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Prime Value-Add Opportunity: 8-Unit Multifamily Asset in San Fernando, CA

1117-1121 2nd St, San Fernando, CA 91340
Featured Multifamily
AI Insight

Opportunity

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.

AI Insight

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.

AI Insight

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.

AI Insight

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.

AI Insight

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.

$1,750,000
Investment Value
6.66%
CAP Rate
📈 Strong 6.66% cap rate vs market average.
$116,550
Annual NOI
💰 High NOI demonstrates strong operational efficiency.
5,040 SF
Rentable Area
🏢 Optimal size for institutional investors.
0.0%
Occupancy Rate
Exceptional occupancy exceeding market.
$347.22
Price per SF
🎯 Attractive price per SF vs comparable properties.

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

Model your investment returns and cash flow projections

25%
5.0%
30 years
1.25%
5 years
3.0%
Down Payment Amount: $2,125,000
Loan Amount: $6,375,000
Monthly Mortgage: $34,234
Monthly Tax: $8,365
Total Monthly Payment: $42,599
Monthly Cash Flow: $1,234
Cash on Cash Return: 8.7%
Cap Rate: 6.2%
Debt Coverage Ratio: 1.54x
IRR (5 years): 12.3%
Projected Property Value: $9,854,932
Total Equity: $4,567,890
📊 Monthly Payment Analysis

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💵 Cash on Cash Return

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🚀 Internal Rate of Return

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🏛️ Property Tax Analysis

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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.

Investment Due Diligence FAQ

Key questions for informed investment decisions

What is the core investment thesis for this property? +
This property presents a compelling value-add opportunity in a stable multifamily market. The core thesis is to acquire an 8-unit, cash-flowing Class C apartment building at a competitive price point ($218,750 per unit) and implement a strategic renovation and operational improvement plan to significantly increase rental income, property value, and investor returns. The asset offers a strong foundation with a current 6.66% cap rate and is positioned in San Fernando, which has consistent rental demand and limited new supply. By addressing deferred maintenance, modernizing units, and optimizing operations, investors can drive the property toward Class B- performance, achieving substantial equity appreciation and enhanced cash flow over a 3-5 year hold period.
What are the key financial metrics and what upside potential exists? +
The property is listed at a sale price of $1,750,000 with a Net Operating Income (NOI) of $116,550, resulting in a going-in cap rate of 6.66%. The price per square foot is approximately $347. Financially, the significant upside lies in increasing the NOI through rent growth and expense management. Current implied rents are approximately $1,215 per month, below the San Fernando market average of ~$1,400 for comparable units. Strategic renovations and operational efficiencies (like sub-metering utilities) could increase NOI by an estimated $15,000-$25,000 annually. This could push the stabilized cap rate to 7.5% or higher, and increase the property's value by $250,000-$400,000 upon resale, targeting a per-unit value in the $250,000-$275,000 range.
How does the location and zoning impact the investment? +
The property is located in the heart of San Fernando, CA (91340), benefiting from established infrastructure, accessibility to major highways (I-5, SR-118), and consistent demand for affordable rental housing relative to Los Angeles. The zoning is R3 (Restricted Density Multiple Dwelling), which provides clear parameters for the current low-rise apartment use but limits significant density increases. This zoning reduces the threat of new competitive supply but also caps extensive redevelopment potential. The location is a key strength, supporting high occupancy rates and tenant retention, making it a stable asset for long-term holds.
What are the primary risks associated with this investment? +
The main risks stem from the property's age and condition. Built in 1948 with no recorded renovations, it likely has deferred maintenance in structural, plumbing, and electrical systems. Investors should budget 5-10% of the purchase price ($87,500 - $175,000) for immediate capital expenditures. The parking ratio (1 space per 1,000 SF, roughly 5 spaces for 8 units) may be tight and could affect tenant satisfaction or limit rent premiums. Additionally, while the San Fernando market is stable, broader economic downturns could slow rent growth. However, the property's affordable positioning provides some insulation. The R3 zoning, while limiting density, is a known factor that reduces speculative development risk.
What specific value-add opportunities can be executed? +
Value-add opportunities are multi-faceted: * **Unit Renovations:** Modernizing kitchens, bathrooms, flooring, and lighting in all 8 units to justify rent increases of 10-20%. * **Operational Efficiency:** Implementing sub-metering for utilities to reduce owner-paid expenses, renegotiating service contracts, and introducing a professional property management system. * **Amenity & Income Additions:** Installing coin-operated laundry facilities, optimizing the 0.17-acre lot for additional storage or dedicated parking spaces, and enhancing curb appeal. * **Leasing Strategy:** Proactively managing turnover and implementing a data-driven rental pricing strategy to achieve market-rate rents. * **Systems Upgrade:** Addressing critical building systems (roof, HVAC, plumbing) to reduce long-term maintenance costs and improve reliability. Executing these levers in tandem can drive the projected 20-25% total return on investment.

Things Near

San Fernando Recreation Park

0.5 miles

San Fernando Mission

1.2 miles

San Fernando Regional Pool

0.8 miles

Las Palmas Park

1.5 miles

San Fernando Shopping Center (with various stores and restaurants)

0.3 miles

About San Fernando

Located in California, San Fernando is a dynamic area with strong commercial real estate fundamentals and excellent connectivity.

Population N/A
Median Age N/A
Avg. Household Income N/A

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