Living the dream in California, playing 18 rounds of golf before the workday begins and hob-knobbing with A-list movie stars as part of your job – how great is that?
Two Canadian-born real-estate partners, Ben Bacal and Ryan Davis, are more than qualified to answer those very questions having already bought and sold $92-million of Los Angeles real estate for clients including celebrities such as Matt Damon, Ellen DeGeneres and transplanted Canadian and former Friends star Matthew Perry. There are many other big names, but they can’t be revealed due to privacy agreements. Then there’s the long list of billionaire and multi-millionaire entrepreneurs as well.
Davis, 35, was born in Calgary and Bacal, 34, was born in Toronto and both were raised in Toronto. Davis moved to California three years ago to pursue a real estate career in the sunny southwestern portion of the United States. Prior to real estate, Davis worked in the insurance industry in Canada for about 10 years specializing in liability and homeowner claims.
“I did a lot of residential fires, where we’d rebuild the house and handle water damage claims. Then I moved out to California and decided to do a career switch and got into real estate,” he says.
Bacal entered the real estate business in 2005, starting in Venice Beach, Cal.
“When I hit the market, if you put a sign on the front lawn or spread the word, everyone was just running to make offers,” Bacal reveals. “It was a crazy time when it seemed like values went up daily by about 10 per cent.”
Davis and Bacal have been together now for just over a year and have already made impressive inroads within the industry. Due to their immense success, the partners felt it made sense to open a Toronto branch office of their Beverly Hills Sotheby’s Sunset Strip brokerage with a number of Canadian snowbirds looking for homes in the southern California market.
“We’ve actually got two businesses running out of it,” (the Toronto location) Davis says. “There’s an insurance business down below and then the upper two floors are the office, which for us is more of a meet & greet if somebody wanted to come in and we can show them various properties that we have in L.A.”
Davis tells us that 34 per cent of sales in California last year – all residential transactions – were from Canadians.
“For myself, I used to frequent Florida quite a bit and felt that after being there for such a long period of my life and then coming to California, just seeing the differences that both states have to offer. Being in California, there’s skiing, golfing and surfing all in the same day. I just feel there’s a lot more culture out here and more things to do here. We’re just trying to make the switch, saying ‘hey, why always go to Florida? Why not take a look at California. ”
“Florida used to be the go-to place for Canadians to buy retirement and vacation homes but the incentives for Canadians to buy in Los Angeles are unbeatable right now,” says Bacal. “We’re Torontonians at heart and there’s never been a better time for a Torontonian to own a home in one of the most desirable cities in the world.”
“Trophy properties that have never been on the market are now for sale at a fraction of their previous worth and more modest Los Angeles homes are drastically reduced,” Davis offers. “Direct flights between Toronto and L.A. are more affordable than ever, too.”
The population in California is also a bit higher than all of Canada, so there’s no shortage of potential buyers from all sections of the state and well beyond with far greater demand. It’s also assumed by Davis and Bacal that the real estate values will hold better levels in California compared to Florida, the usual vacation getaway that many Canadians tend to think about.
But living the good life in California means you’ll need to have a nice tidy income regardless of where you are currently residing. To purchase a $1 million home, it would likely take an annual salary of at least $200,000 per year to move into one of the nicer areas that Davis and Bacal service.
“You can get a terrific house for $1 million to $1.5 million,” Bacal remarks. “You can get an amazing property. When I compare what I can buy here for $1.5 million or Toronto, you can buy a better house here.”
On top of that is the beautiful warm weather and sunshine all year round. It’s now definitely a sellers market in southern California, with inventory quite scarce and property values starting to climb.
“However, there’s still a looming recession hanging over our heads,” Davis notes. “Interest rates have never been so cheap. I’m buying a home and I’m getting a loan for 3.25 per cent, which is basically like free money.”
Interest rates in Los Angeles are currently the lowest in its history, offering Canadians 3.5 to 4 per cent on 30-year mortgages. In addition to financial incentives, California’s weather is more consistent than Florida’s and the geography offers the luxury of beaching and skiing in the same day.
“The most famous people in the world all have their L.A. house,” Davis says. “There’s a house that Ryan and I just sold for $40 million and literally five doors down there’s a house that sold for $1.45 million. You can live in amazing areas and have the likes of Keanu Reeves down the street from you. You’re surrounded by a wealth of people and tremendous properties.”
“The U.S. government is putting $40 billion a month into mortgage-backed securities,” Bacal adds. Such a program helps keep interest rates low. “When you talk about properties going down in L.A. or California, there’s a lot of outskirts around so if you’re talking Beverly Hills or Bel Air, it hasn’t really been affected as much. It’s gone down a bit but we’re really seeing a lot of the numbers come back and even actually higher than what they were in 2005 and 2006. The sale we just did for almost $40 million was the biggest sale in The Strip to date. (The area just above the famous Sunset Strip is known as The Strip).
Not everyone has the ability to pull off buying a $40 million mansion. This particular client of Davis and Bacal is a foreigner with a large private equity fund.
The success of the Beverly Hills Sotheby’s Sunset Strip Brokerage has led to Bacal and Davis being inundated with numerous calls from lenders in California and Canada.
“There are programs and a company in Mississauga that will do specific loans for Canadians buying properties down in the U.S.,” Bacal notes. “It’s a way to use your RRSPs as well. You can take a portion of your RRSP or have the loan backed by the RRSP to put a deposit down or take out a full mortgage and they’re charging 3.5 per cent with basically unlimited funds based on credit and obviously salary and other particulars like that.”
Other than tax implications on the sale, it’s really no harder for a Canadian to purchase a home in the United States than it would be for an American citizen already living there. Setting up LLCs and trusts also come into play at that stage in most circumstances.
Davis and Bacal have excellent access to some of the best listings in Los Angeles and their ascent in the industry has been nothing short of incredible. So how did two transplanted Canadians manage to move up the real estate ladder so fast?
“One thing I always hear is it’s the Canadian personalities – we’re always considered the nice people,” Davis replies. “In real estate there’s got to be a lot of trust with your realtor and I believe that Ben and I are very honest people who do great work. The combination of the two has been a great formula for success.”
“Ben and I also own a dotcom company called Pocketlister.com and we do a lot of off-market properties,” Davis continues. “With some of the clients we deal with – whether it’s celebrities or billionaires – who don’t want their homes up on everyday sites where anybody can get into including MLS. We’re known as the pocket kings. We’ll get off-market properties and place in the properties without using MLS.”
Davis is also a scratch golfer who is up by 5:30 am on most days, managing to play 18 holes in the morning. Some of those golfing excursions will quite often include a round with the Hollywood A-list celebrities he sells homes to.
“My father was a three-time All-American at Ohio State University,” he proudly states. “He taught me the game when I was younger.”
Bacal’s favourite sport is tennis. When he’s not on the court or selling multi-million dollar mansions, he’s working on Pocketlister and is also an avid fan of working out in the gym to keep in shape.
As Bacal notes there are areas outside of Bel Air and Beverly Hills where there is more affordable housing with beautiful and safe surroundings if you don’t earn at least $200,000 per year.
“You can get into the valley and hit up Studio City and different areas there, which are dictating a much lower price and it’s only 15 minutes from Beverly Hills,” he says.
By CBJ Staff