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Real Estate Feelings vs Business: How Smart Landlords Survive in California

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Show Summary

In this episode of the Real Estate Pros Podcast, host Micah Johnson interviews Niv Davidovich, a seasoned real estate attorney with over two decades of experience. They discuss the unique challenges facing landlords in California, particularly in Los Angeles, where pro-tenant laws are increasingly making it difficult for property owners to operate. Niv emphasizes the importance of understanding the legal landscape, making strategic decisions, and maintaining a business mindset in real estate. He shares insights on navigating legal challenges, the costs associated with evictions, and the necessity of having a solid support system in place for landlords.

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    Investor Fuel Show Transcript:

    Niv Davidovich (00:00)
    you need to make decisions with your head and not your heart. What I tell people is you can be in the real estate feelings or you can be in the real estate business, but you cannot be in both.

    Micah Johnson (01:43)
    Hello everyone, welcome to the Real Estate Pros Podcast. I’m your host, Micah Johnson. And today I’m joined by Niv Davidovich, who’s been a real estate attorney now for the past two decades. Niv, welcome in, man, glad to have you. Absolutely, absolutely, I’m excited for our talk today. You’ve been in this game a long time and you do it out in California, which you’re gonna dig into, but I think your experience just is loaded with a ton of value that our listeners are gonna get today. So let’s dive in on that, man, for folks who…

    Niv Davidovich (01:55)
    Hey, thanks for having me.

    Micah Johnson (02:11)
    Aren’t familiar with your world yet. Give us the short version. What’s your main focus these days and what markets you’re operating in?

    Niv Davidovich (02:18)
    So our main focus is to be a one-stop shop for landlords, property managers, developers, any of the legal needs that they have, whether that’s residential, commercial, industrial, health care, whatever, you name it. And we do evictions, litigation, and transactional in all of those fields. For transactional, we operate nationally. For litigation, we operate ⁓ over all of California.

    but our primary focus is mostly Southern California, and we have two offices in LA and San Diego.

    Micah Johnson (02:52)
    Okay, now y’all the way you practice law makes y’all

    out, correct? Your differentiator is it’s a one-stop shop really dig into that little bit for us.

    Niv Davidovich (02:58)
    Yeah.

    So a lot of places, especially larger, more white shoe real estate firms or the real estate departments of larger white shoe law firms are not going to touch residential real estate with a 10 foot pole. It’s very difficult. It’s very much specialized and they don’t want to get involved in it. And they’ll frequently refer cases out to us.

    And that’s a big part of our practice. But we also do the things that they do. So you don’t need to go to a bunch of different places, say, OK, here’s my real estate lawyer for this. And here’s my real estate lawyer for litigation. Here’s my real estate lawyer for transactional. Here’s my real estate lawyer for residential. And here’s my real estate lawyer for commercial. And then I have a labor attorney when I have an employment issue with one of my resident managers. But I have a health. ⁓

    lawyer when I’m dealing with a landlord tenant issue at my nursing home. It’s like, we could just do all of those things for you, which is what we do. And short of a couple of very specialized areas, we really do handle all of those issues. A lot of our clients are in healthcare and multi-family and they have that in California and all over the country. So servicing them has enabled us and required us to become a place where

    you don’t have to go to a thousand different places in order to get serviced.

    Micah Johnson (04:26)
    And that’s really got to help y’all stand out too, because you didn’t just list like one or two attorneys that you’re going to need to practice there. You listed quite a few that you’re going to have to deal with. So take us a little deeper into that. You practice out in California. do transactional nationwide, but you’re litigating in California. You’re in LA right now. What’s the landscape like today in that market? What are folks dealing with out there across the board?

    Niv Davidovich (04:50)
    It is super ugly. ⁓ We have a city council, a mayor, that’s in the city of LA, and then we have a board of county supervisors.

