Need some opinions about this value add deal
Hello, I would love to hear some opinions from you guys about this value add multi family deal in Beverly Hills for those who know the area.
341s elm dr.
6896 sqft, 6 units
2 3/2 rented for 2780 and 2600 a month
2 2/2 rented for 2110 and 2040
1 1/1 bot rented for +- 1500
Bed/bath
Owner asking: 3250000
Gross income: 138410
Expenses: 39419
Property tax: 18849
NOI: 80142
The building needs a few updates to bring the rent to market price.
I could be a redevelopment opportunity too.
Most Popular Reply
@Othmane Khayatey
@Chase Louderback
So this area is INSANE! Well relative to what I'm used to seeing on the EC. Market caps are posted at 4 but the comps show a crazy cap of around 2!! So relative to market its actually a deal (as I slowly shake my head in total disbelief that I just said that). A comp just sold 2 blocks over at a 2.79% cap at a whopping $770,000/unit or a cool $5.4 mil.
I'm not sure if this affects this property but the regulations on rent growth in parts of LA, I know are capped at 3% a year, this seriously affects your upside because no matter how much you improve the property, cash flow growth will be capped. Your only hope is improving terminal value.
Surprisingly, the current rents are actually below market, if you can believe it. That submarket is currently reading at around $3800 for 3/2, $2900 for 2/2, and $2100 for 1/1. BUT...remember the rent growth ordinance.
If you have the cash to play, I say play away.