1541 S Hayworth Ave, Los Angeles

the successful sale of 1541 S Hayworth Avenue in Los Angeles, California.

Property Overview

The Site is 6,850 square feet in total and it is zoned R3 & TOC-3, which would allow for a maximum of 16 units to be built. However, the seller of this property entitled it for only 10 units in order not have to build subterranean parking, saving on construction costs. The sellers plans, which are very close to full RTI status, still needed to use the TOC bonus to get to 10 units, which forced 3 of the 10 units to be restricted to affordable housing.

Deal Story

We were introduced to the seller a few months ago to potentially list this project as an RTI development to build 10 units. However, after reviewing the seller's plans, we quickly realized that he was not optimizing the land's value because he was limiting the development to only 10 units, 6 less than the maximum allowed per the zoning and TOC bonus. Furthermore, the seller could have chosen to build 9 full market-rate units by-right, but he was overly concerned about subterranean parking costs so he decided to utilize the TOC bonus in order to lower the parking requirements. However, instead of pushing the TOC bonus to 16 units, he only added 1 unit above by-right zoning, which ultimately cost him 2 market-rate units because his 10 units would have included 3 affordable units. We advised the seller to not go through with pursuing full RTI status with his plans, and instead we urged him to allow us to list his property as raw unentitled land so that we could market the property to it's highest and best use.

As we were preparing to go to market, we received a call from a client of ours asking for us to find him something to buy for a 1031 exchange that he was in. This is a type of call we receive almost daily. Since we consistently have dozens of listings on the market at any given time, and we average almost 2 new listings per week, we often receive calls from 1031 exchange buyers or brokers asking us what we have newly listed. This is another reason why our clients hire us to sell their properties because we always know who the exchange buyers and brokers are at any given time.

During this phone call with our exchange client, we found out that he coincidently owns 1537 S Hayworth, the lot directly next door, and he was in the process of getting plans to develop his lot into a 16 unit apartment building (maximizing his density). Our client decided that he was willing to entirely scrap his plans that...