We’ve invested $2.5 million in the acquisition of two lots, totalling roughly 0.33 acres, in the Koreatown neighborhood of Los Angeles. This investment is the latest execution of our broader strategy to finance the development of homes in fast-growing areas around the country, particularly those experiencing housing shortages.
Business plan
The borrower intends to finalize permits for the construction of a 31-unit apartment complex on the property. Our goal is to earn consistent cash flow from interest payments through the maturity of the loan.
Why we invested
- Vibrant, walkable neighborhood: With a Walk Score of 92 (daily errands do not require a car), Koreatown is substantially more walkable than LA as a whole, which scores a 67. Specifically, the property is within walking distance of numerous restaurants, bars and markets. Originally an ethnic enclave for Korean immigrants, the area has transformed into a diverse urban center known for its bar scene and 24/7 casual dining, featuring in an episode of CNN travel show Parts Unknown.
- City-wide housing shortage: As a growing number of new homebuyers look to plant roots in urban LA neighborhoods, supply has been unable to keep pace with demand. Condo developments such as this one aim to meet that growing demand by building higher density housing on underutilized land. See our LA market analysis
- Attractive margin of safety: Our loan is equal to roughly 73.5% of the total value of property, based on a June 2018 appraisal. This serves to reduce our risk, as the property would have to lose more than a quarter of its value to threaten our investment.
