Apartment Beverly Hills – 320 S Reeves

Apartment Beverly Hills – 320 S Reeves

Multi-family Apartment Building.
Approx. 5776 Sq. Ft.
6 units | 8 beds | 7.75 baths.
320 S Reeves, Beverly Hills, CA.

THE FULL STORY

Spotting Value

1204N was acquired with a view of transforming it into a high end rental or my personal residence. This Bank of America REO 1 bed, 853 sf property was impacted by the fallout of the 2007-2009 Great Recession and as such was acquired all cash on an as-is basis. The building itself was struggling financially with many notices of defaults, making it hard to secure financing but this is often where value can be created.

Spotting Value

Our solid reputation in this industry is something that we have spent decades creating. So when we say we want to make a deal, we tie it down and close. We had previously done a deal with this broker and there were certain sensitivities that would have required the buyer (us) of this property to stick through the challenges as the deal was closed.

The cost for us at the time of the acquisition was quite favorable which meant that a good return would be achieved from the start. There were also value add components that enabled us to extract more value out of the deal. Each unit had its own parking which is what the market pays a premium for.

s reeves dr ca outside side view before renovations
multi-family apartment in beverly hills ca, outside front view with side entrances, real estate investment
multi-family apartment in beverly hills ca, outside view of side entrance at night, real estate investment

Investment Outlook

This multi-family apartment unit was covered under rent stabilization so that put a limit on the rental amount that we could increase every year. At that time, this was not as restrictive as rent control so that didn’t deter us since we invest in properties with a long-term view to minimize risk.

1200 wilshire
256 26th street

Condition at Purchase

Since it was purchased on an as-is basis, the property’s characteristics at that time weren’t great but we sensed that there was value there to extract. This was a unique unit situated on the 12th floor with a great 180-degree view. It also had a balcony. The banks were assigning value to this unit compared to others but that wasn’t exactly a fair comparison owing to the dynamics at play here. We saw inherent value.

The property’s condition at purchase was less than ideal. There was mold, outdated Formica countertops, and floorings that had been laid on top of floorings over the years. The unit’s hallway was a waste of space that could have been better utilized as closet space (a desperately needed addition) or a small den. Everything was in need of updating but there was plenty of space to execute that plan.

Condition at Purchase

We knew that within the next 3-5 years, all rents would gradually be increased up to market level. We set out to update the units and managed them really well. The gradual increase of the rent to market value elevated our bottom line. The units were dated and needed to be revamped, at least cosmetically.

s reeves dr ca outside wide view before renovations

How We Added Value to the Property

We renovated the units with cool white tiles to achieve a fresh and modern look. Katia Aryeh brought great design ideas to the table. We painted all of the cabinets white to achieve an open and clean look. Added super cool sconces to the units. The yard was cleaned up, the facade was painted and the doors also got a fresh coat of paint. Giving this older building a fresh Mediterranean look was exactly what it needed and the rents we started to get proved that.

1200 wilshire
256 26th street

Our Confidence

Despite the dilapidated condition of the property, we were confident that this was an up-and-coming neighborhood that was evolving into even a more vibrant community. The younger demographic would result in a spike in demand for modern homes.

We capitalized on that opportunity to build out the property and it has eventually proven to be a hidden gem – and honestly one we should have kept.

What We Were Confident About

Despite the dilapidated condition of the property, we were confident that this was an up-and-coming neighborhood that was evolving into even a more vibrant community. The younger demographic would result in a spike in demand for modern homes.

We capitalized on that opportunity to build out the property and it has eventually proven to be a hidden gem – and honestly one we should have kept.

1600 west plano parkway

What We Were Confident About

Our play here was to add value through renovation. Since the entire building had been acquired at such a great cost due to the all cash offer, we were a bit ahead of the game with returns. In terms of IRR metrics, this was probably one of the best deals we have done. The rents were low so we did make renovations in line with our projections for rental increase.

The entire property was sold 1.5 years after it was purchased for a great return on investment.

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