Great Deal Alert
First off, I know that the words “South Central” will be a non-starter for some people, and I hesitated to even send this out based on that.
But, as I comb the landscape for anything and everything in the market place that makes sense, I keep coming back to this one. Basically, it checks out as an awesome acquisition in every respect, as follows:
a) the cap rate and the cash flow are ridiculously good. It is a true 8.6 cap (subject of course to due diligence) and, at $800,000 cash outlay,
it will cash flow at a fantastic 17% or $12,000 a month or $144,000 annually.
b) the big question, of course is, will the condition of the property or the behavior of the tenants eat up a lot of that cash flow? Once again, it
is subject to due diligence of course, but by all outward appearances, the answer is ‘no.’ If one looks on ‘Bldg and Safety’s’ site one can see that a lot of
renovations have been done recently with permits. And, importantly, they have installed brand new electrical throughout the building. I have toured
the building and have seen the interiors and have met some of the tenants. All looks good to me.
c) Is there any ‘value add’ opportunity? Yes there is, in two ways: first, there are 4 units that are well under market rent where rents can be raised every year.
Second, there is a large area of land where at least four (maybe more) ADUs can be built.
As far as the neighborhood, I have already told you the general location. But when I visited the property I was impressed by what has been going on on this particular street. There are
several brand new builds right on this street that look very good and the remaining dwellings have pretty good ‘pride of ownership.’ This property in particular has
very good curb appeal.
As always, if you want it or want to know more about it, give me a call and I will be happy to help you out.
