Multi-Family reposition in Los Angeles - Lots of Photos

[Eyal B.]

I recently finished work on my 4-unit building remodel in Silver Lake, an area that has become fairly desirable in Los Angeles.

I seek out under-performing buildings with deferred maintenance and under market tenants. I fix and remodel the building as a high end offering then bring in top market quality tenants, offering beautiful new homes and great service to those that sign leases with me. I end up with forced appreciation in an already strong appreciation market as well as strong cash-flow. Momentum is gaining and this model is proving successful for me. I thought I'd show one of my recent deals as I near completion.

This is what the building looked like when I purchased it a year ago:

And after:

A couple before and after interior photos, 2 bed layout:

After:

A couple before and after interior photos, 3 bed layout:

After:

If you want to see all my before and after photos, they are available here:

Before: https://www.dropbox.com/sh/rsry5kjok097j8b/AAAGjIl...

After: https://www.dropbox.com/sh/spee31mdpa6vtdv/AAB3f4B...

The building was grossing $3,770 when I picked it up. I listed all 4 units about 3 weeks ago. I have 3 signed leases, and filling the last 3 bed unit now. The building is scheduled to gross $11,680 per month.

Basic numbers:

Purchased: $1,114,700

Remodel: $250,000

Unit 1 - 3 Bed/2 Bath - Vacant - For lease, $3,295/m
Unit 2 - 2 Bed/2 Bath - Leased - $2,495/m
Unit 3 - 3 Bed/2 Bath - Leased - $3,345/m
Unit 4 - 2 Bed/2 Bath - Leased - $2,545/m

Non rent-controlled, 1990 construction building. Lots of upside as Silver Lake rental values continue to grow.

Building value at a 5 CAP is about $2,000,000.

[Eyal B.]

@Mark Brogan  Thanks so much!

@Amit M. SF and LA face some similar challenges, but there are many differences. (Jealous of your land use abilities!)

- Condo conversion used to be popular in LA, but over the years steps have been taken to make it difficult. Granted its not a model I know well, but it is difficult to impossible to do in most parts of LA now. Just gotta build them as condos, then rent them for the option.

- Most of my deals have actually been on MLS. It's doable, just have to be smarter than the next guy. I'm always the FIRST person to call on the property, and I'm always the most motivating buyer to work with. I have my strategies to maximize my buying value before escrow and in it.

- I'll be cold calling smaller banks and credit unions to find a motivated lender who should like my numbers, and try to create a long term relationship there to maximize my borrowing power.

- This building took a year to realize full value. The first few months were to allow the old tenants to vacate. The remodel was slated to take 3 months, but it took 5. It took about a month to fill the 4 units. Currently I'm slow on the acquisitions side as there aren't as many deals. I wait to focus my limited capital on a fantastic deal. I work full time, so for now I can afford to be patient. In 2013 I acquired 3 properties, in 2014 I only acquired 1... I'll probably continue to acquire 1-3 a year until the next market crash where I hope to go on a shopping spree.