8734-8736 Burnet Ave — Condo Conversion Return Analysis

8734-8736 Burnet Avenue — 20-unit townhouse-style complex, North Hills, CA 91343

01The Deal

A 20-unit, 1990-built apartment complex under contract at the seller's counter of $4,100,000 all cash — roughly $205,000 per unit. The business plan is to acquire the building as a rental, entitle and record a condominium map, renovate the units, and sell them individually as for-sale condominiums.

Counter Price

$4,100,000

Units

Price / Unit

$205,000

Year Built

1990

Unit Type

3BD / 2BA ±1,380 SF

Close of Escrow

45 days +15 opt.

Contingency Period

12 days

Deposit

3% ($123,000)

Counter terms: all cash, no loan and no appraisal contingencies, property sold as-is / where-is with no seller repairs, inspection access after escrow opens with the 3% deposit. Buyer assumes the City's Report (9A) work after closing. Escrow: Atlantic Escrow (Ruby Tsai); Title: Fidelity Title (Nicole Menard). Counter expires 7:00 PM, May 17, 2026. — Sourced from Seller Counter Offer No. 1.

02The Value-Creation Strategy

The return is driven by the spread between what the building is worth as a rental (acquisition basis ~$205K/unit) and what each unit is worth as a renovated for-sale condominium (~$575K-$655K/unit per the comps below). The conversion process is what unlocks that spread — and it is also where the time, cost, and approval risk sit.

Step 1 — Buy

Acquire

Close the 20-unit building all-cash per the counter, funded with an acquisition & renovation loan plus equity.

Step 2 — Entitle

Convert

File a Tentative Tract Map, satisfy LA's conversion ordinance, record the condo plan & CC&Rs, and obtain the DRE public report.

Step 3 — Renovate

Improve

Moderate per-unit refresh (kitchens, baths, finishes) plus common-area and exterior upgrades to reach saleable condition.

Step 4 — Sell

Retail Out

Market and sell 20 individual condominiums, repaying the loan and returning equity plus profit as units close.

03For-Sale Comp Analysis

Finished-product evidence: what renovated 3-bedroom condominiums trade for in North Hills (91343). The value argument is finished-condo $/SF applied to the subject's ~1,380 SF units — not rent or cap rate.

Closed Sales — North Hills Condos (2025)

Seven closed condo sales in 91343, 2025. The mid-size 3BD comps — 9438 Burnet (1,518 SF) and 9431 Sepulveda (1,307 SF) — are the closest profile match to the subject's ~1,380 SF units.
Address	Status	BD/BA	SF	Price	$/SF	Sold
8601 Burnet Ave #D	Closed	2 / 2	948	$465,000	$491	Nov 26, 2025
8958 Burnet Ave #A1	Closed	2 / 3	—	$525,000	—	Nov 5, 2025
9140 Burnet Ave #3	Closed	2 / 3	1,275	$512,500	$402	Sep 29, 2025
9438 Burnet Ave	Closed	3 / 2.5	1,518	$679,990	$448	Jun 27, 2025
9431 N Sepulveda Blvd #1	Closed	3 / 2.5	1,307	$520,000	$398	Jun 24, 2025
9834 Sepulveda Blvd #112	Closed	2 / 2	909	$445,000	$490	Jun 23, 2025
15108 Plummer St #9	Closed	4 / 3	1,885	$692,500	$367	Feb 14, 2025

Active Listings — Competing Resale Supply

Address	Status	BD/BA	SF	List Price	$/SF	Notes
8530 Burnet Ave #107	Active	3 / 3	1,284	$570,000	$444	Direct profile match
9354 Burnet Ave #111	Active	3 / 3	—	$724,900	—	Burnet Ave condo
9800 Sepulveda Blvd #38	Active	2 / 2	1,039	$429,500	$413	Smaller unit
9714 Sepulveda Blvd #202	Active	2 / 2	844	$494,999	$586	Small unit, high $/SF

New-Construction Competition

North Hills median ~$453-463/SF (Feb-Apr 2026). Comp set is preliminary, drawn from public listing aggregators — expand and verify with full MLS closed sales before removing contingencies.
Project	Status	BD/BA	SF	From	$/SF	Notes
Valley Villas — Plan 2 (9433 Sepulveda)	New Constr.	3 / 2.5	1,482-1,504	$705,128	~$472	75-unit project
Valley Villas — Plan 3 (9433 Sepulveda)	New Constr.	3 / 2.5	1,485-1,518	$697,323	~$465	75-unit project

Takeaway 1

Closed 2025 condo sales in 91343 span ~$367-$491/SF; mid-size 3BD units (~1,300-1,520 SF) cluster tighter at ~$400-$450/SF — the band that matters for the subject.

