Corner of Hollywood and Vine
Hollywood is cited as the #1 hot sub-market in the five county Southland. Much of this reputation is due to the massive residential and commercial developments under construction near Hollywood Boulevard and Vine Street.
These projects include the new W Hollywood Hotel and Residences just east of Vine Street and a huge retail complex including anchor tenant Whole Foods Market at Vine Street and Selma Avenue. Loft buildings, including the Hollywood Lofts and the Broadway Lofts, have brought residents to create a vibrant live-work-play neighborhood.
5623 Virginia Avenue
There were ten sales of income properties in the 1st quarter of 2009. Four out of ten were bank-owned (REO) properties; one was a short sale.
Over-leveraged investors clearly mismanaged their assets, and new buyers were able to swoop in and purchase these income properties on excellent terms.
1238 Kenmore Avenue
5623 Virginia Avenue, an Art Deco 11-unit building, sold for $965,000, generating $110,000 annual income. 1238 N Kenmore street, an 8-unit building from 1954, sold for $900,000, earning $82,000 annual income. The gross rent multipliers (GRM) are 8.8 and 11.0, respectively. (Neither was an REO).
Because many of the buildings have vacant units, unpublished rents (properties are sold as foreclosures) or have rents substantially below market rate, it’s difficult to extract meaningful cap rates or GRMs from the data. However, the most dominant trend is that REOs are “making the market” and establishing a new, lower baseline for pricing.