Los Angeles Multifamily

The Difference between ‘Bachelor’, ‘Studio’ and ‘Single’ Units

All SRO (Single Room Occupancy) units are not created equal in the City of Los Angeles. There are 3 main types – Bachelor Units, Studio Units and Single Units. Many use these three classifications interchangeably, however they are in fact very different as noted below:

  • Bachelor Units: Bachelor Units are also classified as “Guest Rooms” on a Certificate of Occupancy (clearly differentiated from “Dwelling Units). They are the smallest and most compact of the three options. Bachelors are typically ~200 to 300 square feet and sometimes feature a kitchenette (but not always) and usually has its own bathroom. From a utilities standpoint, Bachelor units generally do not have in-unit gas appliances such as a range/stove. The appliances, if any, are usually electric. It is important to note that most Bachelor units are also not independently metered for gas or electricity – meaning that their utilities are usually paid by the owner (if they are not using RUBS).

  • Studio Units: Studio units are slightly larger and more versatile than bachelor units. Usually there is no separation between the kitchen and the living/sleeping space. The kitchen is usually located on one of the walls and has a compact oven/stove top and full size fridge — if a refrigerator is included with the unit. Typically, a studio apartment is small, anywhere from 300-600 square feet. The bathroom is also separate from the room.

  • Single Units: Singles are generally the most desirable of the 3 classifications. What differentiates a single more than anything is that it has has a separate space for living/sleeping and a separate kitchen which is outside of the ‘living space.’ If there is a wall with an entrance to the kitchen, the unit is a single. A single may have compact or full size appliances. A separate bathroom is included in a single apartment. Usually singles have a similar square footage as studios – approximately 300-600 square feet.

I bring this up because as I said above, some folks use these terms interchangeably when they are in fact different. When we market a property, we always make sure the owner specifies which type of unit we are dealing with, particularly because a ‘single’ or a ‘studio’ unit can almost certainly achieve more favorable rent than a ‘bachelor.’

Cost Recovery Programs Los Angeles Multifamily

The Cost Recovery Programs Available to LA Landlords

As LA apartment rental income has remained fixed for the past three years and with property expenses on the rise, it is important to note a few Cost Recovery Programs available for landlords in the City of Los Angeles. There are six programs that allow owners to recover the cost of improvements to their rental properties from their tenants depending on the circumstances and nature of the improvement. In addition, the Just & Reasonable Program is a rent adjustment program that provides a mechanism to provide relief from rent increase restrictions. Each item below provides program information:

  • Capital Improvement Program:  The Capital Improvement Program splits the cost of approvable expenditures 50/50 between the landlord and all tenants benefiting from the improvement.  Eligible improvements include the complete exterior painting of the building, landscaping, flooring, fixtures, doors, windows, fences, security items, meter conversions, major appliances, screens, window coverings, etc.  Read More Here
  • Seismic Retrofit:  The Seismic Retrofit Work Cost Recovery Program and allows for a temporary rent surcharge to tenants based on: 1) A pass-through of up to 50% of total seismic retrofit costs divided equally among all rental units, if approved by LAHD and 2) A maximum rent increase of $38 per month for 120 months.  Read More Here
  • Rehabilitation Work:  Eligible improvements include work mandated by a federal, state or local agency through the Health, Safety or Building Codes, or, due to the repair of damage caused by a natural disaster, e.g. fire, flood, or earthquake.  Read More Here
  • Primary Renovation:  Landlords wanting to take advantage of the Primary Renovation Cost Recovery program must first complete the requirements for the Tenant Habitability Program. Once the work has been completed, an application can be prepared for a Primary Renovation project.  Read More Here
  • Just and Reasonable Adjustment:  The Just & Reasonable Program is a mechanism to obtain a fair return on the landlord’s investment in rental property. It compares the Net Income from the first year for which records are available with the Net Income in the Current Year.   If the business is currently unprofitable compared with its first year of operation, a permanent rent increase adjusted for inflation may be permitted to be added to the rent to improve the property’s profitability and permit a fair return on the owner’s investment.  Read More Here
  • Replacing Smoke Detectors:  The Rent Stabilization Ordinance (RSO) allows landlords to recover the purchase price and installation costs of smoke detectors in each unit and on the property at the rate of $3.00 per month for permanent electric smoke or combination smoke/carbon monoxide detectors. This is the only self-help cost recovery program a landlord can use without approval of the Department.   Read More Here
Los Angeles Multifamily Rent Control

Next Allowable Rent Increase for LA Rent Controlled Properties

LA Housing Department Stipulates the next allowable rent increase for rent controlled properties effective in 2024.

7% is the number as of right now.

After a 3+ year rent freeze due to Covid-19 Renter Protections, the Los Angeles Housing Department has stipulated the next allowable rent increase for 2024. This information was published on July 1, 2023.

Here are the details for LA RSO Rent Increases:

  • Landlords of RSO properties can resume allowable rent increases effective February 1, 2024. No banking or retroactive rent increases are allowed.

  • The annual allowable rent increase under the RSO from February 1, 2024 through June 30, 2024, will be 7% unless amended by City Council. An additional 1% for gas and 1% for electric service can be added if the landlord provides the service to the tenant.

  • Landlords must provide an advance 30-day written notice for all rent increases of less than 10%.

This information can be found on the latest LA Renter Protections Notice updated in July 2023. You can access that notice here.

Development Los Angeles Multifamily

New Apartment Construction is Down Considerably

LA and Other West Coast Markets are Experiencing a slow down in new construction development.

Despite a worsening housing crisis, many major West Coast cities have seen a decline in new 2023 construction projects. Although demand for housing remains consistent, developers are pumping the brakes due to high interest rates and the inability to secure debt financing. As demand for housing continues to grow and supply begins to stagnate, upward pressure on rents and property values could lead to additional upside for property owners come 2025.

