In LA, Small Multifamily Properties Present Big Opportunity
When Artem Tepler moved from Siberia to New Jersey as a child, he was prepared to take advantage of every opportunity America had to offer. After earning his bachelor's and master's degrees on the East Coast, he decided to relocate to warm and sunny California.
It was in LA that he met Paul Schon, a seasoned broker and Mexico City native who would eventually become his business partner. The duo teamed up to form Schon Tepler Group, a full-service commercial real estate firm specializing in multifamily development, property management and construction. The firm focuses on building and managing projects that are under 50 units. For Schon and Tepler, the smaller the property, the bigger the opportunity.
“Small properties allow us to do more with less,” Tepler said. “Focusing on smaller-scale projects allows us to get through projects faster, and work on more projects at once.”
Since founding Schon Tepler Group, Schon and Tepler have seen consistent growth in their project pipeline. The team currently manages 18 projects in various stages of development across the LA metro area. The firm has made a concerted effort to expand its footprint across neighborhoods. Among its active projects are a 13-unit apartment complex in West LA, a 26-unit development in Hollywood and a 42-unit mixed-use building in Echo Park.
"Our competitive advantage is targeting small projects," Schon said. "This allows us to find land at a more attractive price since we are not competing with national and institutional developers. In addition, we are able to get building permits much faster than larger developments that get more scrutiny by the city and neighborhood councils."
Schon Tepler Group gets its equity financing from high net worth accredited investors and family offices. The firm works with local community banks for construction financing at attractive rates.
Because they focus on small properties, Schon and Tepler are able to quickly capitalize on emerging commercial real estate trends. The firm’s new co-living arm, LACOLIVE, is tapping into a growing demand for “adult dorm-style living” in LA.
Co-living is one of the industry’s solutions to rising construction prices and a shortage of affordable housing. Inspired by how coworking has turned the traditional office on its head, the co-living industry aims to disrupt housing by building properties with less privacy in exchange for lower rents. Co-living has become an especially hot commodity in LA, which has seen multifamily rents skyrocket over the last decade.
Schon and Tepler are also experimenting with micro-units, or apartments that range from 140 SF to 350 SF. This trend has become increasingly popular in cities across the U.S. In LA, these micro-apartments could be a logical solution for people who want to live alone but cannot afford a studio or one-bedroom apartment.
Micro-apartments also play an active role in LA’s urban development landscape. As LA residents start to rely more on transit and less on driving, city planners have considered turning former parking lots into land that can support new development. This space might not support large luxury developments but it does offer the land and convenience for smaller properties. Industry professionals like Schon and Tepler see these spaces as ripe for redevelopment.
While the firm may one day expand its services to other parts of the country, Schon and Tepler plan to keep their focus on LA for the foreseeable future.
“There’s a healthy supply and demand in LA, which is good for our business and good for investors,” Tepler said. “We keep finding more land to do more projects, so we see no need to go elsewhere anytime soon.”
This feature was produced in collaboration between Bisnow Branded Content and Schon Tepler. Bisnow news staff was not involved in the production of this content.