A few days ago we closed the sale of 1516 Micheltorena, an 8 unit building in Silver Lake.
Here are the relevant numbers:
- Bought for $954k in September 2010
- Renovated for $645k
- Total capital outlay of $1.6MM
- Stabilized rent roll of $215k / year
- Took roughly $200k in cash out of the building while we owned it
- Sold for $2.1MM gross, a hair under 10x
- Total pre-tax profit of roughly $640k
- Return on investment (ROI) of $640k / $1.6MM = 41%
I was sad to see this one go. The location, just north of Sunset on Micheltorena, is prime. I have zero doubt that I will look back and wish I had not sold the building. However, the tyranny of IRR meant that it was better to sell and take the profit than to re-finance and hold.
One other interesting note: We bought this one off-market and sold it off-market, which is kind of unusual. I feel good about having sufficiently strong broker relationships that I can do deals like this now. It certainly wasn’t always the case!
Best of luck to the new owners!