AB1482 at $714K/Door in Manhattan Beach

The Setup

Eight units across 7,347 gross SF on a 5,886 SF lot. Two stories and no elevator. The unit mix is  two-bedrooms (5 of 8 units), with one studio at 533 SF, one one-bedroom at 708 SF, and a four-bedroom unit at 1,563 SF .  Average around 967 SF.  

What an Operator Sees

Zislis paid $5.0 million — about $714,000 a door on CoStar's seven-unit sale math — for a 1974 AB1482 walk-up two blocks from the Manhattan Beach Strand, at a 5.29% current cap and a 13.72 GRM.

In most of Los Angeles I would look at that GRM on older rent-controlled stock and move on. Here you are not buying the income cheap. You are paying a premium for Manhattan Beach dirt — the land assessment alone is most of the price — and betting location protects the basis.

CoStar's sale is seven units; the building tab shows eight. I am using seven. I would pass at a 13.72 GRM almost anywhere else. This sale is the reminder of how expensive even RSO becomes when the land underneath it is Manhattan Beach.

I research these transactions to sharpen my own investment strategy and share what I find so Los Angeles owners, brokers and investors can debate the market with better information.

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Property and transaction data: CoStar Research.