    And they are not friendly to landlords or developers or anybody who’s owning real estate. Their primary focus

    is to try and do the things that they believe are going to be the best for tenants, of course they’re all wrong. And all of these pro-tenant laws that they’re passing in the state…

    Also where we have super majorities in the assembly, that’s like our house in the Senate, both in the California legislature and all five elected executive positions, they’re all Democrats. So they can pretty much just do whatever they want. And for the most part they do. And so this consistently leads to more and more and more.

    super tenant friendly legislation and ordinances, which make it increasingly more difficult for landlords and developers to operate. mean, there’s lots of different examples, there’s lots of different hoops, and a lot of the time they just absolutely make absolutely no sense. They’re things that are designed to be complicated and difficult, so a small operator messes up a… ⁓

    Micah Johnson (06:58)
    Yeah.

    Niv Davidovich (07:07)
    an eviction notice and has to start all over again. What does that do? That gives the tenant more time to stay. On top of which in Los Angeles County, we now have by my last count 16, one six different 501c3 organizations whose sole focus is to defend tenants in evictions completely for free. And they’ve innovated this idea of asking for a jury trial in every single case where they get involved.

    Micah Johnson (07:12)
    Right.

    Wow.

    Niv Davidovich (07:34)
    So as soon as that lawyer comes in, remember they’re not getting paid by the hour. And they take a piece of whatever the tenant can squeeze out of the landlord, their own contingency. And they’re political operatives. They really believe in their cause. And their goal is to keep tenants in place no matter what. If you’re a tenant, you’re right. And if you’re a landlord, you’re wrong. Period. That’s their position. I’ve had crazy.

    Micah Johnson (07:39)
    Right.

    Right.

    What do you think the end

    game of all that is? When does it get better? Let me ask that. What do think it looks like between now and when do you think it gets better?

    Niv Davidovich (08:07)
    ⁓ When does it get better?

    So there’s two, it gets better when regular people start seeing that this doesn’t work.

    And when there’s enough regular people, because most regular people don’t want the things that the extremists want to push. And they’re pushing it for a very, very small, but vocal minority that is trying to push us into a South American style socialist regime. I’m not joking. We have four people on our city council who are DSA, Democratic Socialists of America.

    like comrade Mamdani in New York, and they just straight up say, we want to seize the means of production. Seize, seize, take without paying for it, the means of production that means everything that generates income, including the real estate. That’s their end goal.

    Micah Johnson (09:10)
    Right.

    Niv Davidovich (09:14)
    And so when people start to realize, wait a minute, I just have a single family home, I’m on the list of people they’re gonna seize from. No, no, no, that doesn’t work for me. When they realize that the city of LA is now getting sued for simply just not for following their own laws.

    Micah Johnson (09:23)
    Right.

    Niv Davidovich (09:34)
    because one of the DSA people really is promoting the idea of having street vendors and he doesn’t want them to be licensed and he doesn’t want them to be regulated and he wants them to be able to work anywhere they want. And that doesn’t work for most people. I don’t think everyone wants to live in a place where you go outside on your street and it’s just nothing but street vendors on the sidewalk. That’s not what we sell work for. That’s fun to see on vacation.

    Micah Johnson (09:50)
    Right.

    Right.

    Niv Davidovich (10:37)
    But that’s not where you want to live permanently. You know, that’s not our culture. So I think when people start to see more and more and more of that, then they start to say, okay, these people have gone a little too crazy. Now I’m going to vote for someone a little bit more centrist. But we really haven’t gotten to that bottom of the curve yet.

    Micah Johnson (10:39)
    Right.

    Right.

    Where bends back. Cause you’re describing something that you’re describing something that, ⁓ not my camera now. ⁓ he’s old. You’re describing an interesting phenomenon, man, which is, is how it tends to get extreme until enough folks understand what’s happening and it bends back where it’s, it’s easy to hear the extremes. Cause they’re always loud anywhere. Like that is, that is what gets frustrating about it.

    Niv Davidovich (11:25)
    and it

    Micah Johnson (11:28)
    And in certain environments, it can start to create some havoc inside institutions if too many people that all say something out loud isn’t helpful. Because like what you just described is in the end, amount of

    landlords out there that are trying not to be good people, it’s not the majority. Most landlords are incredible people trying to take care of their folks doing the right thing and that’s just the reality. And then it’s you got folks who don’t understand that that get elected into these positions and

    Niv Davidovich (11:54)
    Same with tenants.