What’s Happening:

  • Record inflation in 2022 saw construction costs increase considerably, cutting heavily into the margins of developers.
  • Debt costs have skyrocketed in the past months, with many construction loans containing rates above 10%.
  • Further turbulence among regional banks has exacerbated the issue and with many developers either unable to secure loans or forced to finance with very low leverage.
  • The Mansion Tax in Los Angeles has made the merchant development of apartments nearly unfeasible when 5.5% of future sale proceeds is slapped on to all deals exceeding a $10M+ exit price.

Effects and Implications:

  • While current construction projects are still hitting the market, you may see the current dip in new construction having its market impacts in late 2024 to 2025, further exacerbating the supply and demand imbalance that exists in LA.
  • Lack of supply and an abundance of demand likely will result in increases in both rents and property values, bettering the position of current property owners.
  • As we sit in a current market marked by rising cost of debt and declining values, it is important to look past the present to see if any future market trends might lead to increased returns. With projections of easing interest rates through 2024 and 2025, combined with the possibility that the lack of new construction may lead to an even tighter housing market, holding now with intent to sell in 2025 may not seem like such a bad option.
Los Angeles Multifamily

Just Closed – The LA 7 Portfolio – 7 Properties, 94 Total Units

Seven LA multifamily properties sell to a single purchaser in one of the few LA portfolio sales of 2023 so far.

Through a challenging market with sales volume down considerably, a thinning buyer pool and a tight credit environment, we were able to close a significant portfolio transaction consisting of 7 apartment properties totaling 94 units spread amongst four core LA submarkets – Mar Vista, Palms, Koreatown and Hollywood.

All 7 properties were subject to LA rent stabilization and were by all measures value-add properties, with current rents significantly below market and significant Capital Expenditures needed in the way of unit renovations, plumbing, roof, electrical and mandatory soft-story retrofits.

General Feedback From the Market

The general feedback from the diverse pool of purchasers was typical for a transaction such as this one, highlighted in few bullet points below:

  • Systems Capex: Many prospective purchasers were skittish about the amount of systems capex needed (ie roof, plumbing, electrical and seismic) in addition to the standard unit renovations that would be necessary to achieve market rents. With the cost of construction, materials and labor still on the higher end, this was a legitimate concern for many prospects.

  • Negative Leverage: With interest rates in the low 6s, much of the market pushback circled around the concept of negative leverage – ie the cost of debt for the acquisition loan exceeded the cap rate.

  • Low Rents: As is customary with many value-add properties with legacy ownership, the current rents were significantly below market with upside of around 65% from current to market. Many were attracted to the upside, albeit harder to capture in today’s landscape.
  • Attractive Basis: Many purchasers were attracted primarily to the blended ‘price-per-pound‘ basis of the portfolio, which was $186,170 per unit and $275 per SF. 46 units were located in Westside submarkets, while 48 units were located in Central/Eastside submarkets.

Healthy Buyer Interest
with Multiple Offers Generated

Through the marketing process of The LA 7 Portfolio, we attracted attention from the most active buyers in the LA market – both large and small. Most of the prospects were family offices and/or local syndicators.

  • Throughout our competitive marketing process, we were able to attract attention from some of the most active names in the business. By our Call for Offers date, we had generated over 20 offers in various property combinations and price ranges – a few of the offers all cash.
  • The properties were spread out over roughly an 11-mile distance (about an hour drive in LA traffic) from the western-most property to the eastern-most property. Some purchasers preferred only the Westside assets – while others preferred only the Eastside assets.
  • The terminal buyer was a well-established operator with ~1,000 Units under management locally, who in the end acquired all 7 properties at the full asking price.

The Final Deal Metrics

Below are the final blended deal metrics for the LA 7 Portfolio:

  • $17,500,000 Sale Price
  • 7 Properties | 94 Total Units
  • $186,170 blended price per unit
  • $275 blended price per SF
  • 12.4 GRM
  • 4.5% blended cap rate
  • Approximately 66% upside in rents from current to market
  • Located in Mar Vista (2 properties – 20 Units), Palms (2 properties – 26 Units), Koreatown (2 properties – 36 Units), Hollywood (1 property – 12 Units)

We are currently evaluating similar Los Angeles properties and portfolios for local owners. If you would like more information on how we may assist, please reach out to me at

The LA 7 Portfolio

12 Units in Hollywood
18 Units in Koreatown
18 Units in Koreatown
9 Units in Palms
17 Units in Palms
10 Units in Mar Vista
10 Units in Mar Vista
Los Angeles Multifamily

Why some of our clients have sold properties

Let’s face it: As of this moment in June 2023, rates are up, credit is hard to come by, transaction volume is down precipitously, investors can clip a 5% risk-free coupon rather than buy real estate, and the regulatory environment for LA multifamily owners is uncertain at best. Generally speaking, not favorable conditions for a Seller.

That said: Some owners have sold in the past 12 months and below is a partial a list of reasons why they have done so:

Life Events – Death, Divorce, Partnership Dissolution – Life events such as death, divorce, or partnership dissolution may lead an investor to sell an investment property in order to divide assets or distribute wealth amongst partners and/or beneficiaries.

Step Up in Tax Basis – Related to the bullet point above, an investor (or child of an investor) who has inherited a property may sell to take advantage of his/her “step up” in tax basis, potentially resulting in very little (or no) capital gains tax exposure when the property is eventually sold.

Major Capital Expenditures – An investor may choose to sell an investment property if the property requires significant repairs or renovations that the investor does not want to fund. Many owners in Los Angeles have sold in order to avoid mandatory seismic retrofits which can cost upwards of $100,000 for small buildings.

Heightened Government Regulation – Between rent control, tenants rights, eviction moratoriums etc. heightened government regulation makes it more difficult and costly for an investor to maintain an investment property and achieve adequate returns, often times leading to an investor selling a property.

1031 Exchange – An investor may sell an investment property as part of a “1031 exchange,” also known as a “like-kind exchange,” in order to trade up to a larger (and possibly more valuable property) while deferring capital gains taxes. People also trade down, say from an 8 Unit to a duplex (or two). There are various other property types and alternative 1031 vehicles which investors trade into as well.

