5541 Fulcher Ave, North Hollywood

the successful sale of this 14 unit + 1 non conforming unit multifamily property at 5541 Fulcher Ave, located in the very desirable NoHo Arts District neighborhood.

Property Overview

Built in 1990, this property is free of LA's strict rent control laws, and is only subject to California's AB-1482, which limits annual rent increases to 5% + CPI. This 4 story, 16,086 square foot property sits on a 0.23 acre lot, and it boasts an excellent unit mix of (9) 1 Bed / 1 Bath units and (7) 2 Bed / 2 Bath units.

Deal Story

We listed this property for a longtime client of ours in late January 2022. After sending our initial "just listed" email announcement to 20,000 brokers and principals, we were able to generate a significant amount of activity in a short period of time. Within 2 weeks, we had multiple offers from qualified buyers. The best offer came from our good friends and fellow Marcus & Millichap colleagues, Sam Liberow and Max Gersht from The Liberow Group, who were representing a very good buyer client of theirs that they've closed many deals with before. This buyer of theirs targets properties that are not subject to LA's rent control, meaning they are looking for properties built after 1978.

We opened escrow about 2.5 weeks after the start of our marketing at $5,750,000 with great seller-friendly terms, including 1031 exchange friendly terms that we try to negotiate into all our sellers' contracts that are planning on exchanging. The terms we were able to achieve were: a short 7-day due diligence period, no finance or loan contingency (but buyer was allowed to get a loan), buyer's 3% deposit would be released out of escrow after the 7-day due diligence, Seller would have 2 options to extend the close of escrow by 30 days each (in case the seller needed extra time to find their exchange property), and we were able to get the buyer to cooperate with the Seller after close of escrow to return any COVID delinquent rent that the Seller was owed.

A couple days after we opened escrow, the Buyer had their chance to fully inspect the property using a professional inspector. When we got the inspection report back, we found out that this seemingly well-maintained building has some deferred maintenance issues. Although the seller took great day-to-day care of the property, many of the major systems had not been upgraded or replaced since the seller built the property in 1990, 32 years ago. According to the buyer’s inspector, the roof, A/C units, and...