A LA Multifamily success story in Koreatown
Sometimes S*** can Hit the Fan...
1144 Elden Ave.
When s*** hits the fan, we stay cool, calm & collected. You're going to want to read this story...
Offering Price
$2,310,000
City
Koreatown
Current CAP
6.67
Price per unit
$192,500
Lot Size
7000 SF
1144 Elden
Offering Price
$2,310,000
Number of Units
12 Units
Bldg. Size
SF
Price per Foot
$
Year Built
1986
Market CAP
9.43
Zoning
Background
1144 Elden was a 12-unit property not subject to LA City rent control. Built in 1986, the property allowed for an 8.8% annual rent increase, and was located in an opportunity zone by Koreatown. Comprised of (6) 2-bdrm. and 1.5-bath units and (6) 1-bdrm. units, these units offer approx. 34% rental upside compared to renovated units in the area. 1144 Elden was offered at $307 per foot, $250,000 per unit, 9.42 market GRM, and 7.19% market CAP.
Matthew Hoult of Aaron Kirman Group, who had an established relationship with the property's out-of-state beneficiaries, contacted us to help them cash out. The property had accrued significant deferred maintenance since the family developed it; however, it held a unique advantage. 1144 Elden was not subject to City of LA rent control.
Challenge
We knew this property would attract tons of interest. But once we started marketing... that's when s*** hit the fan. The on-site property manager (who lived there rent-free) "claimed" he was owed money in the event of a sale. With our trusted network of experienced vendors, we recommended an attorney who successfully resolved the situation. We were in escrow a week after the resolution, only to discover an affordable housing covenant that should have been removed decades ago. This covenant restricted 10 of the 12 units to low-income housing!
Result
Over the next 9 months (filled with TONS of follow-up calls), we worked with land use attorneys and the City of LA to REMOVE the affordable covenant. Shortly after, a buyer approached us with an all-cash, non-contingent offer. Given the amount of deferred maintenance, we suggested to the Buyer that he tour the property first. The inspection was a win-win for both parties, it minimized our Seller's exposure, and gave our Buyer an in-depth look at the property. The Buyer still returned with an all-cash, non-contingent offer, and closed escrow in 60 days.
