The Location
Romaine Street sits in the interior of East Hollywood, the ZIP 90029 pocket that runs east of the 101 and north of Santa Monica Boulevard. The median household income of $56,640 means rent growth is hard here although this specific building has a lot of upside.
The Setup
Total building is 15,406 SF on a 9,743 SF lot.
Parking is 12 covered stalls.
4 units carry no parking.
The Math the Broker Was Pitching
The broker listed at $2.495M. CoStar confirms the 10.5 GRM is computed at close on current rents. Backing out the implied gross: $2,325,000 divided by 10.5 equals $221,429 in annual gross rent, or $1,153/month per unit. That is the rent roll this buyer purchased.
| Scenario | Avg Rent / Mo | Annual Gross | GRM at $2.325M |
|---|---|---|---|
| In-place (at close) | $1,153 | $221,429 | 10.5 |
| Submarket market rent (CoStar) | $1,856 | $356,352 | 6.5 |
| Broader market rent (CoStar) | $2,366 | $454,272 | 5.1 |
LOTS OF UPSIDE
What an Operator Sees
Four units have no covered parking. The record shows 12 for 16 units.
The owner has an opportunity to turn this into a cash flowing building.
I talked to the broker when this came out and offered around a 9 GRM because it had upside rent. Glad to see it got sold.
I'm researching the market to make better investment strategies. I'm sharing what I find along the way with other investors to have discussions, debates and help make better decisions.
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Property and transaction data: CoStar Research.