James wood &Arapahoe25-Unit Community in Koreatown
Just west of downtown and one of the city’s most desirable, and densest areas.
These two buildings were purchased at an exceptionally low cost, with strong metrics. In addition to being acquired 25% below value, there was in-place positive cashflow and significant upside in rents.
The unit mix on these two properties is ideal, with studios, one and two-bedroom units, giving more options to potential residents.
The tenant profile is young professionals working downtown in the tech and entertainment industries, and blue collar professions.
2960 James M Wood & 934 Arapahoe St.
This 25-unit multifamily property was built in 1909 & 1923, and features studio, one, and two-bedroom units with on-site parking.
- Occupancy at takeover 100% 100%
- Value-Add Rent Growth 54% 54%
- Average Annual Sub Market Rent Growth 5% 5%
- Average Sub Market Occupancy 96.3% 96.3%
Today this sprawling, three-square-mile community just west of downtown has become one of the city’s hippest areas thanks to the continuing renovation of its rich architectural heritage, a new subway traversing its Wilshire Boulevard hub and recently opened boutique hotels like the Line and Normandie. As the most densely packed part of Los Angeles, it’s also one of the city’s most strollable, with Art Deco buildings and palm-lined boulevards.
James Wood & Arapahoe were purchased in tandem at the end of 2018. What really made this deal interesting was the exceptionally low-cost, and strong metrics, we were able to purchase at for the area. This was purchased for $229 per sqft, well below the submarket average of $304 per sqft.
Since our purchase at the end of 2018, we’ve completed multiple projects, including an exterior and interior renovations. Due to the increase in income, we we’re able to successfully refinance this property at the end of 2019, returning a large portion of capital to our investors after only 12 months!
We expect to exit this project in 5-7 years, with an equity multiple greater than 2.0x and an average annual return of +15%.