Buying Below Replacement Cost in the Heart of Westlake

There are certain assets in Los Angeles that require creativity to make the numbers work. And then there are assets where the opportunity is already embedded in the basis. 2334 Valley Street falls into the second category.

This eight unit property has been owned by the same seller since 2008. Over nearly two decades of ownership, rents have compressed relative to the market, and the building has quietly done what many long held properties in central Los Angeles do. It has produced stable income without aggressive repositioning. Now the owner is preparing for an exchange, creating a rare window to acquire a centrally located multifamily asset at a basis that simply does not reflect today’s replacement cost.

At $118,750 per unit and roughly $215 per square foot, this property is trading well below what it would cost to build comparable product in Los Angeles today. Between land costs, construction pricing, soft costs, and entitlement risk, new development in this corridor is dramatically more expensive. When you buy below replacement cost, you are not speculating on future value. You are stepping into existing infrastructure at a discount and focusing on operational execution.

The real story here is the upside. The building is composed entirely of one bedroom units, and current rents total $7,428 per month. The pro forma rent roll supports approximately $15,200 per month. That delta creates a projected increase in net operating income from roughly $50,000 to over $136,000 annually. Even underwriting that conservatively, the spread between current performance and stabilized performance is significant. This is not incremental upside. It is transformative.

Location adds another layer of durability. Westlake continues to benefit from its central position between Downtown Los Angeles, Koreatown, Silver Lake, and Hollywood. The property sits in a dense, transit connected corridor where demand for one bedroom housing remains consistent. In markets like this, well located, well sized units do not struggle to attract tenants. They simply need to be positioned correctly.

For a buyer who understands execution, this is a classic value add opportunity anchored by a strong entry basis. The seller has held the property since 2008 and is now exchanging into another asset, creating a transition moment that does not come often with long term ownership. Buying below replacement cost in central Los Angeles, with measurable upside already identified, is a strategic move rather than a speculative one.

If you are evaluating opportunities where operational improvement drives equity creation, 2334 Valley Street deserves a closer look. Reach out directly for underwriting support, rent comps, or a detailed walk through of the repositioning strategy.