Description

We are proud to present this mixed use property in the MacArthur Park neighborhood of Koreatown, one of the most desired and fastest developing communities in all of Los Angeles. This pocket of Koreatown boasts the second highest walk score in all of Los Angeles (96 walk score), and it is teeming with new development. There are more than 300 brand new apartment units currently under construction or recently built when just looking at the directly surrounding properties. The two next door developments are nearing completion for a total of 130 units. The building directly across the street ("The 900") is a brand-new construction property that was finished in 2021 which has 193 apartment units along with office space and a state-of-the-art gym. Built in 1914, this 12,780 square foot mixed use property sits on a 0.17-acre lot on the corner of Vermont Ave and James M Wood Blvd and is comprised of 14 apartment units on the second and third floors and a ground floor restaurant which is occupied by a successful Korean BBQ restaurant. The 14 apartment units combine for 8,580 gross square feet and are comprised of 10 studio units and (4) 2 bed / 1 bath units. The 2 bed units are currently being rented out by the bedroom with a co-living / shared-bathroom concept. The apartment units are under rented, providing the buyer with almost 40% upside potential in gross rental income. Furthermore, there is a huge opportunity to significantly increase the NOI of the property by implementing a utility bill back system to the tenants. Since the building is master metered for all utilities, the current landlord's utility bills are very high. A savvy buyer would charge the tenants each month for their share of utility costs which would significantly reduce the expenses on the building. We estimate that the Buyer could decrease utility costs by $45,000 per year. When the buyer can fully stabilize the apartments, they could add an estimated $119,000 to the annual NOI with the combination of higher rents and lower utility costs. That is an increase of 64% above the current NOI that can be captured by a value-add investor. The ground floor is approximately 4,200 square feet and is being occupied by a popular Korean BBQ tenant called "J BBQ." This restaurant has been operating out of this location since 2012 when they originally signed a 10-year lease. That 10-year lease is expiring this year, and the tenants have notified the landlord that they will be exercising their first of two 5-year extension options. Per the lease, the rent for each extension option is reassessed at current fair market value. The landlord and restaurant are still negotiating the lease amount, but it will be between $13,000 - $14,000 per month for the next 5 years. The restaurant pays for all their own utilities and handles all repairs and maintenance inside their unit. The landlord is only responsible for property taxes and common area maintenance for the restaurant, keeping the expenses for that part of the building very low. There are two billboards on the roof and additional wall sign that benefit from more than 45,000 cars per day driving through Vermont Avenue. Currently, these billboards bring in an extra $820 per month or $1,640 per year. This corner lot has an excellent LAC2 zoning with the TOC Tier 3 bonus. The C2 zoning allows for 18 units to be built, and the TOC bonus increases that to 34 apartment units that can be built on this lot. The great zoning, combined with significant amount of development going on next door, shows the buyer that the long-term strategy for this lot could be redevelopment. In the meantime, a savvy investor would consider building extra units on the current parking lot. You could build 2 detached ADUs on the parking lot, or better yet you can build 4 by-right units there using the C2 zoning.