Resilience in Real Estate: How Malibu Overcame Wildfires Together

John Harcar (00:00.868)
Okay, hey guys, welcome back to our show. I’m your host, John Harcar, and I’m here today with Patti Palafox. And what we’re going to talk about besides your journey in business and in real estate, we’re going to talk about, you know, how the wildfires, we all heard about the devastating ones out in California and how they really affected the market. Remember, guys, at Investor Fuel, we help real estate investors, service providers, I mean, really all real estate entrepreneurs, 2 to 5X their business.

And we do that by providing tools and resources that help them grow the business they want to have, which helps them turn the life that they’ve dreamed of. So, Patty, welcome to our show.

Patti Palafox (00:38.818)
Hi, thank you so much for having me and giving me the opportunity to let you know what’s going on here in Cali.

John Harcar (00:44.58)
100%. I was born and raised in Orange County, Southern California. So I mean, I’ve served Malibu. I know the whole place. But before we kind of talk about, know, how the market and how things were affected by all that happened, tell our audience first a little bit about you, kind of your background, how you got into real estate and what brought us up to today.

Patti Palafox (01:05.112)
Yeah, thank you for that. So I’m originally from Mexico City. I grew up there and then I live for seven years in London. went to school there, graduated from university and then a job opportunity brought me to the States, to United States, California mainly. And I started exploring the real estate market back then and I was managing portfolios that involve real estate investments, mainly in Malibu.

And so I have a very broad expertise from a different perspective, from investing investor perspective, but also now from a real estate agent. So eventually it just makes sense for me to get my license and start providing the service that now I do, you know, selling, representing, transactions here in Malibu mainly just because I’ve been living here for almost two decades, almost 20 years. And I’m very familiar with the area.

I have a family here, my kids go to school here, so I pretty much now live half of my life here.

John Harcar (02:08.824)
Very cool. So what seed was planted that decided to help you get into real estate? Like why that of all things?

Patti Palafox (02:15.8)
Well, because I was managing portfolios and that involved dealing with real estate transactions. So was fascinated by the prices here. I couldn’t believe how properties exchange for, especially the condition of some properties. Mainly we have, you know, properties built in the 60s, 70s, but because they’re beachfront properties, some of them, the value of those properties was very intriguing to me. And I just started getting very familiar with

John Harcar (02:23.224)
Mm-hmm.

Patti Palafox (02:45.462)
what things can be worth in Malibu in particular. I created very good relationships with realtors and investors. So I kind of started from that back end and it just made sense for me to get my license and started doing full on service.

John Harcar (03:02.596)
Okay, when you say you’re managing portfolios, mean, were you a property manager type of thing? I mean, what is actually, what were you doing to manage those portfolios? Okay. Business manager.

Patti Palafox (03:10.348)
I was a business manager, so I work for people that own real estate.

John Harcar (03:17.262)
Okay, awesome. And what were some of the struggles that you ran into when we got your license and you started trying to go and represent folks for their properties?

Patti Palafox (03:25.9)
Well, mainly was, you know, just to get to know some clients and build trust, right? So because when you are new in the business, you have to earn their business. And typically people go with whoever has a name in already, you know, in the community. so that was kind of first struggle, but little by little, because I was already familiar with, you know, people in the community and they knew what I was doing before.

and my knowledge was a little bit broader than a new, fresh new agent, it showed and it just started, you know, pretty much building my database. But of course it took time and effort.

John Harcar (04:04.12)
Right, yeah, definitely. So, you know, as you started to grow, did you build a team? Did you join a team? What did you do?

Patti Palafox (04:12.526)
So I joined a team. First, I was a solo agent. I joined a team who was well established at Compass. And that gave me great resources to have the ability to have people that were on salary that will help with the back end of administration, marketing, and allow me to really just dedicate more time into networking and serving my clients more hands-free without having to take care of everything that it goes on the transaction.

I did very well with the team. I was one of the best performing agents besides the funding partners. And eventually I just went solo and now I’m building my team.

John Harcar (04:54.756)
What do you think was your attributed YouTube being one of the best on the team or outside of the founders? What kind of things got you there, right?

Patti Palafox (05:09.336)
Well, I think it’s performance. really feel that I am very driven and I’m very dedicated to whatever I set my mind to do. And I love what I do. I love servicing people and all the emotional part of the transaction, also the negotiating aspect. But I think it’s very rare to find somebody with great empathy, but at the same time, great negotiating skills. And I think I have a good balance there so people feel comfortable.

with me, they feel protected and that’s kind of what has helped me to build trust and of course performing well by executing transactions and delivering results.

