7108 Amigo Ave, Los Angeles

this record breaking, new construction apartment building sale in Reseda, CA.

Property Overview

This 38,276 sqft apartment building sits on a large, corner lot of nearly half an acre, and it was built in 2017, meaning it is not subject to any rent control (state or local). The property boasts an excellent unit mix of (3) 1 Bed / 2 Bath Units, (30) 2 Bed / 2 Bath Units, and three of the units are designated for low income tenants, and all three of those are 2 bed units.

Deal Story

The seller for this property, who developed it himself in 2017, reached out to us in early July 2021 and asked us to put together an opinion of value because he was considering selling and exchanging. After touring the building, reviewing the property's historical financials, and analyzing nearby recent sale comparables (many of which we sold ourselves), we advised the seller to list the property at $12.0M, which came out to a 4.10% CAP rate per our underwriting. In our opinion at the time, that CAP rate was right in line with where we thought it would sell because the property was brand new with very little upside in rents. Also, it goes without saying that Reseda is a decent location, but it does not compare to better San Fernando Valley locations like Studio City or Sherman Oaks where we have been able to achieve many sub-4% CAP rate prices on brand new construction properties. At our suggest list price, the price/unit and price/sqft fit very well into the recent sale comparables in the area and if anything was slightly aggressive comparatively. Luckily for the seller, he did not agree to list at the price and instead urged us to revisit our numbers because he thought the building was worth at least $13.0M. Per the seller's instructions, we sharpened our pencils and tried to figure out how we could push the list price to the highest level we could while still feeling comfortable enough that we'd get interest and offers from the market. We ended up agreeing with the seller to list the property for $12.9M, and we hit the market on July 28, 2021.

In less than 2 weeks after the start of our marketing, we were able to generate 8 different offers, all from very qualified buyers, and 2 of those 8 offers were at our full list price of $12.9M. Of course, we were extremely pleased with the activity and offers we were able to generate on this listing in such a short period of time, but what we didn't know is that behind the scenes the seller was starting to have cold feet. Two weeks...