SUCCESS STORY
Sold at 4.25% CAP & 12.69 in 90 Days in Palms
10883 Rose Ave.
During the due diligence period, they discovered that the actual operating expenses were significantly higher than initially estimated.
Price
$
4,650,000
City
Palms
Current Cap Rate
4.25
%
Price P/ Unit
$
465,000
Lot Size
8,015
SF
10883 rose
About the Property
10883 Rose was a well-maintained complex in the heart of Palms, that was not subject to City of LA rent control. The exemption from City of LA RSO allowed for an 8.8% annual rent increase. Built in 2000, the property featured (10) 2-bdrm. and 2-bath units that had been upgraded with wood laminate flooring, stainless steel appliances, quartz countertops and recessed lights. Property amenities approx. 20 subterranean parking spaces, a community laundry room, and controlled access.
Price
$
4,650,000
City
Palms
Current Cap Rate
4.25
%
Price P/ Unit
$
465,000
Lot Size
8,015
SF
Background
Built in 2000, 10883 Rose was a 10-unit complex exempt from the City of LA's Rent Stabilization Ordinance (RSO). The exemptions provided a significant advantage, as approx. 75% of LA's multifamily properties are subject to RSO restrictions. The ability to increase rents annually by CA's maximum of 8.8% (5% + CPI), compared to LA's rent cap of 4%, made the property particularly attractive to investors seeking greater flexibility and enhanced income potential. The property's owner, a long-time client of Kenny's, wanted to diversify their LA real estate portfolio.
Result
In mid-October, we went under contract with an outside agent representing an all-cash exchange buyer. During the due diligence period, they discovered that the actual operating expenses were significantly higher than initially estimated. Despite this discrepancy, the buyer remained deeply interested in the property, ultimately closing escrow in 30 days at 97% of the listed price - $4,650,000. The seller plans to exchange into an out-of-state DST, significantly boosting his income stream. Meanwhile, the buyer recognized the value-add potential in this newer construction property, and intends to optimize expenses through more efficient prop mgmt. practices.