Problematic Tenants – Problematic tenants, such as those who consistently pay rent late or cause damage to the property may lead an investor to decide to sell the property in order to avoid the ongoing hassle and potential financial losses.

Return Capital to Investors – Many professional syndicators who have raised LP capital from investors have 5-7 year hold periods or investment horizons, after which they sell properties in order to return capital to their investors (and hopefully harvest their promote).

Retiring from the Business – Let’s face it, some just get tired of doing it. An investor who is retiring from the business of owning and managing investment properties may choose to sell their remaining properties to free up liquidity as part of their retirement plan.

Los Angeles Multifamily

With Utility Bills Higher, Property Owners Look to RUBS

Many Landlords Consider Billing Tenants For Utilities via RUBS Program

As the cost of utilities continues to rise for LA landlords, many owners are considering the implementation of a Ratio Utility Billing System (RUBS). RUBS is a way for Landlords to manage their expenses by proportionately sharing utility costs with their residents. While RUBS is not without its critics, many landlords have found it to be an effective way to manage rising utility costs.

Utility Costs Surging

SoCalGas bills up 3x: Natural gas prices in California have increased significantly in recent months, driven by factors such as extreme colder weather events, supply chain disruptions, and an overall increased demand. SoCalGas, the largest gas utility in California, has warned its customers that bills for 2023 could be up to 3x higher than last year due to surge in prices.

LADWP not far behind: Not to be outdone, in 2022 The Los Angeles Department of Water and Power implemented rate adjustments on water usage, a move that has lead to higher bills for many customers. The change went into effect in January 2022 and primarily impacts residential customers who are the highest water users. LADWP uses a four-tiered pricing structure based on usage to determine the rates a customer pays for water.

Benefits of RUBS

RUBS typically proportionately divides water, sewer, trash, electricity, gas, or pest control utility costs among residents using a formula based on several factors including state and municipality regulations, size of units, and the number of occupants in each unit.  Some of the benefits are as follows:

  • Tenant Cost Absorption: Tenants absorb the costs of their utility consumption as opposed to the landlord.
  • Fair Cost Distribution: Utilitycosts are divided on an individual basis, making the process more equitable for tenants.
  • Increased Net in Operating Income: Utility consumption contributes to a decrease of Operating Expenses leading to an increased Net Operating Income.

California does not currently have any laws that prohibit the use of RUBS and there are many companies that you can employ to implement RUBS at your property.  Additionally, there are also programs which can be purchased to independently implement RUBS. 

Legislation Los Angeles Multifamily Rent Control

What to know About LA’s Latest Renter Protections

LA County Eviction Moratorium Extended by 2 Months

The LA County Board of Supervisors has voted to extend the countywide renters protections once more. The moratorium will now expire at the end of March 2023. County leaders have indicated that this will be the last time they push the end date.

According to the LA Times and other sources, because properties located in the City of Los Angeles will no longer have its own eviction moratorium (as of January 31, 2023), the eviction moratorium for LA County will apply to the properties and residents of the City of Los Angeles starting February 1, 2023 and ending March 31, 2023.

The Latest Renter Protections in LA

In addition to the LA County eviction moratorium extension, last week the LA City Council also approved additional sweeping renter protections outlined below which pertain to properties located in the City of Los Angeles:

There are three main components to the LA City expanded renter protections:

  • Universal Just Cause: The LA Rent Stabilization Ordinance currently lays out specific allowable causes for evictions. These include reasons such as failure to pay rent, illegal activity, etc. Just Cause requires a landlord to specify the reason for eviction from the RSO list. In cases where landlords evict tenants without an approved cause (called a “no fault” eviction), then the landlord would be required to pay tenant relocation costs.

  • Relocation Assistance for Tenants subjected to Large Rent Increases over 10%: While this certainly does not apply to most landlords whose properties are already subject to LA Rent Stabilization, Landlords who raise rents by an amount greater than 10% of their tenant’s current rent will be required to pay the renter relocation costs. Relocation fee amounts are determined based on the length of tenancy with additional relocation fees to be paid to qualified renters.

  • There will now be a Minimum Threshold for Failure to Pay Evictions: Landlords will not be allowed to evict tenants who fall just a small amount behind on rent. You may only proceed with an eviction if the unpaid rent amount exceeds one month’s worth of fair market rent for that unit type (currently $1,747 for one-bedroom, $2,222 for two-bedroom). IE if a tenant lives in a one-bedroom unit and owes total back rent of less than $1,747 – that tenant cannot be evicted.

Los Angeles Multifamily

Just Closed | 10793 Ohio Avenue in West Los Angeles

10793 Ohio Avenue
Los Angeles, CA 90024
7-Units | Just Closed in Westwood

We just closed this 7-unit multifamily property in the Westwood area situated south of Wilshire and just east of Westwood Boulevard. This was a property that had been in the family of the Seller for over 50 years. The Seller, like many other small operators in California, was fatigued by the heightened regulatory environment that accompanies apartment ownership in Los Angeles nowadays. The Purchaser was a local student housing operator who was in the midst of a 1031 exchange.

The property traded at sub 4% cap rate and roughly 16x rents. All things In the long run, owning apartments in West LA is generally one of the safer real estate investments out there. The location with respect to transit (and the ocean) are optimal. While the yields upon acquisition may be lower than elsewhere in the market, when all is said and done the rental demand is steady, the rents grow over time, and it’s still ‘The Westside.’

Los Angeles Multifamily

Newsom passes sweeping pro-housing legislation. But is it enough?

Newsom makes an aggressive pro-housing push in California

If there is one thing residents and landlords can agree on, it’s that California needs more housing. How much more housing? That depends on who you ask. State officials say California needs to ramp up production to 310,000 new housing units annually over the next eight years — a pace that’s 2.5 times faster than the current rate. CA Governor, Gavin Newsom, has taken a proactive approach in his recent passing of pro-housing legislative bills, a few of which are outlined below.

