Core Concept

Graham’s move: He’s selling all his LA residential rentals because of:

Heavy regulation (3-year eviction moratorium, rent freezes)

Extreme bureaucracy (permits, inspectors, delays)

Weak returns (~4–5% on equity) vs. other investments

ADU “nightmare” example:

Built an ADU and got stuck in:

Multiple failed inspections with shifting requirements

Forced $22k sewer repair, sidewalk and tree-root work

60–75+ day delays for permits and tenant notices

Result: months of delay, extra cost, lost tenant, high stress.

Tyler’s core thesis:

This story doesn’t kill real estate; it kills small residential in high-reg markets.

It actually makes the case for commercial real estate:

Fewer tenant-protection politics

More contract-driven, business tenants

Better return vs. headache trade-off, especially in middle-market CRE deals.