8827 Van Nuys Blvd, Los Angeles

Initially, we put the property on the market at the start of 2022, at a time when interest rates were more favorable. We soon attracted multiple offers and entered into an escrow at the full asking price with a buyer looking for a 1031 exchange. Despite removing all contingencies and preparing for a close, we encountered delays in obtaining our Certificate of Occupancy. This led us to cancel our full price escrow, withdraw the property from the market temporarily, and then relist it at the beginning of 2023.

We finally secured our Certificate of Occupancy on March 15, 2023. Following that, we needed to focus on leasing the vacant property so that we could offer a stabilized and an easier-to-sell property to the marketplace. We advised the property owners to hire our go-to leasing agent, Heidi Li from SKPM Group, for the leasing process, and also had them engage Peek who would create virtual, self-guided tours to prospective tenants. After leasing up the majority of the units at great rents, we returned to escrow on April 17, 2023, with a selling price of $3,360,000. The transaction eventually closed with a brief hold-up due to the lender's requirement for 'seasoning' all nine units. The buyer secured a 5-year Freddie Mac loan with an interest-only rate of 6.42% for the initial three years and a minimal prepayment penalty period of three years, providing an opportunity for refinancing when rates decrease.

Even though interest rates have climbed substantially over the past year and a half, we mitigated some of the increased financing costs by securing higher than anticipated rents. This strategy is effective for new construction and AB1482 properties, as they can offset financing costs through rent increases. This is not the case for RSO (Rent Stabilization Ordinance) properties, which constitute nearly 80% of Los Angeles's housing stock. RSO properties have not seen any rent hikes in the last three-and-a-half years, negatively impacting their market value.

Sale