Assembly Bill 2011

  • AB 2011 allows for ministerial, by-right approval for affordable housing on commercially-zoned lands, and also allows such approvals for mixed-income housing along commercial corridors, as long as the projects meet specified affordability, labor, and environmental criteria.
  • The bill also requires that all projects seeking approval under its provisions ensure all construction workers earn prevailing wages and receive health benefits.
  • With thousands of potential commercial sites across California, the bill would allow production of new affordable housing units at scale, without changing the density or character of existing residential neighborhoods. One recent analysis found the potential for 2.4 million units statewide.

Senate Bill 6

  • SB 6 allows residential development on property zoned for retail and office space without needing a rezoning, and allows project applicants to invoke the Housing Accountability Act (HAA) to limit local discretion to deny or condition approval.
  • However, SB 6 does not provide a ministerial approval pathway, and it requires applicants to commit to both prevailing wage and more costly “skilled and trained workforce” requirements for project labor (although the law provides an “off ramp” if fewer than two bidders bid for a contract under the “skilled and trained workforce” requirement).
  • SB 6 does not contain any BMR requirements, and it has fewer site exclusions than AB 2011, and so it is likely to be used most frequently in lower-cost areas of the state and on sites where AB 2011 is not available.

Assembly Bill 2097

  • This bill would prohibit a public agency from imposing any minimum automobile parking requirement on any residential, commercial, or other development project, as defined, that is located within 1/2 mile of public transit.
  • Parking mandates, which require parking for cars to be included in new housing, are common in cities throughout California and can add $40,000 or more to the cost of construction per parking spot, while also increasing climate pollution.
  • Eliminating these costly parking mandates will give Californians more choices about whether they want to pay for parking, or have lower-cost housing in walkable, transit-accessible neighborhoods. AB 2097 increases housing choice and will make it easier to provide lower-cost, walkable-and transit-accessible housing across the state.
1031 Exchange Los Angeles Multifamily

You have sold your investment property. Now what?

What our LA multifamily clients have done with their sale proceeds, post-sale…

Perhaps the most common question we get from our LA multifamily clients when contemplating a sale is: “If I sell, what do I do with the money?” There is no one single right or wrong answer to this question. It’s situational. Sometimes the right answer is you should not sell at all.

But for the ones who have sold, we have seen a few various paths taken by the Sellers in terms of their next step and how they invest their sale proceeds. Of the last 20 or so transactions that we have completed, below are a few different paths taken by the Sellers post-sale, many of course with the goal in mind to avoid paying capital gains taxes.

1031 Exchange into Local Properties

Chances are, if you’re reading this, you have at least heard of the term 1031 Exchange. In case you haven’t, a 1031 Exchange is a tax loophole which allows Sellers of investment properties to defer paying capital gains taxes by selling their properties and purchasing a ‘like-kind’ property of equal or greater value than the property they are selling.

For real property transactions (rental houses, farmland, office buildings, strip malls, etc.) the “like-kind” requirement does not mean selling and buying the exact same type of property. Some of our clients have sold a 6-unit apartment building and 1031-exchanged into a 30-unit across town. Some have sold a 12-unit and traded down into one (or more) 4-plexes for their kids. Others have sought to exit apartments permanently and have traded into commercial strip malls locally. It varies on a case-by-case basis.

1031 Exchange into Out-of-State Properties

Under 1031 Exchange provisions, you do not have to sell and purchase in the same state. In other words, you can sell your LA property and 1031 into another state. Some investors are no longer buying in California as a result of increased regulation. Some of our clients have sold their LA multifamily properties and traded into properties in Sunbelt states such as Texas or Arizona – many with the intent of escaping the unforgiving rent control Laws in Los Angeles and California as a whole.  

Other clients have sold their LA properties and purchased out-of-state “triple-net” properties (ie CVS, Walgreens, Dollar General etc) – where they simply collect rent from large commercial tenants without having to pay property taxes, maintenance or insurance for the property (ie nets).

1031 Exchange into Delaware Statutory Trusts

Some of our clients who are tired of direct ownership and oversight of a property, and prefer a completely hands-off investment such as a Delaware Statutory Trust, which also qualifies for a 1031 tax-deferred Exchange.

A Delaware Statutory Trust (DST) permits fractional ownership where multiple investors can share ownership in a single property or a portfolio of properties, which qualifies as replacement property as part of an investor’s 1031 exchange transaction. A DST takes all decision-making out of the hands of investors and places it into the hands of an experienced sponsor-affiliated trustee.


One or two of our clients have also carried paper or “Seller Financed” their transaction. Seller financing in real estate is, quite literally, when the seller of a property finances the transaction. The buyer furnishes a down payment and borrows the rest from the seller.

The seller essentially acts as the bank and holds a note, for which they are paid interest by the Buyer. There are certain tax advantages to this: An installment sale is taxed differently than a regular sale in that each installment is taxed in the year received, making it favorable for sellers who want to spread out their tax liability over a number of years instead of paying 100% of the tax in the year of sale.

Some Just Pay Capital Gains Taxes

Believe it or not, there is a large component of Sellers out there who are just done with real estate entirely. They simply do not want to own another piece of property or fractional share of a property. As a result, the transaction would result in the Seller paying Capital Gains taxes on the sale, which between State and Federal can be a significant amount depending on the situation.

Note: The above should not be construed as tax or financial advice. If you are considering any of the above, please seek the assistance of a qualified CPA and/or tax attorney

Los Angeles Multifamily

1980s 4-Plex – Just Closed Off Market | Virgil Village, Los Angeles

536 N. Commonwealth Avenue
Los Angeles, CA 90004
Stabilized 4-Plex | Just Closed

We just closed a renovated 4 unit property located on Commonwealth Avenue in the heart of Virgil Village just south of Silver Lake. The property was constructed in 1980 and therefore not subject to Los Angeles Rent Stabilization – only to California’s less restrictive statewide rent control as governed by AB 1482, whereby the allowable annual rent increase is 5% +CPI as opposed to the blanket 3-4% increase imposed by traditional LA rent control.