    Micah Johnson (12:02)
    More and more lately, any political position is more of a platform than the job it actually is. Most people just want to be loud instead of do the job because the job’s usually really boring. If you study what the job is, it’s not that exciting. So you got to go make a bunch of noise so you feel better. And then that now you got folks making decisions that don’t know what they’re making decisions on. And that has ramifications throughout everything. And especially if you’re dealing with folks who think people who make money isn’t a good thing.

    Niv Davidovich (12:16)
    No, it’s.

    Yeah.

    Micah Johnson (12:31)
    Now, now we got a problem because we’re, we’re not fighting up. We’re not even, we’re not even having the same conversation anymore. Right. Cause I’m sure most landlords are willing to say, yeah, okay. Let’s take care of tenants. Let’s do that. Let’s do it in a fair way where that’s not the conversation that’s trying to be had. It sounds like it’s way more lopsided.

    Niv Davidovich (12:48)
    No, the conversation is we want public housing, essentially. That’s what they want at the end of the day. And the funny thing is, then they become the landlord. And you don’t want the government as your landlord.

    Micah Johnson (12:59)
    Right.

    No, no, it’s a highly

    specialized skill to do it well. Like it’s not just for anybody. There’s way more horror stories for people in real estate getting out because of tenants and specifically than almost any other thing, probably besides losing all their money on a bad deal. But that the one thing you hear, I got horror stories about my tenants, right? It’s not easy. It’s not simple. There is a lot you have to deal with. And if you’re not

    Niv Davidovich (13:06)
    Yeah.

    Micah Johnson (13:31)
    The kind of person that deals with it. Well, it’s really not the business for you. That’s one the reasons I’m glad real estate’s really big. You can do other stuff that’s not tenant related if you really can’t deal with it.

    Niv Davidovich (13:40)
    Yeah.

    I tell people all the time, at least in LA, I think 50 years ago, 40 years ago, you used to be able to own a couple of small apartment buildings and have that be your side hustle. You would have a full-time job, not even a business. I’m just talking a full-time job working for someone else. And then you could have two or three apartment buildings that you’re slowly building into a portfolio and just manage them yourself as a side hustle.

    That was a thing you could do. It was like, ⁓ to give it a sports analogy, it was like being in the intramural badminton team at your college. You could do that and still do your major, right? Now, being a landlord in LA, even if it’s just a small number of units, that’s playing in the NFL during the playoffs.

    Micah Johnson (14:20)
    Okay.

    Right.

    Wow. So it just changed the game completely.

    Niv Davidovich (14:36)
    And

    you’re not doing something else while you’re doing this. You cannot have it be a side hustle. It requires so much time, so much energy, and just the energy that you have to put in into sort of controlling your feelings about how unfair it can be. But the reality is a lot of my job is explaining to people that there isn’t really anything we can do about it while you’re in the problem.

    Micah Johnson (14:56)
    Right.

    Niv Davidovich (15:46)
    We can’t.

    Micah Johnson (15:46)
    Right.

    Niv Davidovich (15:47)
    go out there and tell the council member or the mayor, hey, go change these rules, they’re bad. That’s not going to help us while we’re dealing with the bad tenant. We just have to make the best decisions that we can in the circumstances that we find ourselves in, which most of the time doesn’t feel very good, but it is the right decision based on the math. And that’s why I try and convert every problem.

    Micah Johnson (15:54)
    Right.

    And that’s where you said an interesting,

    you said an interesting line in prerecording where something that sets your law firm apart is every decision that you help them make is designed to support their business. And it’s really differentiate on that. Take us into that a little bit deeper. So list listeners can understand what you mean when, when you’re going to work with somebody, why you’re thinking in this frame about how to help them make good choices.

    Niv Davidovich (16:23)
    Right.

