229 S Westlake Ave

The Challenge

When we brought 229 S Westlake Ave to market, we immediately ran into a valuation challenge.
The property consisted of 12 studio units with no on-site parking. While the building was relatively clean and had benefited from several significant capital improvements, much of the buyer feedback was that studios without parking in the greater Westlake/Koreatown submarket should trade closer to $100,000 per unit.
That was a significant discount to our $145,833-per-unit asking price.

We believed the property deserved a premium. The building had a new sewer line, upgraded electrical systems, upgraded copper lateral plumbing, separate gas and electric meters, and potential ADU opportunities. Rather than simply reducing the price further to meet the market's initial underwriting, we looked for another way to improve the economics for buyers.

The Strategy

We determined that creative financing could bridge the valuation gap.

Instead of competing solely on price, the seller offered to provide financing at 80% LTV, 4.5% interest for three years.

The combination of high leverage and a below-market interest rate materially improved the buyer's equity requirement and leveraged return profile, allowing investors to justify a price they had been unwilling to reach using conventional financing.

The Result

The strategy changed the response almost immediately.

With the seller-financing structure in place, we generated multiple offers and ultimately closed the transaction in just 17 days.

The Takeaway

In a challenging market, the best solution isn't always a price reduction.

229 S Westlake demonstrated how understanding what is preventing buyers from reaching a seller's valuation can create another path to a transaction. In this case, rather than substantially discounting a quality asset, we restructured the financing to improve the buyer's economics, created competition, and got the property sold.