Over the past few years, and in particular since the Covid-19 pandemic, we have seen a flight to properties that were constructed after 1978 (non-LA rent controlled properties), as dealing with LA rent controlled properties constructed before 1978 has become increasingly problematic with various city, county and statewide renter protections.

This unique property was in excellent shape and featured spacious 2 and 3 bedroom units averaging over 1,000 SF each, with ample on-site parking and a sprawling backyard often used for concerts. The 1031 Exchange purchaser, who closed all cash with a 30 day escrow, was attracted to the growing dynamics of Virgil Village in addition to the property’s near-stabilized rents. The details of the transaction are below:

536 N. Commonwealth Avenue. Los Angeles, CA 90019

$2,300,000 Final Sale Price
– 4 Units |4,400 SF
– Two and three-bedroom floor plans
– Year Built 1980
– $575,000/Unit
– $518/SF
– 16.2 GRM
– All Cash transaction sold off-market to 1031 Exchange Purchaser

Los Angeles Multifamily

16 Units – Just Closed Off Market | Mid-Wilshire, Los Angeles

1241 & 1247 S. Dunsmuir Avenue.
Los Angeles, CA 90019
16 Units | Just Closed

We just closed a 16 unit value-add multifamily transaction, sourced off-market, which was located on the border Mid-Wilshire and Wilshire Vista neighborhoods of Los Angeles – two of LA’s well-established yet seemingly fast-growing rental submarkets. The property was located on South Dunsmuir Avenue near San Vicente Boulevard, a quiet tree-lined side street with a mix of single-family residential, multifamily (old and new) as well as small lot sub-divisions.

I like this area for a variety of reasons. It is close to major thoroughfares such as San Vicente Boulevard, Pico, Olympic, Fairfax, La Brea and it is a straight shot into popular parts of town like Beverly Grove and West Hollywood. Additionally, the real estate in this area is as diverse as the residents who populate it. As mentioned above, the properties in the area feature everything from new construction, to 1930s Spanish Duplexes, to charming SFRs and 1960s apartment buildings – the list just goes on.

This particular property, originally constructed in 1947, consisted of all one-bedroom floor plans averaging approximately 800 square feet, situated on an R-3 zoned 17,407 SF lot. The property was held by a family operator for over 30 years who like many other LA owners were seeking to transition to a slightly more hands-off investment out-of-state via a 1031 Exchange due to the heightened regulatory environment locally.

The purchasers were attracted to the value-add potential of the property in addition to its central location and proximity to areas like Beverly Grove, Beverly Hills and West Hollywood. The property was delivered with 2 vacancies which the Purchaser plans to renovate and lease at market rent, along with other improvements to the property. The details of the transaction are below:

1241-1247 S. Dunsmuir Avenue. Los Angeles, CA 90019

$4,605,000 Final Sale Price
– 16 Units | 12,364 SF
– All one-bedroom floor plans
– Year Built 1947
– $287,812/Unit
– $372/SF
– 15.3 GRM

Additional Photos:

Los Angeles Multifamily

What $2,750,000 per unit buys you in Santa Monica – 1221 Ocean Avenue.

Douglas Emmett pays a record price for 1221 Ocean Avenue in the heart of prime Santa Monica

I don’t typically write about institutional transactions but this is what I would call a WOW price. Douglas Emmett, a firm that is very near and dear to me, paid a record-price for a multifamily asset in prime Downtown Santa Monica with the purchase of 1221 Ocean Avenue – which is certainly one of the most prestigious multifamily assets on the West Coast with unbelievable ocean views. The Seller was The Irvine Company, who had owned and operated the Class-A property for years. 1221 Ocean was one of a few assets that they own in Los Angeles – outside of their core market of Orange County.

Here are the deal Metrics:

  • $330,000,000 Purchase Price
  • 120 Unit Multifamily Property
  • $2,750,000 per unit
  • $1,800 per SF
  • 98% leased at close
  • 1,500 SF Average Unit Size
  • Closed April 26, 2022
  • Purchased in the low 3% Cap range
  • DE plans to continue to significantly upgrade units and common areas

The deal was purchased via a new Joint Venture managed by Douglas Emmett in which they own a 55% interest. The property is a nice addition to the vast portfolio of Class-A office buildings which they own in the area, in addition to their sister multifamily assets also in Santa Monica – The Shores and Pacific Plaza. Congrats to my friends over at DE on this incredible acquisition!

Los Angeles Multifamily Playa del Rey

Playa del Rey – LA’s Most Low-Key Beachside Community

An LA gem location hiding in plain sight

Playa del Rey is one of those small beach side pockets of Los Angeles that for the most part just flies under the radar.  If you don’t know where it is, chances are you have at least passed it going either to or from LAX or maybe you biked through on the beach path heading towards Manhattan Beach.  It’s not one of those areas like Venice or West Hollywood that people specifically seek out when they move to Los Angeles.  It’s one of those hidden gem locations that really is just hiding in plain sight – its where people move when they still want to be on the Westside but want something that’s a little more quiet and away from it all.

Location wise, Playa del Rey is sandwiched in between Marina del Rey to the north and El Segundo to the south.  And it’s right next to the Ballona Wetlands which is about 600 acres of protected saltwater marsh, just west of Lincoln Boulevard as you head towards the ocean.   It’s about a 30 minute car ride to Downtown LA with no traffic.

The area was established in the early 1920s but most of the homes and apartment buildings in the area weren’t built until the 1950s and 60s.  There’s only about 13,000 residents in Playa del Rey today.  It’s a small community.  Among the more famous residents was Jerry Buss, who owned the Los Angeles Lakers and lived in an area of Playa del Rey called the Bluffs which is perched on a hill and overlooks the Wetlands and the entire Westside.  Former Laker head coach Phil Jackson, also calls Playa del Rey home.  