    What I like to do is I like to ask people, why did you get into this business? Because usually they’ll come to me and they’ll have a rule of the universe that I have discovered. Number one, 95 % of tenants are very, very lovely people. Just like you said, most landlords are just people who are just trying to make an honest living and want to support their tenants. And their tenants are their clients. Their tenants are their customers. Of course you want to support them and service them in a way that makes sense.

    So 95 % of the landlords, 95 % of the tenants, all lovely people. They just want to pay their rent, don’t want to complain, watch Netflix, go to sleep, rinse and repeat. Those are their goals. Nobody ever calls me about them. Nobody ever picks up the phone and says, hey, I just wanted to let you know ⁓ everybody paid their rent. They didn’t make any complaints. I haven’t had to do any maintenance and we don’t have to do any evictions. Bye.

    Micah Johnson (17:37)
    Thanks, Nev!

    Niv Davidovich (17:37)
    I don’t ever get that call. Yeah. No

    one, no one calls me about that. It’s just like, you don’t call your doctor and be like, I’m feeling great today, doc. Bye.

    Micah Johnson (17:49)
    I’m going to do that now. ⁓ Well, I’m not. Thanks. Click. ⁓

    Niv Davidovich (17:51)
    Wow, leave me alone. You’re feeling great. Good for you. Bye. Right. So no one

    ever calls me about that. So I get to deal with the other 5 % who take up all the time, all the energy, and all the money. And that 5%, unfortunately, get a lot of help from the government, like we’ve been talking about. And so I like to reframe every single problem in terms of tying it back to the goal.

    So the question that I ask people is, why did you get into this business? And you’d be surprised how long it takes them to eventually get to, to make money. It’s like to run real estate, to own apartment buildings, to grow micro-forums. Like, no, no, Under all of that, why are you doing all of that? It’s to make money. Good. Well, you can make money in two ways. One, you can proactively make it. That means you need to go out there and get tenants to rent your property.

    Micah Johnson (18:41)
    Right.

    Niv Davidovich (18:50)
    I don’t help you with it. That’s the offense to extend the sports analogy. Then there’s saving money. And that’s the defense. I’m a defensive player. I’m your goalie. I can’t help you make money. I can only help you save it. So we have a problem. We need to deal with it. And we need to get to the end of the problem by spending the smallest amount of money possible out of your pocket. Where the money goes, when it leaves your pocket.

    Micah Johnson (18:53)
    Right.

    Niv Davidovich (19:20)
    shouldn’t be any of your concern. This is where it gets into having to control your emotions. Because when you have a tenant coming to you and saying, all right, I haven’t paid the rent in six months, so now I owe you X amount of dollars, but I’ve hired this legal aid person who’s going to run you through a full-blown jury trial, send you discovery, do motions, and then only at the end try and get you on some technicalities so that you have to start all over again.

    when you’re facing that as ⁓ a potential risk. If we can just waive the rent that they’re never going to pay you anyway, which you’re never going to be able to collect anyway, because they don’t have any money. That’s why they didn’t pay you in the first place. And then give them a little bit of money. You actually may be ahead. And that’s a deal that we sometimes make a lot. And it sounds insane on the surface.

    Micah Johnson (20:05)
    Right.

    Niv Davidovich (20:18)
    Why would you give money to someone who owes you a bunch of money and is putting you through this big headache? And then the answer is on principle, I don’t want to give him any money. I’d rather give it to you. And then I tell them, no, you don’t really want to give it to me. And I’ve been down that road. They really don’t want to give it to me. Right. So really, what are you saying is I don’t feel good about

    Micah Johnson (20:40)
    Thank

    Niv Davidovich (20:46)
    giving them money because it feels like they’re winning. All right, fine. Let’s talk about the other option. The jury trial itself, which can and again, for people who are not from California, this might sound completely insane, but in California, you are permitted to demand a jury trial in an eviction. Even if the notice itself is for two or three thousand dollars, you can ask for a full blown jury trial. Twelve people in the box, just like on TV.

    with discovery, written discovery, depositions, a whole deal. Just the jury trial itself, just those three to five days can cost $15,000. That’s not to mention all the stuff that comes before it in preparation for it. So if you win, it’s not like you get your money back. So if it costs you $15,000 to $20,000 to go beat the guy, right? And remember, there’s no guarantee of you beating the guy.

