As part of our broader strategy to invest in emerging urban areas, we’ve acquired an underutilized property in South Los Angeles for roughly $4.2 million, with plans to redevelop it into apartments and ground-floor retail.

Thanks to a variety of factors, including tech companies opening major offices, an expansion of the LA Metro system, and renters being priced out of more established neighborhoods, this area is poised to undergo rapid growth in the coming years.

This project is noteworthy in that we purchased the real estate directly and plan to do the development ourselves, instead of our more typical model of partnering with a developer.

By doing more of the work “in-house” on certain project types, we believe we can cut costs and increase efficiencies, with the end goal of achieving even better returns for you as an investor.

Business plan

The property is currently improved with two light industrial buildings, totaling 5,300 square feet of rentable space, which is currently leased to an auto repair shop. We intend to continue leasing to them while we work on design and permitting for the construction of a seven-story, 65-unit apartment building with ground-floor retail.

Upon securing the necessary entitlements and permits, which we expect to take between six and nine months, we plan to engage a contractor and build the apartments ourselves. Alternatively, we could sell the “shovel-ready” project to another investor for substantially more than we invested. With or without executing on this redevelopment plan, we believe that the property has strong potential to appreciate in value over the next several years given its central, transit-oriented location.

Why we invested

  • Transit-oriented development: The property is located two blocks from the Expo / Crenshaw Metro Station, connecting riders west to Santa Monica and east to downtown. The future Crenshaw / LAX Line, scheduled to open next year, will extend from the same station south to Los Angeles International Airport (LAX).
  • Cash-flowing with upside potential: The property is fully occupied and income-generating from day one. The 16,500 square foot (0.38 acre) lot is large enough to be redeveloped into a higher density mid-rise building in the future.
  • City-wide housing shortage: LA housing prices have grown much faster than incomes in recent years, resulting in a major affordability crisis within the city. With large sections of the city simply out of reach for many renters and homebuyers, we believe that smart investments in up-and-coming areas will deliver attractive long-term returns. See our LA market analysis.

As always, please don’t hesitate to reach out to investments@fundrise.com with any questions or feedback.