stabilization Ordinance covers buildings with a certificate of occupancy dated on or before October 1, 1978, with two or more units, and currently caps annual increases at a flat rate the city sets each cycle. A building one block away, built after that date, generally isn't covered by the local ordinance at all and instead falls under the statewide Tenant Protection Act, AB 1482, which caps most multifamily increases at a formula tied to regional inflation, roughly five percent plus CPI, up to a ten percent ceiling.

Glendale, where I hold property, runs differently again. The city has no local rent stabilization ordinance of its own. Rentals there fall under the statewide AB 1482 cap if the building is old enough, generally construction completed at least fifteen years prior, with single-family homes and condos typically exempt unless owned by a corporation or LLC. Glendale does have its own Just Cause eviction ordinance layered on top, which requires landlords to offer tenants a one-year lease and, if a rent increase crosses a certain threshold, pay relocation assistance. So a landlord who owns in both Los Angeles proper and in Glendale isn't running one rental business under one set of rules. They're running two, and the difference isn't cosmetic, it changes what you can charge, how you terminate a tenancy, and what happens if you get it wrong.

Statewide, there's one more line worth knowing: under the Costa-Hawkins Rental Housing Act, buildings with a certificate of occupancy on or after February 1, 1995 are exempt from local rent control ordinances entirely, though they can still fall under the statewide AB 1482 cap unless separately exempt. Age and jurisdiction, together, decide almost everything about how a property can be operated.

Underwrite the ordinance before the property

My practical rule: find out which rent-control regime a property sits under before I get attached to the numbers, not after. That means pulling the certificate of occupancy date, confirming whether the address is inside city limits or unincorporated county territory, and checking unit count, before modeling any rent growth assumption. A pre-1978 building inside the City of Los Angeles needs to be underwritten with a much more conservative rent-growth assumption than a post-1995 building in a city with no local ordinance at all, because one of those properties has a hard ceiling on how fast income can grow and the other doesn't.

I've written elsewhere in this space about the one time I skipped a deep-enough inspection on a Glendale property and paid for it in lead and asbestos abatement. This is the same lesson wearing a different hat. The standard due diligence checklist tells you about the roof and the foundation. It doesn't tell you which regulatory system you're about to operate inside for the next twenty years. That's a separate check, and it's the one that decides whether your rent-growth spreadsheet is describing a real property or a fictional one.

None of this makes older, rent-controlled buildings bad investments. Plenty of operators do well with them, at the right basis and with a realistic income assumption baked in from day one. It just means the ordinance isn't a footnote you check after you've fallen in love with the deal. It's one of the first numbers you need, right alongside the purchase price.

I'm the founder and CEO of Glencore Associates, a Los Angeles private investment and asset management firm, and founder of AIDiscover, an AI-powered marketing and brand discovery agency. This article is for general information only, is not legal or investment advice, and rent control rules change; confirm current requirements with your city and a qualified attorney before relying on anything here.