7
$392,857
$845
3.27%
19.27
6.16%
12.52
The LA Apartment Advisors are pleased to announce the successful sale of a record setting 7 units located North of Wilshire in prime Santa Monica. This 7 units bungalow style apartment is built in the 1920’s and sits on 7,523 square feet of land with 3,254 square feet of building area. The offering boasts an excellent unit mix of five 1-bed/1-bath units, one 2-bed/1-bath unit and one studio/1-bath unit.
While this property faced some intricate challenges such as exceptionally low rents, seismic retrofit requirement and needed a large down payment; we were able to generate multiple offers and find a value-add buyer looking to rehab and achieve market rents as vacancies arise. The asset sold at its full asking price of $2,750,000 which was market leading at $845/SF and over 19 GRM. No other apartment building in Santa Monica has sold close to this price per square feet in the past 12 months.
Additionally, due to the fact that rents were so low in this Santa Monica rent-controlled environment, the buyer was unable to get conventional financing at this purchase price, so through our relationships with short term bridge-lenders, we were able to secure a temporary loan for our buyer while he renovates and raise rents. The buyer was able to get 90% leverage on this transaction. In other words, the buyer only needed a 10% down payment to close escrow.
The seller's motivation to sell this property was to both get rid of management responsibilities and also increase his cash flow through a tax-deferred 1031 exchange into a different income-producing asset. Due to the fact that the seller is a passive "mom and pop" investor and who is now retired, he did not want to put in the hard work required to renovate the units and bring the rents up to market-rate. Through our unmatched expertise in 1031 exchanges, we were able to advise the seller towards a much more lucrative and much less management intensive asset. The seller will using the proceeds of this sale to exchange into the very popular option of a single-tenant triple-net leased property, where he will be more than doubling his net cash flow and getting rid of any and all management responsibilities!
For more information about this transaction, how to increase your income through a 1031 exchange, or a complimentary evaluation of your property, give us a call today!
