We’ve invested $4.5 million in the acquisition of a 33,000 square foot (0.76 acre) property in the West Adams neighborhood of Los Angeles, as the future site of a 30-unit apartment building.

By opportunistically financing new housing creation in supply-constrained markets like LA, we can continue to target attractive yields — in this case 8% annually — while record prices have driven yields on public stocks and bonds to near-historic lows.

Business plan

The borrower, Canfield Development, plans to finalize designs and permits for the construction of a 30-unit apartment building on the property. We expect that this process will take roughly 14 to 20 months. Upon finalizing designs and permits, they plan to either sell the shovel-ready property or refinance into a construction loan.

Our investment is structured as debt, where we are entitled to earn a fixed annual return of roughly 8% over the life of the investment before the sponsor can earn a return for themselves. Our goal is to earn consistent cash flow from interest payments through the maturity of the loan.

Why we invested

  • Major tech boom in South LA: The property is located less than three miles east of Culver City, where Amazon Studios, Apple, and HBO are in the process of opening major offices. We expect that a substantial number of the thousands of tech employees who will work in these offices will also want to live, dine, and shop nearby, driving a major increase in overall property values.
  • Experienced partner: The principals of the borrower have collectively entitled and developed 10 projects in the Los Angeles area, valued at roughly $250 million worth of real estate.
  • City-wide housing shortage: LA home 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.