Lavell Thompson - VellSells.com
    Investor Seller Guide

    Selling an LA Investment Property

    Tenants, 1031 timelines, depreciation recapture, and the difference between a cap-rate buyer and a retail buyer. Built for owners, not first-timers.

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    45
    Days to identify a 1031 replacement
    180
    Days to close the exchange
    20+
    Years selling LA County property

    Investment sales are won on paperwork and timing. The rent roll, the leases, and the exchange calendar decide your price long before a buyer walks the property.

    Who does what

    You own the tax strategy. I own the transaction.

    Your CPA and exchange accommodator handle the tax side. Everything on the property side is mine.

    What you and your CPA handle
    • Deciding whether to exchange, sell outright, or hold
    • Choosing your qualified intermediary
    • Producing leases, rent roll, and expense history
    • Approving the tenancy strategy
    • Signing off on the final net
    What I handle
    • Valuation on both cap rate and vacant-possession basis
    • Tenant notices, estoppels, and access coordination
    • Investor-grade marketing package and offering memo
    • Buyer vetting, proof of funds, and DSCR lender pacing
    • Escrow coordination around your exchange deadlines
    Phase 1

    Decide what you're actually selling

    An occupied fourplex, a vacant SFR, and a tenant-occupied condo are three different products with three different buyer pools. We pick the product before we pick the price.

    Step1
    We do it together

    Choose your exit: exchange, outright sale, or refinance

    Before anything hits the market, decide whether you're taking cash, rolling into a 1031 exchange, or pulling equity out instead. The answer changes the timeline, the price sensitivity, and how aggressively we can negotiate.

    I'll model all three side by side with real Valley numbers so you're not deciding on a hunch.

    • Outright sale: simplest, but you eat capital gains plus depreciation recapture
    • 1031 exchange: defers tax, but locks you to a 45/180-day clock
    • Cash-out refinance or HELOC: keeps the asset and the tax basis
    • Installment sale or seller carry: spreads the gain across years
    LA Specific

    Los Angeles County rental stock trades on a mix of income and land value. In much of the Valley, a tired duplex on an R3 lot prices closer to land than to cap rate.

    Get an investment valuation
    Step2
    You handle this

    Know your tax picture before you list

    Depreciation recapture surprises more investors than capital gains does. Every year you depreciated the building comes back at a separate rate when you sell, whether or not you actually claimed it.

    This one's yours and your CPA's. Send me the number they land on and I'll price the exit around it.

    • Federal capital gains plus the net investment income tax where applicable
    • Depreciation recapture on the building basis
    • California taxes the full gain as ordinary income at the state level
    • Passive activity losses that may be released on disposition
    Run your next purchase numbers
    Step3
    We handle this

    Value it two ways: income and vacant possession

    Occupied income property is priced on cap rate and GRM. The same property delivered vacant is priced on comparable sales, which in most of the Valley is a higher number — but getting it vacant legally is its own project.

    I build both models and tell you which one the market will actually pay for on your block.

    • Rent roll, actual vs. market rents, and vacancy factor
    • Operating expenses, reserves, and management cost
    • Cap rate and GRM against recent closed sales in the same submarket
    • The vacant-possession comp set for the same building type
    LA Specific

    Under-market rents in an RSO building are a real discount to value. Buyers price in the years it will take to bring rents to market.

    Step4
    We handle this

    Set the tenancy strategy first

    Whether tenants stay or go must be decided before marketing starts. Getting this wrong is the most expensive mistake an LA investor seller can make — it can cost far more than any repair.

    Notices, estoppels, and relocation math are mine. You will not be guessing at RSO rules.

    • Sell occupied to an investor buyer (fastest, lowest friction)
    • Sell with tenants and let the buyer handle occupancy
    • Deliver vacant through lawful buyout agreements, never pressure
    LA Specific

    The LA Rent Stabilization Ordinance and statewide just-cause rules govern notice periods, relocation assistance, and whether a buyer can move in at all. Cash-for-keys buyouts in the City of LA carry disclosure and filing requirements.

    Read: Selling a home with tenants in LA
    What done looks like

    Phase 1 is done when you know your exit strategy, your tax exposure, and which buyer pool we're targeting.

    Phase 2

    Build the package a serious buyer will underwrite

    Investor buyers underwrite documents, not adjectives. The cleaner the file, the shorter the due diligence and the fewer retrades.

    Step5
    You handle this

    Produce the rent roll, leases, and expense history

    Two years of operating history is the standard ask. Incomplete records get priced as risk, and risk gets deducted from your offer.

    Send me what you have in whatever shape it's in. I'll build it into a clean package.

    • Current rent roll with move-in dates, deposits, and rent increases
    • Every executed lease and any month-to-month agreements
    • Two years of expense detail: taxes, insurance, utilities, repairs, management
    • Deposit ledger and where the deposits are actually held
    Step6
    We handle this

    Order estoppels and confirm what tenants believe

    An estoppel certificate is the tenant confirming their rent, deposit, and terms in writing. It protects you at closing and protects the buyer from a surprise side agreement.

    I prepare and circulate the estoppel certificates and chase them down.

    • Rent amount, due date, and last increase
    • Security deposit held and any pet or parking deposits
    • Verbal agreements, concessions, or promised repairs
    • Any known disputes or habitability complaints
    Step7
    We handle this

    Inspections, code, and deferred maintenance

    Deferred maintenance on an income property is priced brutally — buyers multiply the repair by their required return. Get ahead of the big-ticket items so the negotiation is about income, not about the roof.

    I order everything and coordinate access around tenant notice requirements.

    • General and pest inspections on every unit
    • Sewer lateral scope — clay lines are common in older Valley buildings
    • Roof certification and electrical panel condition
    • Open permits or code enforcement cases on the property
    LA Specific

    City of LA requires a Residential Property Report (9A) before recording, and older multi-family buildings may carry soft-story retrofit obligations that a buyer will absolutely underwrite.

    Read: What a City of LA 9A report is
    Step8
    We handle this

    Build the offering package

    Investor buyers want a package they can send straight to a lender: financials, unit mix, photos, floor plans, and a clean narrative on the upside.

    Financials, photography, and the offering memo are mine, at my cost.

    • Current and pro forma income statements
    • Unit mix, square footage, parking, and utility configuration
    • Zoning, lot size, and ADU or density upside where it exists
    • Photography that shows condition honestly
    What done looks like

    Phase 2 is done when the rent roll, leases, estoppels, and expense history are in one organized package.

    Phase 3

    Reach the buyers who actually close

    Investment property has a narrower buyer pool than a retail listing, and it's a pool I can reach directly.

    Step9
    We handle this

    Market to the investor pool, not just the MLS

    Some of the strongest offers on income property come from buyers already in an exchange with a clock running. Those buyers pay for certainty.

    MLS, my investor list, exchange buyers on a deadline, and 1031 boards — all mine.

    See how I market listings
    Step10
    We handle this

    Vet buyers hard before you accept

    A DSCR or commercial loan behaves nothing like a conventional residential loan. Terms, timelines, and appraisal risk are different, and a weak buyer costs you weeks.

    I verify funds and talk to the lender directly before I bring you an offer.

    • Proof of funds dated within days, not months
    • Lender contact, loan type, and realistic timeline
    • Track record: have they closed this type of asset before?
    • Whether they are in a 1031 and what their deadline is
    Step11
    We do it together

    Negotiate terms, not just price

    On investment property, terms often beat price: a shorter due diligence window, a non-refundable deposit, or a waived appraisal contingency can be worth more than an extra percent.

    I'll bring you the trade-offs plainly and let you pick the deal you want.

    • Length of the due diligence period
    • Deposit size and when it goes hard
    • Whether the buyer accepts the property occupied as-is
    • Who carries the risk of tenant estoppel discrepancies
    What done looks like

    Phase 3 is done when you have vetted offers with proof of funds and a lender you can verify.

    Phase 4

    Close clean and land the exchange

    If you're exchanging, the closing is the starting gun on a 45-day clock. We plan the replacement before we ever open escrow.

    Step12
    We do it together

    Open escrow with your intermediary in place

    In a 1031, the qualified intermediary must be engaged before closing. If proceeds touch your account, the exchange is dead — there is no fixing it afterward.

    I coordinate directly with your qualified intermediary so nothing gets missed at signing.

    • QI engaged and exchange documents signed before closing
    • Escrow instructions reference the exchange
    • 45 days from close to identify replacement property in writing
    • 180 days from close to complete the purchase
    Step13
    We handle this

    Transfer tenants, deposits, and records correctly

    Security deposits transfer to the buyer at closing, tenants get written notice of the new owner and where to pay rent, and prorated rents get settled in escrow.

    I run the transfer checklist so nothing follows you after closing.

    • Deposits credited to the buyer in escrow, documented
    • Written notice of ownership change to every tenant
    • Prorated rent, and any prepaid rent, reconciled
    • Keys, mailbox keys, warranties, and vendor contracts handed over
    Step14
    We handle this

    Line up the replacement before you need it

    The investors who lose money on exchanges are the ones who start shopping on day 40. We build the target list during escrow so identification day is a confirmation, not a scramble.

    I start the replacement search while your sale is still in escrow. That's the whole game.

    Browse Valley community market dataTalk through your exchange
    What done looks like

    Phase 4 is done when the deed records, the deposits transfer, and your replacement property is identified.

    The Numbers

    What it costs to sell an LA investment property

    County documentary transfer tax$1.10 per $1,000 of sale price
    City of LA transfer tax$4.50 per $1,000 (city limits only)
    Measure ULA (City of LA)4% at ~$5.3M+, 5.5% at ~$10.6M+ — hits apartment sales
    Qualified intermediary fee (1031)$800–$1,500 per exchange
    Escrow and titleRoughly $2 per $1,000 plus base fees
    Estoppel and tenant notice preparationTypically absorbed by me
    Soft-story retrofit (older multi-family)Varies widely — quote before listing
    Relocation assistance (if applicable)Set by LA ordinance; varies by tenant class
    Depreciation recaptureUp to 25% federal on the depreciated basis
    Brokerage compensationNegotiable — set in your listing agreement

    Estimates for general guidance only. Rates, thresholds, and customary practices change and vary by city. I'll prepare a written net sheet specific to your property before you list.

    Common Questions

    Investor seller questions

    Thinking about your exit?

    Send me the rent roll and I'll model the sale, the exchange, and the hold — side by side.

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