Every real estate transaction tells a story and the sale of the five-unit property at 1149 W 88th St in South LA is no exception. We initially made contact with the owner over the phone. We discovered that she was interested in selling this property and exchanging into another that was closer to her new home and has the same cash flow or better. Once we had a sense of the owner’s goals, we began to work on an investment analysis of the Subject Property and we initiated a search for suitable properties for the exchange upleg. We agreed on a listing price-$1.175 million- with our client, signed an agreement and immediately began marketing the property. We put the listing on all of our social media accounts, the MLS and Loopnet of course, blasted our sizable database of principals, and phoned owners that own in the area.
The property we listed was a gem. It featured three “California Bungalows” and two units over a garage-all kept in very good condition both inside and out. Plus, it was occupied by Section 8 tenants with strong rents. Our client is an effective property manager when dealing with Section 8 tenants and was able to increase rents in a very challenging post-pandemic Los Angeles area rental market. As a result, 88th St had appeal as an investment that it otherwise would not have.
Three offers came through in fairly short order but none quite measured up to what our experience showed the market could command. The Seller agreed. Not too long after a buyer emerged that had been active in the area buying properties of this size and investment profile. The buyers had done their homework. They saw the value in the property and escrow was opened at less than one percent under list.
The seller insisted the property would be sold in its As Is condition and though the buyer was aware of this, after a physical inspection, they still asked for an aggressive credit through a request for repairs. As brokers, we negotiated that we previously stated that the property would be sold in its As Is condition with no credits. After multiple days of back and forth, we remained firm and no credit was given. The appraisal was consistent with our valuation and the lender produced loan docs without incident.
The deal closed at $1.170 million, resulting in a 12.27 Gross Rent Multiplier and a 5.9% Capitalization Rate. It was a testament to the strength of the property, the Seller, and the South Los Angeles real estate market. The sale was a memorable journey. It highlights the importance of persistence, thorough research, and skilled negotiation in the real estate world. It was a pleasure to work with our client, and I’m excited to see what the future holds for all parties involved.