Results for ‘Real Estate Math’ category

Why there are vacant lots in Los Angeles

Have you ever wondered why there are vacant lots in Los Angeles? Blame Prop 13. Proposition 13 is an amazing law for California property-owners. Passed through CA’s referendum process in the late 1970’s, Prop 13 sets property tax at 1.25% of a property’s original purchase price and restricts increases to 2% per year (until the

The state of the West Hollywood apartment market

Today I spoke with a broker who has an eight unit property in West Hollywood listed at a somewhat reasonable $187,500 / door. I say somewhat reasonable because the gross rent multiple is 15x. At a list price of $1.5MM, that means the property is generating rents of $100,000 / year. The rents are obviously

Adding washers and dryers to your units? Careful!

One of the best ways to add value to an apartment building is to add washers and dryers to the units. Why? Because tenants will typically pay $100-150 / month in rent in order to avoid using shared laundry rooms or, worse, going to laundromats. The math is easy: $100 / month in extra rent

Are LA apartment building prices entering a bubble?

Recently, prices for apartment buildings in Los Angeles have been increasing rapidly. 12 months ago, you could find buildings in improving neighborhoods for less than 10x annual gross rents. Now, the range is more like 10.5-11.5x for larger buildings and up to 14x for smaller buildings. Inventory in all asset sizes is also very slim

One of the ways a bad broker kills a seller

When you list your rent-controlled apartment building for sale, your broker will almost always include what are called “pro forma” or “market” rents in the listing published on Loopnet and the MLS. These are the rents the broker believes the units would achieve were they available on the open market. Getting them wrong is one

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