Checking in on the East Hollywood income property market

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I’m on the record repeatedly extolling the virtues of owning in East Hollywood. I generally think owners there underestimate the achievable rents and that buyers can therefore occasionally find deals that makes sense, even at today’s inflated prices.

Today, I figured I’d check in on the income properties on the market in East Hollywood to see what I can see. Note that, for the purposes of this piece, I am using the LA Times neighborhood map for East Hollywood but excluding the area to the west and south of the 101. Why? Because I don’t think those areas have the same appeal to tenants as the areas closer to Silver Lake.

Here’s a map of the area under consideration:

As of November 25, here are the numbers on 2-4 unit income properties in the area:

  • 12 total properties (excluding what is technically a duplex on Sunset but which is being used as a commercial property currently)
  • Median price per square foot of $249
  • Median gross rent multiple of 14.6 (ludicrously high, in my opinion)
So, what’s going on here? A few thoughts:
  • Some of these properties have been sitting on the market for a while (for obvious reasons)
  • Because these are 2-4 unit deals, its conceivable the sellers / brokers are hoping that an owner occupier will come along and over-pay because they fall in love with the property (don’t be this kind of sap, please!!)
  • Brokers and owners may be becoming aware of what is possible rent-wise, but don’t have the means or the energy to remove their rent controlled tenants. So they are pricing the properties without regard for the rent control and hoping a buyer stupid enough to ignore the rent control will come along (this happens, believe me).

Big picture: If landlords in East Hollywood are going to ask Silver Lake prices, so might as well just buy in Silver Lake.

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