Los Angeles multifamily lending

Short answer: Los Angeles is the hardest 5–20 unit market to underwrite: stabilized caps sit at 4.5–5.5%, rent growth has cooled to +1.1% YoY, and RSO/AB 1482 rent controls mean in-place rents rarely equal achievable rents. At a 5.0 cap most deals are deeply DSCR-binding, landing 15–25% below 75% LTV.

Los Angeles at a glance

LA is the toughest underwriting market on this list and the one where mistakes cost the most. Stabilized 5–20 unit caps sit in the 4.5–5.5% range, rent growth has cooled to +1.1% YoY, and the LA city / LA county RSO regimes mean the in-place rent roll is rarely the achievable rent roll.

How far below 75% LTV will DSCR push an LA loan?

At a 5.0 cap and current DSCR-loan rates near 7.4–7.7%, an LA 8-unit is deeply DSCR-binding. Expect max loan to land 15–25% below 75% LTV — sometimes more on rent-controlled assets where the lender haircuts in-place rents further. PathIQ's DSCR card flags this immediately so you don't waste a week on a deal that won't lever.

Submarket cap-rate guide

• Westside (Santa Monica, WLA, Mar Vista) — 4.25–4.75%
• Mid-City / Koreatown — 4.75–5.25%
• Eastside (Highland Park, Eagle Rock, Glassell) — 5.00–5.50%
• SFV (Van Nuys, North Hollywood, Reseda) — 5.25–5.75%
• South Bay (Long Beach, Torrance) — 5.00–5.50%

Local underwriting flags

• RSO / AB 1482. Most pre-1978 multifamily inside LA city is RSO; nearly everything else statewide falls under AB 1482's CPI + 5% cap. Underwrite to legal max increases, not market.
• Soft-story retrofit. LA's mandatory soft-story ordinance still has stragglers; budget $80k–$160k per building if not yet completed.
• Prop 13 reset. A purchase triggers reassessment to sale price — model year-2 taxes off the new basis, not the seller's.
• Insurance. Wildfire-zone properties (PCH corridor, foothills) are seeing carriers non-renew. Confirm bindable quotes before going hard.
• ULA "mansion tax." 4% on sales $5M–$10M, 5.5% above $10M inside LA city. Affects exit math on larger 5–20 unit deals.

Recent comparable activity

5–20 unit transactions in LA city have clustered in the $280k–$420k/unit range, with cap-rate spread driven mostly by RSO exposure and soft-story status rather than condition.

PathIQ pre-fills the California RSO/AB 1482 flag, applies the Prop 13 reset to year-2 taxes automatically, and surfaces ULA exposure on any LA city subject property.

Frequently asked questions

Why won't my Los Angeles deal lever to 75% LTV?

At LA's 4.5–5.5% cap rates and DSCR-loan rates near 7.4–7.7%, the rent barely covers the payment, so the loan is DSCR-constrained rather than LTV-constrained. Expect max loan to land 15–25% below 75% LTV, and further on rent-controlled assets where the lender haircuts in-place rents.

How do RSO and AB 1482 affect Los Angeles underwriting?

Most pre-1978 multifamily inside LA city falls under RSO, while nearly everything else statewide is capped by AB 1482's CPI + 5% limit. Underwrite to legal maximum rent increases, not market rents — the in-place rent roll is rarely the achievable one.

What happens to property taxes when I buy in Los Angeles?

A purchase triggers a Prop 13 reassessment to the sale price, so model year-2 taxes off the new basis rather than the seller's much lower bill. Skipping this is one of the most expensive mistakes in the LA market.

What is the ULA "mansion tax" and does it hit 5–20 unit deals?

Inside LA city, the ULA transfer tax is 4% on sales of $5M–$10M and 5.5% above $10M. On larger 5–20 unit deals it can meaningfully affect your exit math, so factor it into the sale-side proceeds before you commit.