    Micah Johnson (21:16)
    Man.

    Right.

    Niv Davidovich (21:43)
    And what do you get at the end of meeting that guy? All you get is a judgment for possession. That’s what we’re really going for. We’re trying to get the guy out. We’re trying to get judgment for possession. Cool. Well, I can settle with him and buy myself a judgment for possession for, let’s say, $10,000. So if you can go to the store and let’s say you’re looking for product X, you know, 100 widgets, and there’s two things on the shelf.

    Micah Johnson (21:52)
    Right.

    Niv Davidovich (22:13)
    One has 100 widgets for ten thousand dollars. Cool. And you know you’re getting 100 widgets just buying it at the store. The next box is you might get 100 widgets or you might get nothing. This box costs fifteen thousand dollars. No one’s buying the second box. You’re always going to buy the first box. So why would you make a different decision just because we’re in a court and just because someone is taking advantage of you?

    Micah Johnson (22:33)
    Right.

    Niv Davidovich (22:43)
    Are they taking advantage of you? Yes. Are they stealing from you? Yep, they are. But it’s legalized theft. And so that means you need to deal with the situation as you have it, not as it should be under normal, moral, and just circumstances. They’re not moral. They’re not just. It’s a legalized thievery, but it is the system that we have. So you have to stop thinking about the

    Micah Johnson (22:43)
    Right.

    Right.

    Right.

    Niv Davidovich (23:12)
    issues of right and wrong and moral and just and fair and not fair and just make a business decision, make a mathematical decision. It’s really hard for me, which I understand very, very frustrating.

    Micah Johnson (23:22)
    Right? I bet.

    Because especially when you start scratching that like justice and moral itch on somebody, nothing makes you feel more certain as a human than when somebody wrongs you and how pissed off you are about it. Like in that moment, you are so sure and you feel so sure. Where I can sense it when you describe it, where I could definitely hear somebody say, I’d rather give you the money than do this and hear why they’re saying it makes complete sense. Because the idea of doing that

    It’s, like allowing yourself to be taken advantage of, which is the last thing all of us want to do is be taken advantage of. It’s like, like your analogy too. I’m gonna hit you with another sports one. It’s like a fourth and three and you punt the ball, right? It’s, it’s punishing to punt the ball fourth and three. could maybe get it. Yeah, but we can lose the game if we don’t punt. We can make sure we’re still in the game and have a good chance in a minute if we punt the ball. Okay. And it’s

    Niv Davidovich (24:24)
    And the other reason

    you punt it is because we don’t know that they’re not going to change the rules of the game in the middle of our kick. I’ve had that happen to me. Where they, I had a building where we were evicting people under a brand new law that had not been really vetted. And there was a group of people trying to change the law to get rid of this basis for eviction. And we had already filed our case. We had already given them the notices. We were.

    Micah Johnson (24:31)
    Right.

    And that is tough.

    Niv Davidovich (24:54)
    really on the finish line of finishing the case. And these five tenants from this one building who were very loud, very vocal, went to the city councilman and got them to change the law in the middle of our eviction and even put in a little clause that said, this is retroactive to any case that isn’t already done.

    Micah Johnson (25:16)
    Mmm.

    Niv Davidovich (25:16)
    So literally in the middle of our game, they changed the rules.

    it’s it’s to continue the analogies like you kick in the field goal and then they’re like, all right, we’re just going to take the the field goal post and move it back 50 yards while the ball’s in here and then say, you didn’t make it. No, yeah, of course I didn’t make it.

    Micah Johnson (25:35)
    Right, literally.

    That’s not where I was trying to go.

    Niv Davidovich (25:45)
    Yeah. So I,

    and the whole, the whole thing was based on lies. were claiming that the, they were claiming that the, that the ordinance was causing homelessness. And meanwhile, I had it on record, a subcommittee council hearing where they were asking the actual housing department, hi, in the two years we’ve had this ordinance, how many times has it been used to evict anybody? And they said 98, 98 times.

    in the entire city of Los Angeles, four million people.

    Right? And you could hear the council people, were like, what? 98? We thought it was hundreds. We thought it was thousands. They were surprised that it was so low. And they still passed the law. And in the, the preamble of the law, said, whereas this is a major crisis causing homelessness all over the city, straight up lying about it.

    Micah Johnson (26:20)
    Right.

    Niv Davidovich (26:41)
    and you’re in that reality and that’s what can happen to you,

    you need to make decisions with your head and not your heart. What I tell people is you can be in the real estate feelings or you can be in the real estate business, but you cannot be in both.

    Micah Johnson (26:58)
    Man, that’s powerful. Well, you’ve chosen a, you’re in an interesting place, man. Like people still invest there. There’s still deals going on. You just got to know what you’re doing. You got to partner up with people that understand what’s going on. You know, if you’re listening or watching, say it all the time on this show. When you’re listening to a professional that we bring in, if they’re talking about something that is affecting you and where you are, there’s a reason we have folks on this show. Reach out to them. You need to be working with and talking to people who are

    Niv Davidovich (27:06)
    Yeah.

    Micah Johnson (27:27)
    actively doing the things you want to do daily. Because if not, like what you just listened to Niv say, the rules can literally be changed on you in the middle of it. That’s the benefit of working with people who know what they’re doing. Their ears are to the ground. They’re paying attention. It’s not to scare you. know, again, it’s not the feelings. That’s what he just said. It’s a real estate business. You’re choosing where to invest. You’re choosing what to do. We can make money all over the place. So if you’re going to do that, just know what comes with it.

    And if it’s going to come with a little heartache, you know what? Just be ready for it when it gets there. Right. Because as long as you know what’s going on up front, I love the fact that you pointed back to why. Why are you originally doing this? What was the purpose of you doing this? Because when you can get back to that reason, if you would literally go back to them and say, all right, 20 years from now, you can either pay ten thousand dollars to kick somebody out of your unit that hasn’t paid rent in six months or

    you can pay $15,000 and maybe get nothing. What are you going to do? The early stage, they’re just going to say, I’d give them the money. Easy, right? Like the earlier on, the more logical it seems. So it’s, it’s always hard when we’re in the middle of it. My dad always said, it’s, hard to read your label from the inside of the bottle because when it’s happening to you, it ain’t never happened to anybody any worse. And we all feel the same way. But again,

    Niv Davidovich (28:48)
    Right.

    Micah Johnson (28:49)
    understanding the environment you work in. Take that time. I always say education is the first step. Know the environments you’re playing the game and then build a team around you that can play the game at a high level in that same area. So Niv on that man for people that are listening in and watching, where can they go find you learn more about you and what you have going on possibly book a meeting with you.

    Niv Davidovich (29:11)
    Sure. Our website is davidovichlaw.com. Spell that so no one has to guess it. It’s D-A-V-I-D-O-V-I-C-H-L-A-W.com. If you’d like to hear ⁓ some more of my speaking engagements, you can go on to my LinkedIn.

    ⁓ And then we also have the rest of our socials all on the website there and all of our information is there address phone number email anyone can feel free to reach out and Happy to book consultations all the time

    Micah Johnson (29:45)
    Awesome, man, thank you. If you’re listening or watching in, check our show notes. We’ll make sure all of Niv’s contact links are there. Again, reach out to him. When you find a professional, talk to him. Niv, I appreciate you today, man. Thank you for so much for being with us, sharing a ton of value. I love learning about markets, hearing what’s going on out there. And thanks for the way you serve. I appreciate it, man. Taking care of your folks, doing the best you can. That is one of the things I find most honorable.

    Niv Davidovich (30:08)
    My pleasure.

    Micah Johnson (30:10)
    And for everybody listening and watching in, if you got value out of today’s episode, please like this episode, share it with someone else you think you get value out of it. And also don’t forget to subscribe to our podcast. We appreciate every single one of you that follows along with us out there. We have more conversations coming up with operators just like Niv out there building a real business in the industry. Thanks for being with us today. We’ll see you on the next episode.

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