One of the first things you’ll notice about Playa del Rey is that it’s not really like most beachside communities in LA County.  There’s no bougie aesthetic, there’s no chain restaurants or nationally-recognized coffee shops.  Its an area that has never really cared to be cool, But in a lot of ways it still is.  As somebody who grew up there, I can tell you that not a whole lot has changed in Playa del Rey over the years.  The residents are mostly easy going long-term locals who for the most part have a lot of pride being from the area. 

For such a small community, Playa del Rey has some pretty decent spots to eat.  Going down Culver Boulevard, you have restaurants like Cantelini’s which has been there for 50 years and has really good homestyle Italian food with a Dan Tana’s like vibe in the interior.  There’s Bacari PDR, which is a solid Mediterranean spot – who also has locations in Silverlake and West Adams.  There are also local watering holes like Prince of Whales and Mo’s Place which have been there for decades.  And The Shack, a kind of grimy yet delicious burger joint that will serve you a cheeseburger with a Louisiana Sausage inside of it.  My favorite place is probably the most low key of low key spots – Senor G’s…its a hole in the wall Mexican joint which serves up pretty fantastic Burritos.  

Like most communities near the water, real estate values in Playa del rey have soared over the years.  In the last year alone, there were 73 single family homes which sold in the area with an average price per square foot of $820.  The median home price in that same data set is right around $2 Million dollars.  This is not a geography where you will find $30 Million dollar homes, but make no mistake, it is certainly not cheap to live in Playa del Rey.

If you are renting an apartment, you can expect to pay anywhere from $1,800 – $2,500 a month for a one-bedroom and anywhere from $2,700 to over $4,000 a month for a two bedroom.  

A lot of what is driving the demand for real estate in Playa del Rey is the influx of the tech and media companies which have dominated Playa Vista just on the other side of Lincoln Boulevard.  To name a few, you have companies like Google, Youtube, Facebook, Electronic Arts and so many others that populate those office buildings.  Playa del Rey has in a lot of ways been the beneficiary of the high rent spill over from Playa Vista.  For instance, it is tough to find a one-bedroom for rent in Playa Vista right now that is under $3,000 per month.  So Playa del Rey is positioned as the nearby and more affordable option.

The multifamily investment sales market in Playa del Rey is really no different than single family…the prices are high and there seems to be more demand than available supply.  There’s only about 200 multifamily buildings in the area that are 5 units or larger.  Of those 200 buildings, only four of them are over 50 units.  In other words, this is not an institutional submarket as far as multifamily properties are concerned.  It’s mostly small properties that are 5-15 units with Mom and Pop owners.  And as far as multifamily sales, it’s pretty low velocity.  There were only 3 multifamily properties which traded hands in Playa del Rey in the last 12 months.  Those sales metrics averaged right around $500,000 per unit with cap rates just under 4%.  If you are not in the multifamily space, that is an expensive deal.  Like most Westside buyers, the people buying multifamily in Playa del Rey aren’t really buying for cash flow. They’re buying for appreciation and rent growth – not to mention a stellar location.

As far as development is concerned, there’s really not a lot of it happening in Playa del rey, simply because it’s just hard to do.   In 2018, the LA City Council voted unanimously to block the construction of Legado 138.  Legado 138 is a mixed-use development which proposed 72 apartment units and 7,500 square feet of commercial space right on Culver Boulevard near the water. Local advocates argued that it would trigger a development rush and endanger the culture of Playa del Rey.  

I spent the first 18 years of my life in Playa del Rey and even though I live on the opposite side of town now, I still love going there.  It has a rich history and the fabric of the community is tight knit and well-established.   Location-wise, I like that it’s close enough yet far enough from everything at the same time.  And if you’re a beach person, the ocean is right there.   Let’s be honest, Playa del rey is never going to be Santa Monica or Venice.  And it will it almost certainly never be Malibu.  And that’s what I love about it.  It’s an area that never tries to be anything that it’s not – Playa del Rey just flies under the radar – unassuming and uniquely itself.  

Los Angeles Multifamily

Just Closed – 1540 S. Orange Grove | 8 Units

Mid-City Los Angeles Continues to Stay Hot

Congratulations to the Buyer and Seller of this incredibly well-located 8 unit value-add property located in the heart of Mid-City Los Angeles’ Picfair Village (near the intersection of Pico and Fairfax). This pocket of Mid-City continues to stay strong in terms of multifamily investment sales and overall rental demand. Renovated 1960s-vintage one-bedrooms can easily achieve $2,000+/mo and two-bedrooms $2,800+/mo. For this property – there was approximately 45% upside in rents from current to market.

The Seller, as is the case with many local Sellers, was a generational owner who was fatigued by the ongoing stricter rent control laws and overall government regulation that is typical in the Los Angeles apartment business. They had recently allocated significant capital expenditures towards the completion of their mandatory seismic retrofit – a mandate bestowed on about 15,000 other local LA property owners who own 1960s properties with tuck-under parking spaces).

The marketing of this property saw a competitive process with multiple offers generated for the Seller, and ultimately went to a Buyer with an extensive real estate background. The Buyer was attracted to the overall growth of the area, which includes a 28-Unit new construction project on the two adjacent parcels. Among other things, he plans on immediately renovating the two vacant units – as well as building two additional Accessory Dwelling Units (ADUs) in the tuck-under garage spaces to generate additional income. The purchaser utilized short-term bridge financing to acquire the property.

Transaction Details:

  • $2,200,000 Sale Price
  • $275,000/Unit
  • $364/SF
  • One 2-Bedroom and one Bachelor unit Vacant at closing
  • Financed with private bridge loan
  • 45 day total Escrow
Los Angeles Multifamily

I.D.E.A.L. Benefits of Real Estate Investing

Among the many benefits of real estate investments are Income, Depreciation, Equity, Appreciation and Leverage.

