What an Operator Sees
There is no complicated story here. The buyer paid $145,833 per door for 72 apartments in Canoga Park.
The property has 36 one-bedrooms and 36 two-bedrooms. If the one-bedrooms can eventually average approximately $1,800 and the two-bedrooms $2,200, the building could generate around $144,000 per month, or $1.73 million annually.
Using a 35% expense ratio, that produces an estimated stabilized NOI of approximately $1.12 million. That is a 10.7% potential cap rate on the $10.5 million purchase price.
On paper, that is a 6.1 GRM. I think the buyer went in around a 9 GRM with some solid upside.
But this is a 1963 RSO building. The real questions are the current rent roll and how many years it takes to reach those rents. This could be an excellent basis play, but most of the upside will depend on patience and the owner’s ability to turn units legally over time.
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.