In Escrow – 7-Unit Property in an Opportunity Zone

In Escrow – 7-Unit Property in an Opportunity Zone

Josh Barut of Lyon | Stahl Investment Real Estate opened escrow on 6363 Cedar St, a 7-unit property located in Huntington Park!

The property is a 7 unit apartment building in the red-hot Southeast LA submarket with NO RENT CONTROL. The property also lies inside of an Opportunity Zone.

This property boasts a desirable unit mix consisting of (1) 3-bed/1.5-bath, (1) 2-bed/1.5-bath, and (5) 2-bed/1-bath units and a total square footage of 6,912 square feet. Each unit has its own garage and walk-in closet, and the master unit has (2) of each. The interiors are well maintained with capital improvements and there is little-to-no deferred maintenance on the property.

This property has excellent financials with upside to achieve more. The current CAP Rate is 4.85% with an achievable market CAP of 6.42%. Additionally, the current GRM sits at 13.12 with a market GRM of 10.83. With regards to what has sold in the area, these numbers put this opportunity at the forefront.

In this Southeast LA submarket, the combination of low vacancies, healthy rent growth, below-average prices, and proximity to Downtown has drawn the attention of investors priced out of other parts of LA.

 

 

Investment Highlights:

• Desirable unit mix consisting of (1) 3-bed/1.5-bath, (1) 2-bed/1.5-bath, and (5) 2-bed/1-bath units
• Each unit has own garage and walk-in closet (large unit has 2 of each)
• No Rent Control/Opportunity Zone
• Southeast LA/Huntington Park sub market’s vacancy remain near all-time lows while maintaining healthy rent growth year by year
• Current CAP – 4.85, Market CAP – 6.42
• Current GRM – 13.12, Market GRM – 10.83

 

The Mid-cities/Southeast Los Angeles market sits next to red-hot Downtown LA, and evidence suggests thatDowntown’s momentum is beginning to have an impact here. Vacancy rates remain near all-time lows at about 3% and have showed consistent decline for most of the post-recessionaryperiod. Low vacancies have translated into healthy rent growth in recent quarters, and rents continue to grow faster than the metro average, although rent levels remain among the metro’s lowest. Apartments here are generally smaller, older, and less luxurious than in other parts of LA.

The combination of low vacancies, healthy rent growth, below-average prices, and proximity to Downtown has attracted investors priced out of other parts of town. Midcities/ Southeast LA has ranked near the top of the metro in both number of units traded and total transactions for several consecutive years, and average per unit pricing has jumped nearly 65% since 2012. The combination of low property values and proximity to the booming Downtown area has helped drive investment.

 

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