One thing for certain in real estate investing is that different investors have different investment criteria in terms of what they are looking for in a real estate investment. There are investors that buy for cash flow. There are investors that are looking to park money for appreciation and bank on rent growth. There are investors that are looking to buy, renovate and quickly flip out of that investment.

If you are starting out, a great (and simple) place to start when evaluating the benefits of real estate investing is to refer to the old real estate acronym I.D.E.A.L.


If you are buying investment property, at the very least that investment should produce some income in the way of cash flow. On a very basic level, here is how that works. Let’s take the following example for a multifamily property.

$1,000,000 Purchase Price
$80,000 Annual Gross Rents
($32,000) Annual Expenses

$48,000 Net Operating Income
($36,000) Annual Mortgage Payments

$12,000 Annual Cash Flow. Assuming you put down 30% and financed 70% that is about a 4% cash-on-cash return.


Real estate has many incredible tax benefits, but one of the best tax benefits is depreciation. Simply put, depreciation is a non-cash expense (effectively a tax shield) whereby an investor can shield from taxes most or even all of the rental income generated by this particular real estate investment.

Depreciation allows investors to spread out most of the cost of real estate purchases over a period of 27.5 years (for residential buildings). If you own a multifamily property and you have been utilizing the depreciation tax shield for over 27.5 years, you may consider selling as you will likely be paying significant taxes on your rental income. Once your property is fully depreciated, it may be tax-inefficient to own this particular investment property.


As you continue to make mortgage payments towards your investment property, you will continue to pay down the principal balance of your loan. As a result, the longer you own investment property, the more equity you will continue to accumulate both from the principal reduction and appreciation of the property itself.


Over the long run, real estate prices and rent tend to appreciate (i.e. increase in value) at a rate somewhat akin to inflation (~3-4% per year) – sometimes greater in core markets like Los Angeles. This is known as passive appreciation. And while it might not sound like much, when combined with the other benefits and when compounded over long periods, passive appreciation can build enormous wealth.

On the other side of the appreciation coin, is active appreciation. Active appreciation is achieved by actively putting a plan in place to increase the value of your property. In Los Angeles, and in particular with Rent-Controlled properties, this may come in the form of offering cash-for-keys (aka tenant buyouts) for lower paying tenants. Once those units are vacated, many investors will allocate capital towards renovating these units in order to achieve at or above market rents.


Most real estate transactions are acquired using leverage (or loans). The power of leverage cannot be understated in real estate. Taking the example above, you can put 30% down and control a $1M asset. Leverage can significantly amplify the returns on your cash invested. But on the flipside, leverage can also magnify your losses significantly should the market go south.

Accessory Dwelling Units Los Angeles Multifamily

California Housing Bills SB 9 and SB 10 Explained

Duplex Zoning Coming to a Single Family Neighborhood Near You

CA Governor Gavin Newsom this week signed a pair of bills into law that effectively put an end to traditional single-family zoning restrictions in most neighborhoods statewide.

Senate Bills 9 and 10, which take effect Jan. 1, 2022, will make it easier for Californians to build more than one housing unit on many properties that for decades have been reserved exclusively for single-family homes and will give cities greater flexibility to place small apartment complexes in neighborhoods near public transit.

Although the laws represent two new approaches toward alleviating the state’s housing crisis, experts say neither is likely to produce the number of units needed to fully resolve it.

Here are answers to some questions you may have about these new laws.

What is Senate Bill 9?

Senate Bill 9 is the most controversial of the two new laws. It allows property owners to split a single-family lot into two lots, add a second home to their lot or split their lot into two and place duplexes on each. The last option would create four housing units on a property currently limited to a single-family house.

The new law will mark a shift from current policies that allow only two large units — a stand-alone house and an accessory dwelling unit — on single-family lots, as well as an attached junior unit no larger than 500 square feet.

Under the new law, cities and counties across California will be required to approve development proposals that meet specified size and design standards.

What are the caveats?

The law is designed to create additional housing while also preserving low-income, affordable units.

A proposed project under this new law cannot result in the demolition or alteration of affordable or rent-controlled housing or market-rate housing that has been occupied by a tenant in the past three years. Properties listed as historic landmarks or those located within a historic district are off-limits for new development. Wetlands, farmland and properties at high risk of fire or flooding are also exempt.

If someone chooses to split their property in two, each new lot must be at least 1,200 square feet, according to the new law.

Any unit created as a result of the law cannot be used for short-term rentals. They must be rented for a term longer than 30 days.

Who can do this?

Homeowners or landlords can apply to upzone their properties through their local jurisdiction, but only if they plan to live on the property for a while.

Property owners must sign an affidavit stating they will occupy one of the housing units as their primary residence for at least three years after splitting their property or adding additional units.

Does this law allow for offices and new housing units on single-family properties?

No. Any new units created under SB 9 must only be used for residential purposes.

Do cities and counties have to abide by this new law?

Under SB 9, local government officials may only deny a development application if they find that the proposed project would have a “specific, adverse impact” on “public health and safety or the physical environment” and there are no feasible and satisfactory mitigation options.

Will local rules about maximum square footage, building height and parking apply?

Proposals under this new law must adhere to objective zoning and design review standards established by local cities and counties. Developments must still follow local zoning rules such as those governing height and yard size requirements.

No parking is required for additional units if the property is within a half-mile of a major public transit stop. However, a local agency can require up to one parking space per unit if there are no frequent transit stops nearby.

Will this law put a dent in California’s housing shortage?

A recent study by the Terner Center for Housing Innovation at UC Berkeley estimated that just 5.4% of the state’s current single-family lots has the potential to be developed under SB 9, making construction of up to 714,000 new housing units financially feasible. That’s only a fraction of the 3.5 million new housing units Gov. Newsom wants to see built by 2025.

What is Senate Bill 10? 

Senate Bill 10 eases the process for local governments to rezone neighborhoods near mass transit or in urban areas to increase density with apartment complexes of up to 10 units per property. The new legislation also allows cities to bypass lengthy review requirements under the California Environmental Quality Act in an attempt to help reduce costs and the time it takes for projects to be approved.

