A Successful Investment Journey Begins
Successful real estate investing isn’t just about buying the right property—it’s about having the right strategy at every stage of ownership.
Total Realty Group recently helped a long-time client navigate the complete lifecycle of a multifamily investment, from acquisition through disposition, while adapting to changing market conditions and evolving personal goals along the way.
Acquisition Through a Reverse 1031 Exchange
The story began in 2021 when our client acquired 5720 and 5730 Yolanda Avenue, two adjacent 20-unit apartment buildings in Tarzana totaling 40 units. The acquisition was completed as part of a Reverse 1031 Exchange, allowing the client to preserve equity from a previous investment while positioning capital into a larger multifamily asset. The purchase also aligned with the client’s long-term estate planning objectives, creating an investment that could benefit future generations.
Executing the Value-Add Business Plan
The property was acquired for $7,750,000 with a clear business plan: improve the asset over time, increase rents, enhance cash flow, and hold the property as a long-term investment. During ownership, the client successfully completed numerous capital improvements and increased rental income throughout the portfolio, creating meaningful operational value.
Changing Market Conditions and Evolving Goals
However, as often happens in real estate investing, market conditions and personal objectives changed.
By 2025, rising interest rates, increased operating expenses, expanding housing regulations, and a slower multifamily investment market had created new challenges for apartment owners throughout Los Angeles. At the same time, our client’s priorities had shifted. Rather than continuing with the remaining renovation program and active management responsibilities, he wanted to unlock equity from the property, pursue a long-delayed personal project, and transition a portion of his wealth into a more passive investment structure.
Positioning the Asset for Sale
When Total Realty Group completed an initial valuation, the results reflected the realities of a changing marketplace. Despite these challenges, our team remained confident in the property’s strengths and developed a comprehensive marketing strategy designed to identify buyers who would recognize the property’s remaining upside potential.
The asset was brought to market, and while the process required patience, strategic price adjustments, and extensive negotiations, we ultimately identified a buyer seeking exactly this type of opportunity: a well-located apartment portfolio with proven operational improvements and additional value-add potential.
A Strategic Sale Structure Creates Significant Tax Savings
One of the most important aspects of the transaction involved the sale structure itself.
Because the property consisted of two separate 20-unit buildings on individual APNs, Total Realty Group worked closely with the seller and his advisors to strategically structure the disposition as two separate transactions. This approach allowed the seller to avoid the City of Los Angeles’ United to House LA (ULA) transfer tax, commonly referred to as the “Mansion Tax.” By carefully planning the disposition strategy, the seller saved approximately $330,000 in additional transaction taxes, preserving more of the proceeds for future investment opportunities.
Facilitating a Successful Closing
In addition to negotiating the sale, Total Realty Group also assisted the buyer in securing financing for the acquisition, helping facilitate a successful closing for both parties.
Ultimately, the transaction achieved much more than simply selling an apartment building. The buyer acquired a 40-unit multifamily investment with future upside and long-term growth potential, while the seller successfully transitioned into the next chapter of his financial plan. He was able to redirect capital toward personal goals, reduce management responsibilities, defer capital gains through a passive investment vehicle, and maximize net proceeds through thoughtful transaction structuring.
The Value of Full Lifecycle Advisory Services
This transaction also highlights the value of having experienced advisors throughout the entire investment lifecycle. From helping our client acquire the property through a Reverse 1031 Exchange in 2021 to strategically positioning and selling the asset several years later, Total Realty Group was able to provide guidance through acquisition, asset management planning, valuation, marketing, tax-conscious disposition strategies, and financing.
Key Takeaways
Every stage of ownership presents new opportunities and challenges. The most successful outcomes often come from adapting to changing circumstances while remaining focused on long-term objectives. Whether acquiring an asset through a 1031 Exchange, executing a value-add strategy, planning for estate succession, or evaluating an exit, thoughtful planning and creative execution can make a significant difference in the final result.
Jason Smith – Total Realty Group – Associate Vice President
253-217-2825 – [email protected]
KW Commercial – DTLA 963 Colorado Blvd Los Angeles, CA 90041