Prime Value-Add Opportunity: 8-Unit Multifamily Asset in San Fernando, CA
1117-1121 2nd St, San Fernando, CA 91340Opportunity
Attractive Entry Cap Rate with Upside Potential: The property generates a Net Operating Income (NOI) of $116,550, translating to a calculated cap rate of 6.66% at the $1.75 million sale price. This provides a solid cash flow foundation from day one. However, as a Class C building built in 1948 with no recorded renovations, there is significant value-add potential through interior and exterior upgrades, which could push the cap rate to 7.5%+ after improvements, enhancing both income and resale value.
Opportunity
Below-Market Price Per Unit with Renovation Arbitrage: At $218,750 per unit, the price point is competitive for the San Fernando market. Comparable renovated Class B/C properties in the area often trade at $250,000–$275,000 per unit. A strategic renovation program—updating kitchens, bathrooms, and common areas—could justify rent increases of 10–20%, driving the value per unit toward the upper end of that range and creating an equity gain of $250,000–$400,000 upon stabilization.
Opportunity
Value-Add Levers Beyond Cosmetic Upgrades: Beyond unit renovations, operational efficiencies offer immediate NOI boosts. The current NOI implies average monthly rents around $1,215 per unit, which is below the San Fernando market average of ~$1,400 for comparable units. Implementing a proactive leasing strategy, sub-metering utilities, and adding low-cost amenities (e.g., laundry facilities, storage units) could increase net income by $15,000–$25,000 annually. Additionally, the 0.17-acre lot may allow for auxiliary income streams, such as leased storage or parking spaces, further enhancing cash flow.
Strength
Prime Positioning in a Supply-Constrained Submarket: San Fernando is characterized by consistent rental demand due to its affordability relative to adjacent Los Angeles neighborhoods and limited new multifamily construction. The R3 zoning (Restricted Density Multiple Dwelling) provides clarity for future modest expansions or reconfigurations, though density is capped. The property’s central location offers accessibility to major corridors (I-5, SR-118) and local amenities, supporting strong tenant retention and occupancy rates historically above 95% for well-maintained assets.
Strength
Amenity Alignment with Market Demands: The inclusion of air conditioning in all units is a critical advantage in Southern California’s climate, making the property competitive with newer builds. However, the parking ratio of 1 space per 1,000 SF (approximately 5 spaces for 8 units) may be tight for larger households. This presents both a challenge and an opportunity: implementing a parking management plan or exploring minor lot reconfiguration could improve tenant satisfaction and allow for premium rents.
Property Overview
- Multifamily Building located in San Fernando, CA
- Built in 1948
- Strong cap rate of 6.66%
- 5,040 SF of rentable area
Property Details
| Year Built | 1948 | Building Type | Multifamily |
| Total Size | 5,040 SF | Zoning | R3, San Fernando - restricted Density Multiple Dwelling |
| Parking Spaces | N/A | Occupancy Rate | 0.0% |
| Cap Rate | 6.66% | Annual NOI | $116,550 |
| Price | $1,750,000 | Price/SF | $347.22 |
| Location | San Fernando, CA | County | Los Angeles |
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* Calculations are estimates only. Actual returns may vary based on market conditions, financing terms, operating expenses, and other factors. Consult with financial and legal professionals before making investment decisions.
Where Your NOI Goes Each Month
* Distribution based on current inputs. Actual expenses may vary.
Total Return if Sold (Exit Strategy)
* Assumes property appreciation and no sale costs. Past performance doesn't guarantee future results.
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Things Near
San Fernando Recreation Park
0.5 milesSan Fernando Mission
1.2 milesSan Fernando Regional Pool
0.8 milesLas Palmas Park
1.5 milesSan Fernando Shopping Center (with various stores and restaurants)
0.3 milesAbout San Fernando
Located in California, San Fernando is a dynamic area with strong commercial real estate fundamentals and excellent connectivity.
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