Challenge
The client’s objective was to complete a 1031 Exchange on their two Los Angeles multifamily properties, which totaled 30 units. The goal was to sell and reinvest their proceeds into an asset that required less management responsibility in a better location. With potential deals on market boasting inflated returns, the Matthews™ team worked diligently to provide accurate projected returns. During this time, besides looking at properties on-market, the team also found the clients several off-market opportunities from owners with reputations of well-maintained assets to ensure less management responsibility moving forward.

 

Strategy
By utilizing the Matthews™ 1031 Exchange Program, the clients were able to accomplish increased cash flow, less management responsibility, and purchase properties in great locations for superior appreciation. Through daily communication and diligent collaboration with the clients, the team presented a five-unit apartment building in Koreatown and another ten-unit apartment building in Sherman Oaks. Matthews™ generated multiple offers for both properties the clients were selling, allowing for optimal terms and a great price on both properties being sold in South Los Angeles.

 

Results
The Matthews™ team was able to achieve a mutually beneficial outcome. The winning bidders pursuing the 30 units in South Los Angeles submitted competitive non-contingent offers, resulting in quick close of escrows. This was crucial so the team and clients could now focus their energy on submitting competitive offers on their exchange properties and ultimately find their perfect properties in Koreatown and Sherman Oaks. The successful 1031 Exchange resulted in the clients increasing cash flow by $30,000 annually, acquiring properties that were 40 years younger than the properties they sold, and went from a C market in Los Angeles to B and A markets. In summary, this 1031 Exchange from 30 units in South Los Angeles to 15 units in better Los Angeles locations with higher income and less management responsibilities, resulting in clients being extremely pleased with the overall outcome.

 

SOLD PROPERTIES

4309 S Main Street, Los Angeles, CA 90037

Units: 20
Built: 1924
Square Footage: 9,408
Final Closing Price: $2,300,000

3906-08 Montclair Street, Los Angeles, CA 90018

Units: 10
Built: 1925
Square Footage: 5,088
Final Closing Price: $1,700,000

 

PURCHASED PROPERTIES

115 N Catalina Street, Los Angeles, CA 90004

Units: 5
Built: 1939
Square Footage: 4,199
Final Closing Price: $1,600,000

13567 Rye Street, Sherman Oaks, CA 91423

Units: 10
Built: 1961
Square Footage: 5,272
Final Closing Price: $3,800,000