Originally authored by Maggie Angst of Mercury News on September 17, 2021

Los Angeles Multifamily

Why I love Highland Park, Los Angeles

A lifelong Westsider moves to the Eastside.

I finally did it.  As of February 2021, I moved to North East Los Angeles or “NELA” as the cool kids call it.  You can officially call me an Eastsider.  Specifically, I moved to Highland Park.  If you are in the real estate world locally, you have probably seen deals in Highland Park – or at least you have heard of the area.  And if you already own property in the area, you might be thinking that it is already too late to be buying in Highland Park, let alone writing this post.  But for those that don’t know, Highland Park is an old part of Los Angeles. In fact, it’s among the oldest – one of the very first subdivisions of Los Angeles to be exact. It is located just West of Pasadena, adjacent to Eagle Rock and just north of DTLA.  I spent virtually my entire life on the Westside of Los Angeles. Living east of the 405 was a foreign concept to me. But when it came time to purchase a home, staying on the Westside and paying $2 Million for a 2-Bedroom teardown simply wasn’t an option, so my fiance and I packed up from the Westside and headed East.

Now that I’m here, I can honestly say that I love Highland Park.  Here’s why….

1) Highland Park is Very Accessible 

Highland Park is very accessible to areas such as Pasadena, Glendale, Downtown Los Angeles and the San Gabriel Valley.  I never thought I would hear myself say what a benefit it is to live close to Pasadena, but the fact is that Pasadena is absolutely stunning and has every major high-end retailer you would find in any foremost part of Los Angeles.  From a transportation standpoint, Highland Park is serviced by three freeways (the 110, 134 and the 2 which takes you directly into Echo Park/Silverlake).  The L.A. Metro Gold Line has a station just north of Figueroa Street, and can get commuters downtown in about 35 minutes. My place is approximately a 7 minute drive to Dodger Stadium with no traffic.  

2) The Restaurants and Bars are Amazing in Highland Park 

Drive through Highland Park and you will find some of the best and most unique restaurants and bars in all of Los Angeles.  There are very few chain operators in Highland Park.  Instead you will find spots like Hippo, Homestate, Joy, Donut Friend, Goldburger, Pocha, Gold Line, Good Housekeeping and so many others.  The entire area feels uniquely homegrown and very entrepreneurial.  

3) The Real Estate is Unique And Getting Better by the Day 

From a multifamily standpoint, Highland Park is not the biggest market, but if you own a multifamily property in the area, you can achieve very attractive rents.  For properties 5+ units, there are less than 500 properties in the entire zip code of 90042 totaling just shy of 6,000 apartment dwelling units.  Most of these properties were constructed prior to 1960 – in other words, the housing stock is old.  That said, the average rent for a one-bedroom in Highland Park now is $1,873.  By way of comparison, I am leasing a small renovated one-bedroom in West Los Angeles for $1,895.  A multitude of historic restrictions make it tough to develop in Highland Park, but if you are turning an old multifamily property, you can expect to get very high rents.  From a Single Family Residential standpoint, new homebuyers in Highland Park are folks who are generally priced out of areas like Silver Lake and Echo Park (or in my case, The Westside). It is not uncommon for houses to go for as high as $800 per square foot – which is comparable to some houses you would find in areas like Sherman Oaks, Culver City or Mar Vista.  From a retail standpoint, the main streets in Highland Park (particularly Figueroa and York) are teeming with very cool independent shops and restaurants.  It feels like you are walking down Rose or Abbot Kinney in Venice, although Highland Park seems to have less of a homelessness issue.

4) The People Are Great

The Highland Park crowd is an incredibly diverse mix of established locals and newer transplants alike. There is a strong sense of community and generally speaking people do not seem to take themselves too seriously. You can come as you are and you can be yourself.

Long story short, Highland Park is clearly no secret at this point. Simply put, it is an incredible Eastside Los Angeles submarket where from an investment property standpoint, you can achieve rental rates that are comparable to other high-rent areas around town.  Where Highland Park goes from here, only time will tell.  But I have a feeling that direction is up.

1031 Exchange Los Angeles Multifamily

Mid City LA 8-Unit Sells to All Cash 1031 Exchange Buyer

8 Units Closed in Up-and-Coming Mid-City Los Angeles

We recently represented both the Buyer and Seller of 4606 St. Charles Avenue. Los Angeles, CA 90019. This was an off-market transaction sold by a long-term family owner on the Seller-side to a 1031 Exchange Purchaser. The value-add property consisted of 8 units constructed in the early 1960s located in the heart of Mid-City Los Angeles nestled in between Washington Blvd and Venice Blvd just east of La Brea, which is a very up-and-coming rental submarket.

I have always been a big fan of this particular pocket of Mid-City Los Angeles for many reasons, not the least of which is the location. It is close to major arteries (in this case La Brea, Washington and Venice) and is a short distance to the 10 Freeway and Expo Line which bridges Santa Monica to DTLA. In the immediate surrounding area of this property you will find numerous multifamily properties which have been vastly improved by value-add investors, as well as a spate of newly constructed units and small-lot subdivisions either recently completed or under construction, which target a tenant-base consisting of highly qualified renters who are priced out of areas to the north and west like Mid-Wilshire, Beverly Grove, Culver City, Palms and Pico Robertson.

The purchaser was a local investor who owns a few similar properties locally and was looking to reinvest the proceeds from a sale of another property via a 1031 tax-deferred exchange. 1031 Exchange laws are such that an exchange Buyer has to transact within a certain timeframe or risk paying what could be tremendous capital gains taxes on the gains from the property that they sold. The purchaser plans to slowly renovate the units as tenancies turn and hold long term.

Transaction Details

  • $1,775,000 Sale Price
  • 8 Units
  • 6,508 SF
  • $221,000/Unit
  • $272/SF
  • One 2-Bedroom vacancy at closing
  • All Cash Transaction
  • 21 day total Escrow

See additional photos below: