5638 Colfax Ave — Broker Opinion of Value

Subject Property

Property Overview

Address

5638 N Colfax Ave
North Hollywood, CA 91601

Total Units

8 All-Studio

Unit Size

550 SF Each

Year Built

1985 Non-RSO

Building Size

4,524 SF

Lot Size

6,970 SF

Parking

8 Spaces (3 Covered)

APN

2339-015-059

Investment Highlights

Not Subject to LARSO Rent Control. The 1985 vintage exempts this building from the Los Angeles Rent Stabilization Ordinance. Rents reset fully to market on any vacancy — buyers pay a premium for this, and it prices into the sale.
28.7% Rent Gap, In-Place to Market. In-place rents on the 6 occupied studios average $1,318/month against a $1,695 market rate for comparable Valley Village studios — a $27,180/year upside captured through standard lease turnover.
All-Studio Configuration — Simple to Own and Operate. Eight identical 550 SF studios simplify leasing, CapEx planning, and day-to-day management. Studio product serves the entertainment-industry workforce at the sub-$1,800 affordability band, supporting consistent demand.
Offered Free and Clear of Debt. The property is delivered unencumbered — no existing loan to navigate, no lender approval required. Buyers can finance on their own terms or purchase all-cash on a clean, fast close.
2020 Cool Roof — Recent Capital. Full re-roof completed July 2020 (35 squares of composition shingle, Title 24 cool-roof compliant, Permit 20016-90000-18175). One significant deferred-maintenance item already addressed.
8 On-Site Parking Spaces. 8 spaces (3 covered) per the 1986 Certificate of Occupancy — a ratio that fully satisfies tenant demand in this product type.
Federal Opportunity Zone Designation. The site carries a Federal Opportunity Zone designation, enabling qualifying buyers to defer existing capital gains and eliminate tax on new appreciation over a 10-year hold — made permanent under the 2025 One Big Beautiful Bill Act.

Executive Summary

Four Reasons Buyers Will Move on This

Non-RSO is the most-sought attribute in SFV multifamily. The 1985 vintage means rents are not controlled. Every vacancy is a full reset to market. Buyers pay a measurable premium for this designation — and the closed comps bear it out.

$27,180/year in identifiable rent upside. The gap between in-place rents ($1,318/mo avg for occupied units) and market ($1,695/mo) is structural. Three comparable studios within a quarter mile are renting at $1,696–$1,725/month right now.

Free and clear — clean close on the buyer's timeline. No existing lender, no payoff, no approval process. Value-add buyers and 1031 exchange buyers both prize this: they set their own financing, timing, and entry basis.

$105,383 pro forma NOI at full market rents. At $1,500,000, stabilized yield is 7.03%. That spread versus the 5.36% in-place cap rate is the return embedded in the rent upside — and it's what value-add capital underwrites to.

Location Overview

Valley Village — North Hollywood

5638 Colfax sits in Valley Village, a quiet residential pocket between Studio City and the NoHo Arts District, one block north of Burbank Boulevard. It is one of the most supply-constrained rental pockets in the San Fernando Valley — low multifamily inventory, strong walkability for a Valley address, and a tenant pool drawn almost entirely from the entertainment and media industries.

By car, tenants are 5–10 minutes from every major studio lot: Universal Studios / NBCUniversal, Warner Bros., CBS Radford, Disney Burbank, and Hollywood Burbank Airport. This cluster employs tens of thousands of below-the-line workers who rent studios in exactly this price range.

The NoHo Arts District — LA's designated performing arts corridor — is walkable to the east. Lankershim's restaurant, bar, and nightlife strip and NoHo Commons (Target, Regal Cinemas) are all accessible without a car.

Location Drivers

Metro B Line — North Hollywood terminus under 2 miles; direct rail to Hollywood, Downtown, Koreatown
Highway 170 — Immediate freeway access north into the Valley, south to the 101
Lankershim / Magnolia Corridors — Restaurants, bars, and retail within a 10-minute walk
NoHo Arts District — City-designated arts corridor; cultural anchor for the submarket
Studio Employment Cluster — Universal, Warner Bros., CBS Radford, Disney, and Burbank Airport all within 5–10 minutes
Supply Constraint — RD3-1 zoning with small lots limits new multifamily development; organic rent growth structurally supported

Buyer Profile

Who Buys This Building & Why

Buyer Type 01

Value-Add Operator

A San Fernando Valley-focused investor with existing multifamily management infrastructure. Enters at a 5.36% in-place cap and underwrites to a 7.03% stabilized yield through natural lease turnover. An optional light interior upgrade ($12K–$18K/unit) supports rents of $1,800–$1,950/month for Class A positioning.

Buyer Type 02

1031 Exchange Buyer

An investor rolling proceeds from a recently closed SFR, commercial property, or larger multifamily asset. Non-RSO status means no rent board exposure and no relocation liability on standard turnover. The debt-free delivery means they set their own financing on their own timeline — critical for exchange buyers on a 45-day clock.

Buyer Type 03

Long-Term Wealth Builder

A family office, trust, or high-net-worth individual building a generational hold in a supply-constrained LA submarket. AB 1482 permits 5% + CPI annual rent increases (up to 10%) with full market resets on vacancy. Federal OZ designation layers in capital gains deferral and potential tax-free appreciation on a qualifying 10-year hold.

Anticipated Buyer Questions

How does AB 1482 Just Cause affect the rent upside story?

AB 1482 requires just cause for eviction — it does not cap rents. Landlords may raise rents 5% + CPI annually (maximum 10%), and upon any voluntary vacancy, units reset fully to market with no city approval required. This is the core advantage of the non-RSO, post-1978 designation. The rent upside closes organically through normal lease turnover.

Why are in-place rents below market for a post-1985 building?

Long-term ownership with stable tenants typically produces below-market rents in non-RSO buildings — this is how rent gaps develop. The rent gap here is structural, not a reflection of asset quality. The market supports $1,695–$1,725/month for studios in this corridor, and three live comps confirm it. The upside closes organically through normal lease turnover.

The in-place cap rate is 5.36% — is that too thin for a value-add entry?

The in-place cap reflects current rents, not the asset's earning potential. The stabilized pro forma NOI at $1,695/month market rents is $105,383 — a 7.03% cap rate on the $1,500,000 asking price. Non-RSO assets with identifiable rent upside don't trade at stabilized yields — buyers pay a current-yield discount to own the optionality. That spread is the value-add return.

Rent Comparables

Studio Rent Comparables — Valley Village / North Hollywood

Three active studio leases within a quarter mile establish the market-rate range for comparable product in this corridor.

#	Address	Size (SF)	Rent / Mo	Rent / SF
1	11458 Burbank Blvd, North Hollywood	500	$1,696	$3.39
2	5751 Camellia Ave, North Hollywood	481	$1,725	$3.59
3	5020 Tujunga Ave, North Hollywood	500	$1,699	$3.40
Comp Average		494 SF	$1,707	$3.46

$283

Monthly Gap / Unit

28.7%

Below Market

$27,180

Annual Upside (8 Units)

Unit Mix & Rent Roll

Current Rent Roll vs. Market

Unit	Type	SF	In-Place / Mo	Market / Mo	Monthly Gap
Unit 1	Studio	550	$1,311	$1,695	$384
Unit 2	Studio	550	$1,311	$1,695	$384
Unit 3	Studio	550	Vacant	$1,695	$1,695
Unit 4	Studio	550	$1,311	$1,695	$384
Unit 5	Studio	550	$1,350	$1,695	$345
Unit 6	Studio	550	$1,311	$1,695	$384
Unit 7	Studio	550	Vacant	$1,695	$1,695
Unit 8	Studio	550	$1,311	$1,695	$384
Total / Average		4,400 SF	$7,905 / mo	$13,560 / mo	$5,655 / mo

Financial Analysis

Operating Statement — In-Place vs. Pro Forma

In-Place (Current)

Gross Scheduled Rent$135,540

Vacancy & Credit Loss (3%)($4,066)

Other Income (Laundry)$960

Effective Gross Income$132,434

Real Estate Taxes($18,750)

Insurance($6,000)

Utilities (Electric / Gas)($4,755)

Trash Removal($5,018)

Repairs & Maintenance($6,000)

Landscaping($1,020)

Pest Control($1,140)

Management (5%)($6,622)

G&A / Reserves($2,792)

Net Operating Income$80,337

Pro Forma (Market Rents)

Gross Scheduled Rent$162,720

Vacancy & Credit Loss (3%)($4,882)

Other Income (Laundry)$960

Effective Gross Income$158,798

Real Estate Taxes($18,750)

Insurance($6,000)

Utilities (Electric / Gas)($4,755)

Trash Removal($5,018)

Repairs & Maintenance($6,000)

Landscaping($1,020)

Pest Control($1,140)

Management (5%)($7,940)

G&A / Reserves($2,792)

Net Operating Income$105,383

Sale Comparables

Closed Sale Comparables — North Hollywood

Both comparables are same-vintage (mid-1980s), same submarket, and transacted within the past 12 months. They establish the trading range for stabilized small-studio multifamily in this corridor.

#	Address	Units	Built	Closed	Price	$/Unit	Cap Rate	GRM
1	11218 Oxnard St, North Hollywood	6	1985	Sep 2025	$2,000,000	$333,333	5.80%	11.95×
2	5621 Klump Ave, North Hollywood	9	1987	Jul 2025	$2,450,000	$272,222	5.31%	13.01×

Pricing Recommendation

Opinion of Value

Pricing Rationale

The two closed comparables in the corridor — 11218 Oxnard St and 5621 Klump Ave — traded at $272,222–$333,333 per unit at 5.31–5.80% cap rates on stabilized rents. At $187,500 per unit, 5638 Colfax is priced to reflect its current income position, with the upside embedded in the rent gap. Buyers who correctly model the value-add thesis will underwrite to the 7.03% pro forma cap rate — consistent with the comp trading band — as compensation for the lease-up period.

The non-RSO designation supports pricing at the upper end of this range. In the North Hollywood and Valley Village submarket, non-RSO vintage consistently commands a premium over RSO-encumbered product of the same size and vintage. The debt-free delivery further broadens the buyer pool.

Expected trade range: $1,375,000 – $1,500,000 based on LAAA's closed transaction experience with comparable Non-RSO value-add assets in this corridor.

The Team

LA Apartment Advisors · Marcus & Millichap

458+

Closed Transactions

$1.46B+

Closed Volume

LA County Multifamily
Trailing 3 Years

Glen Scher

Senior Managing Director, Investments

Glen Scher is a Senior Managing Director at Marcus & Millichap's Encino office and a founding principal of LA Apartment Advisors. A graduate of UC Santa Barbara with a degree in Economics, Glen has built one of the most active multifamily investment sales practices in the San Fernando Valley, specializing in the disposition of stabilized and value-add apartment assets from 4 to 150 units. He was recognized as Rookie of the Year in 2016 and has consistently ranked among the top multifamily specialists in LA County.

Glen.Scher@marcusmillichap.com
(818) 212-2808 | CA 01962976

Filip Niculete

Senior Managing Director, Investments

Filip Niculete was born in Romania and raised in the San Fernando Valley. A graduate of San Diego State University with a degree in Finance, Filip co-leads LA Apartment Advisors with a focus on multifamily investment sales across the Valley and Mid-Cities. His command of local regulatory frameworks — from non-RSO classifications and AB 1482 exposure to Opportunity Zone structuring — gives buyers and sellers a measurable analytical advantage.

Filip.Niculete@marcusmillichap.com
(818) 212-2748 | CA 01905352