John Harcar (05:48.76)
What do you think is the number one attribute of a truly and highly successful agent?

Patti Palafox (05:55.47)
Well, I really feel that a lot of us get complacent sometimes, especially when we reach certain point of our business and pretty much, you just want to get more market share, get more properties. But the reality is you can only give so much attention. And I think that a lot of times it’s just important to identify if you are into the higher price level, then maybe just focus there because you’re not going to provide the same level of service to people.

just because there is too many to serve and it’s only one of you. And even if you have a great team, people are hiring you for your name. And I feel you have to be more involved in every transaction or just show up to sign the listing agreement and then disappear and have people showcase a property and be involved in the transaction. So I think that what it is is consistency.

and is delivering the amount of service and really attention to detail the client’s need. This is a very sophisticated market. It requires a lot of finesse. yes, indeed, some markets sell by themselves, based on so many factors. But here we’re serving the 1 % pretty much. And you need to deliver a very high standard service. And I don’t think you can do it all.

John Harcar (07:15.329)
What mistakes are you seeing newer agents commit or doing or continually making or things maybe they’re struggling with in the beginning?

Patti Palafox (07:25.39)
Well, I think in particular, the changes that we have constantly within, you know, the National Association of Realtors, the commissions and not being able to adapt to whatever, you know, is thrown at you with the market, a lot of things that we can control, right? I can’t even begin to lease all of the things that are out of our control. So I think it’s just sometimes the inability to really manage the things that are out of our control and just stay.

John Harcar (07:32.942)
Mm-hmm.

Patti Palafox (07:55.33)
focus and try to deliver the same results.

John Harcar (07:58.372)
Right. We know we had the whole NAR ruling and then that more recent thing. Do you see any other trends or do you even see any other rules regulated? Is there anything coming down the pipe that you’re kind of keeping an eye on?

Patti Palafox (08:15.008)
Not really from that perspective. mean, we have so many changes now with Silo as well, right? And even Compass itself, we’re trying to give the sellers the freedom to showcase their property and market the property before even having to put it to the MLS. And now Silo is just showcasing whatever they want to showcase. I even noticed that a lot of times you don’t have access to all of the properties. And I think it just…

should be just a better way for the consumer to check to what’s available there and not just being part of one particular brokerage, but at same time, not one particular site like CILO has been dominating for so many years.

John Harcar (08:54.244)
Right. OK. Now let’s let’s kind of transition a little bit and let’s let’s talk about the you know how the market’s been affected. You know we all saw the news. We all saw how you know the whole thing with insurance and people not getting that pulled out from them and all that. Just the whole fiasco I guess you could probably say. So talk to me about that. How was the market affected.

Patti Palafox (09:17.954)
Well, it was devastating. think it’s the worst fire we have seen and not just because the amount of houses that were lost within Malibu Palisades, Altadena and all the recent fires. But I think this, particularly I’m going to speak from the Malibu perspective, is the first time a fire had affected the whole community. Of course, we have been affected by different fires. The Woolsey fire was extremely devastating too, the La Costa fire as well.

But I feel there were parts of Malibu that were severely affected. And of course, as a community, you suffer with the people you care and the city that you love. But at the same time, if you don’t get to see what’s going on every day, you tend to forget, right? Human beings, we recoup very quickly and we forget and we go back to normalcy very quickly. This particular fire affected our one main access road, which is PCH.

John Harcar (10:13.858)
Yeah, PCHM.

Patti Palafox (10:15.636)
And that is inevitable to get affected by the whole community was affected. The schools were affected, the accessibility to Malibu. We only have other ways of access which aren’t easy, which is through the canyons. And that completely affected all of us. It eliminated a lot of people that had to commute. They had to move out of Malibu even though their homes weren’t affected just because the accessibility wasn’t there.

and traveling out of Malibu was a nightmare, two hours, two hours and a half to go to a doctor’s appointment sometimes in the West side. So a lot of people start getting very antsy about the inability to commute. And that was affecting, of course, the whole community. With that alone is driving through the devastation every day too, once the access became open and just a constant reminder. And that’s going to last a long time too, because obviously there is one road that they have

made a great effort to clear, but every day that you drive it is a reminder of all of the houses that were there and what’s going to happen with the rebuilding process and those people that are under insured and are not going to be able to pay whatever their premium is today to rebuild a home. So it has affected the community very, very severely emotionally. And of course the market gets affected because whatever is available in the market is also not accessible with

open houses, showings. We couldn’t even show houses that were still on that fire zone because how do you get people in and out? And overall, I’m sure we’re going to recover. I don’t want to paint this as a very negative because Mali was still a very special place to live. I think there is so much uniqueness into the town and so much grayness as far as the nature aspect of it and the great homes that we have here in the very close community.

