Investment Info:
Large multi-family (5+ units) buy & hold investment.
Purchase price: $907,000
Cash invested: $250,000
worth $3M today.
upgraded tenancy, added 2 legal units, getting highest rents by far in neighborhood.
average rent per sq ft is a bit over $3 a foot.
eclectic, hip, creative renovation and decor is competitive advantage.
we often stage actual apartment for showing/leasing - its a lot of work, but we think it drastically shortens vacany....and can get us 5% to 10% more rent.
What made you interested in investing in this type of deal?
was doing well with Single family vintage, eclectic restorations, so we went after same demographic on the residential rent side.
How did you find this deal and how did you negotiate it?
broker that sold us single family, brought this to us
How did you finance this deal?
hard money
How did you add value to the deal?
significant sweat equity, 2 to 3 years, major tenant turnover, tenant cash for keys, build 2 new permitted units, 100% renovate 8 of the 12 units
What was the outcome?
property is worth $3m today, and spits out $4.5k ish a month in cash flow. Still have 4 units with legacy tenants paying about 40 to 50% of market on rents. So still lots of upside........BUT still lots of rent control headaches, and lots of repair issues as we still have a 100 year old structure and 70 year old structure. Vintage is great, but it comes with extra maintanence for sure.
Lessons learned? Challenges?
We have learned to work with Los Angeles rent control.......Los Angeles Rent Stabilization Ordinance (RSO)..........NOT for the faint hearted. But we created that rent control knowledge as a fierce competitive advantage....................and the finesse to work with specific demographic that loves our approach, and pays more in rent than they should because of our approach.
