Source: breakdown by Isaac Wentzien (@isaacwentzien)
A four-unit property in Logan Heights, San Diego, sold for $955,000. It was already producing income from five units because one was unpermitted. The buyer's plan: permit the fifth unit, renovate every unit to raise rents, and keep a detached garage as a future conversion. The reel's author called it one of his favorite deals of the year.
Deal snapshot
| Location | Logan Heights, City of San Diego |
| Property | Four permitted units, plus one unpermitted unit |
| Purchase price | $955,000 |
| Condition | All units in value-add condition, needing work |
| Existing tenants | Month-to-month leases |
| Extras | Detached garage with possible conversion to an additional unit, alley access, multifamily zoning |
Price per unit, illustrative arithmetic, not from the reel: $955,000 across 4 permitted units is $238,750 per unit. Across all 5 income-producing units, it is $191,000 per unit.
The value-add plan
- Permit the fifth unit. The property was generating income from five units, but only four were permitted. Bringing the fifth into compliance raises the legal unit count to five. See our guide to retroactive permitting.
- Renovate interiors and exteriors. Every unit needed work. Updated units can command higher rents and raise the property's income.
- Reposition the rents. Existing tenants were on month-to-month leases, which gave the buyer flexibility to renovate and reset rents. See the note below on tenant rules.
- Keep the garage in the back pocket. A detached garage on the lot could be converted into an additional unit later. See our ADU development service.
Why the reel's author liked the deal
According to the breakdown, these were the strengths:
- A strong entry price. The author called $955,000 a great price for a four-unit property in the city of San Diego. This is his opinion, not a comp-backed valuation.
- Value-add condition across the board. Every unit needed work, which means the upside comes from improvements, not just market movement.
- A path to five units. Permitting the unpermitted unit grows the legal unit count.
- Future redevelopment potential. Alley access and multifamily zoning leave room for a larger project down the road.
What to underwrite on any deal like this
General considerations, not from the reel.
- Permitting cost and timeline. Legalizing an unpermitted unit can require corrections to meet code. Get scope and cost before relying on the fifth unit.
- Renovation budget. Five units of interior and exterior work is a large scope. Price it with bids, not estimates.
- Tenant rules. San Diego and California have tenant protection laws that can affect ending or changing tenancies, including month-to-month leases. Confirm the legal path and any relocation requirements before planning around vacancy.
- Rents after renovation. Confirm achievable rents with comparable listings, not assumptions.
- Redevelopment feasibility. Zoning and alley access suggest options, but each one needs its own feasibility check.
For a look at how institutional buyers value stabilized multifamily once the work is done, see our breakdown of BlackRock's Southern California apartment acquisition.
Frequently Asked Questions
- What is a value-add multifamily deal?
- A property bought below its potential, usually because it needs renovation, has below-market rents or has unused development potential, with a plan to raise its income.
- Can an unpermitted unit be legalized in San Diego?
- In many cases, yes, through a permitting process that may require corrections to meet code. Feasibility depends on the property. Talk to a qualified team before buying on that assumption.
- What is an ADU conversion of a detached garage?
- Converting an existing garage into a separate accessory dwelling unit on the same lot, subject to local rules.
- Why does unit count matter?
- More legal units generally mean more income and a higher property value, so adding a unit through permitting changes the math.
- What does month-to-month tenancy mean for a buyer?
- Tenants have no fixed lease term, which can give flexibility to renovate and reset rents, but local tenant protections still apply.
This article is for general education only. It describes a single transaction and is not legal, tax or investment advice. Results vary by property. Consult qualified professionals before buying or renovating.
Evaluating a value-add multifamily deal in San Diego? Ground Zero Development handles acquisition through stabilization on infill projects across the city.
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