John Harcar (12:06.532)
you

Patti Palafox (12:11.672)
So I’m sure we’re gonna heal and rebuild, but of course we all having a difficult time, you know, even working and operating our normal business. Other thing, restaurants have suffered significantly, shops because you didn’t have the access of tourists coming in or people from other parts. So it’s been a rough time.

John Harcar (12:27.8)
Barrett. Do you think we learned anything?

Patti Palafox (12:34.926)
It’s sad that, you know, we didn’t learn anything from 2018. A lot of people were hoping that the city, the county, the state in general, would have more the back of the people that are tax, very high taxpayers. And to see what happened in January is devastating to see no action of firemen trying to rescue homes.

John Harcar (12:58.596)
No.

Patti Palafox (13:00.462)
I feel we didn’t learn anything from 2018 and a lot of people were in the hopes that we had a much better system. And it’s very scary to know that what’s going to happen when something outside our control, which is, know, natural disasters against knock on our door and people, their main assets are tied to their homes.

John Harcar (13:21.678)
Yeah. Yeah, no, that’s that’s difficult. So where do you see the market going? I mean, you see it bouncing back soon later. mean, what does your outlook look like?

Patti Palafox (13:33.378)
Well, PCH is now open and that has created some new activity. We’re having calls from the West side from people inquiring about summer leases, which has always been a great market. I think, you know, obviously overall the market has suffered with the higher interest rates and the economy and the politics and everything that’s happening. And that’s not just to California, it’s everywhere. But I’m really hopeful that things should normalize and people will continue to look. Mali was a very unique.

and very great lifestyle and way of living. So I see the market actually recuperating just because we have lost so many houses, just to tell you the beachfront properties where, you know, astronomical, the amount of those beach homes that were lost. So if you ask me, now you have X amount of number of beachfront properties, at some point, those should be more valuable, right? Just because the inventory is going to be less. We’re always going to have less inventory for all the houses.

John Harcar (14:29.016)
Yeah.

Patti Palafox (14:31.864)
houses that have been lost. So you’ll think that should be in consideration of bringing up or at least maintaining the prices where they are.

John Harcar (14:40.514)
Have you had a lot of investors inquire with you about properties?

Patti Palafox (14:44.012)
We are, yeah we do. From the very beginning, a lot of people from the East side contacted us about land, raw land and future development, particularly in the Palisades. We had a few beach farm investors inquiring to develop obviously homes on the coast, which is on beach farm properties, which are always very desirable. And especially because that was affected greatly. So yeah, there is always people looking for greater opportunities. So I would say this is the time once.

things recover, you again, not going to be able to find that or find that great deal. Now is the time to really find a good deal.

John Harcar (15:14.338)
Did we afford it? Yeah.

John Harcar (15:20.196)
Yeah, no, 100%. I agree. Are you ever buying any of these things? Do you invest at all? Do you buy properties? Do you have rentals?

Patti Palafox (15:29.888)
I had in the past, not recently to be honest, the price point right now is not so great for flipping just because unless you have the interest rates that they were during COVID, that’s a really good way to go. But then again, the cost of insurance and the cost of things are great. So unless there is an unforgettable opportunity, at least for me, is…

You know, it’s better to wait a little bit until the prices adjust more.

John Harcar (15:59.276)
Yeah, yeah, no, I get that. Well, I mean, I appreciate you coming on here and sharing all this. If there’s folks that are listening that are in and around your area, maybe they want to talk to you about buying something there. I don’t know. How do they get in touch with you? Like, what’s the best way for them to reach out and connect?

Patti Palafox (16:16.524)
Well, you know, I’m always available on my phone. always typically try to answer it, but of course, email or my Instagram at Patty Palafox. I’ll send you my info as well. If you Google my name, I’m sure all my number and everything will pop. But I’m always available to serve clients and also just educate them a little bit about the real estate market. There is a great investment opportunities and we have historically.

shown that this is a very good and safe place despite everything, a very safe place to invest your money.

John Harcar (16:50.222)
Yeah, I love Malibu. It was heartbreaking to see that, you know, especially, you know, growing, growing up Southern California, but seeing all that happen in the places I’ve been and I’ve been through. But, you know, I, I, I, once again, appreciate you for coming on here, sharing all this information, you know, hope everybody out there listening got a good show, took some good notes or, you know, just enjoyed the time. Patty, thank you again and everybody will see you on the next one. Cheers.

Patti Palafox (17:16.366)
Thank you so much for your time. I appreciate you.