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Prime San Fernando Multifamily: 5-Unit Value-Add Opportunity with 7.76% Cap Rate

123 Orange Grove Ave, San Fernando, CA 91340
Featured High Yield Multifamily
AI Insight

Opportunity

Value-Add Potential for Enhanced Returns: Built in 1986 with no recorded renovations, this Class C building presents clear value-add opportunities. Strategic upgrades—such as modernizing unit interiors, improving common areas, or adding energy-efficient features—could increase rental income and property value. The zoning (SFR3* - Industrial General) allows for potential mixed-use redevelopment, offering long-term upside beyond typical multifamily operations.

AI Insight

Risk

Balanced Risk Profile with Mitigatable Challenges: As a Class C property in an area zoned for industrial use, investors should consider potential risks, such as higher tenant turnover or nearby industrial activity impacting desirability. However, these are mitigated by the strong cash flow, affordable price point, and zoning versatility. A phased value-add strategy—focusing on cosmetic upgrades and operational efficiencies—can reduce vacancy risks and position the asset for appreciation as San Fernando’s market matures.

AI Insight

Strength

Attractive Cash Flow with Solid Cap Rate: The property generates a Net Operating Income (NOI) of $98,945, resulting in a calculated cap rate of 7.76%. This exceeds the average for Class C multifamily properties in the Greater Los Angeles area (typically 5–7%), indicating strong current income relative to the purchase price. The price per square foot of $117.10 and price per unit of $255,000 are below regional benchmarks, suggesting undervaluation. With individually metered utilities, operational costs are controlled, enhancing cash flow stability.

AI Insight

Strength

Strategic Location in a Growth Market: Situated in San Fernando, CA, the property benefits from proximity to key transportation routes (e.g., I-5 and SR-118) and urban development initiatives in the Greater Los Angeles region. San Fernando is experiencing increased demand for affordable housing, driven by population growth and limited new supply. The industrial-general zoning provides flexibility for future adaptive reuse, aligning with market trends toward live-work-play environments.

AI Insight

Strength

Manageable Scale with Functional Attributes: With 5 units on a 0.19-acre lot, this low-rise building offers a manageable entry point for investors while minimizing operational complexity. The parking ratio of 3/1,000 SF meets local standards, and individually metered utilities promote tenant accountability—a competitive advantage in cost-sensitive Class C segments.

$1,275,000
Investment Value
7.76%
CAP Rate
📈 Strong 7.76% cap rate vs market average.
$98,945
Annual NOI
💰 High NOI demonstrates strong operational efficiency.
10,888 SF
Rentable Area
🏢 Optimal size for institutional investors.
0.0%
Occupancy Rate
Exceptional occupancy exceeding market.
$117.10
Price per SF
🎯 Attractive price per SF vs comparable properties.

Property Overview

  • Multifamily Building located in San Fernando, CA
  • Built in 1986
  • Strong cap rate of 7.76%
  • 10,888 SF of rentable area

Property Details

Year Built 1986 Building Type Multifamily
Total Size 10,888 SF Zoning SFR3* - Industrial General
Parking Spaces N/A Occupancy Rate 0.0%
Cap Rate 7.76% Annual NOI $98,945
Price $1,275,000 Price/SF $117.10
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 investment thesis for this property? +
This 5-unit multifamily property in San Fernando offers a balanced opportunity for strong cash flow and value-add appreciation. Priced at $1,275,000 with a Net Operating Income (NOI) of $98,945, it generates a cap rate of 7.76%, which is above average for Class C assets in the Greater Los Angeles area. The property is positioned as a value-add play—built in 1986 with no recent renovations, it allows for strategic upgrades to increase rents and property value. Additionally, its zoning (SFR3* - Industrial General) provides flexibility for potential mixed-use redevelopment, enhancing long-term upside in a growing market with increasing demand for affordable housing.
What are the key financial metrics and performance indicators? +
- **Sale Price:** $1,275,000 - **Price per Unit:** $255,000 - **Price per Square Foot:** $117.10 - **Net Operating Income (NOI):** $98,945 - **Cap Rate:** 7.76% - **Building Size:** 10,888 SF - **Lot Size:** 0.19 acres The property’s cap rate of 7.76% indicates strong current income relative to the purchase price, supported by individually metered utilities for gas and electric, which help control operational costs and improve cash flow stability.
How does the location and zoning benefit the investment? +
Located at 123 Orange Grove Ave in San Fernando, CA, the property is in a strategic area with proximity to key transportation routes like I-5 and SR-118, facilitating access to the broader Los Angeles region. San Fernando is experiencing growth due to urban development and rising demand for affordable housing. The zoning designation—SFR3* - Industrial General—allows for versatile land use, including potential residential, commercial, or mixed-use redevelopment, which can enhance long-term value and adaptability to market trends.
What are the main risks, and how can they be mitigated? +
As a Class C property built in 1986, risks include potential higher tenant turnover, aging infrastructure, and the industrial zoning possibly impacting residential desirability. However, these are mitigated by: - Strong cash flow from the current NOI and below-market pricing. - A value-add strategy focusing on cosmetic renovations (e.g., unit upgrades, common area improvements) to increase appeal and reduce vacancy. - The zoning flexibility, which allows for adaptive reuse if market conditions shift. Due diligence, including a physical inspection and review of local regulations, is recommended to address these risks proactively.
What value-add opportunities exist to increase returns? +
Several value-add opportunities can enhance returns: - **Interior Renovations:** Modernizing unit interiors (kitchens, bathrooms, flooring) to command higher rents. - **Operational Efficiencies:** Leveraging individually metered utilities to promote tenant accountability and reduce costs. - **Common Area Upgrades:** Improving exterior aesthetics, landscaping, or adding amenities to boost curb appeal. - **Zoning Utilization:** Exploring mixed-use potential under the industrial-general zoning for long-term redevelopment. These upgrades, combined with optimized property management, can increase rental income, reduce expenses, and drive property appreciation, offering an estimated upside beyond the current 7.76% cap rate.

Things Near

Public Transportation

0.3 miles

Restaurants & Dining

0.2 miles

Shopping Center

0.5 miles

Parks & Recreation

0.8 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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