Takeaway 2

Applied to the subject's ~1,380 SF units, that band implies a finished value of roughly $555K-$620K per unit. The model base-cases $590K (~$428/SF) — mid-band, with new construction at ~$465-472/SF supporting the upside.

Takeaway 3

Absorption risk is real: Valley Villas is delivering 75 brand-new condos in the same ZIP. The subject competes on price and renovation quality against new construction.

Takeaway 4

Acquisition at $205K/unit vs. a finished comp basis near $590K/unit is the conversion arbitrage — the entire thesis. Costs and approvals below determine how much of it is captured.

04Interactive Return Model

Every figure except the Sourced contract price is an editable Assumption. Adjust any input and the return recomputes live. Load a preset, then tune it to the deal facts as the offering memorandum and City 9A scope come in.

Acquisition

Purchase price Seller Counter No. 1

Units count

Acq. closing costs % of price

Renovation & Conversion

Renovation / unit moderate refresh

Common area / exterior total $

Conversion soft cost / unit TTM, survey, CC&Rs, DRE

Tenant relocation / unit verify w/ counsel

City 9A required work scope TBD — total $

Financing

Loan-to-cost % of hard project cost

Loan interest rate % annual, I/O

Loan points % origination fee

Sale & Carry

Sale price / unit finished condo

Selling costs % of sellout (comm.+closing)

Property carry tax/ins/util total $

Rental income offset net, during entitlement

Project timeline months, buy to last sale

Projected Net Profit

—

Equity Multiple

—

Return on Equity

—

Annualized ROE

—

Profit Margin

—

Acquisition price—

Acquisition closing costs—

Unit renovation—

Common area / exterior—

Conversion soft costs—

Tenant relocation—

City 9A work—

Loan fee + interest carry—

Property carry—

Selling costs—

Less: rental income during hold—

Total net project cost—

Condominium sellout (revenue)—

Acq. + Reno Loan

—

Equity Required

—

Interest carry is modeled on a declining loan balance as units sell (≈62% average outstanding). "Equity required" is peak equity, simplified — it does not model the timing of unit-sale cash inflows. Annualized ROE is a simple figure (total ROE ÷ years); a true IRR requires a unit-by-unit absorption schedule.

05Scenario Range

The same model run across three internally consistent cases. The deal pencils to a profit even in the conservative case — the question the contingency period must answer is which case is realistic.

Generated live from the model formula. Click a preset above to load any case into the interactive model.
Driver / Outcome	Conservative	Base Case	Upside

06Key Risks & Contingencies

A condo conversion is an entitlement play, not just a renovation. These items drive the difference between the base and conservative cases — and one of them is binary.

1. Conversion approval is not guaranteed (binary risk)

Los Angeles approves residential condominium conversions only where the planning area's rental vacancy rate is at or above 5% (LAMC 12.95.2). Citywide vacancy is currently borderline (~5.1%). If the area fails the test, the conversion cannot be approved and the thesis collapses to a rental hold. This must be confirmed with City Planning before contingency removal.

2. Entitlement timeline & Tentative Tract Map

A 20-unit conversion requires a Tentative Tract Map, condo plan, CC&Rs, and a California DRE public report before a single unit can close. Realistic entitlement is 12-18 months; the model's timeline input carries this. Delay extends loan interest and property carry directly.

3. City 9A required work — scope unknown

The counter makes the buyer responsible for the work in the City's Report (9A) after closing. The model carries a $150K placeholder. The actual scope must be obtained and priced in the 12-day contingency window — it could be materially higher.

4. Tenant relocation cost & occupancy

The building is occupied. Conversion triggers tenant noticing, a right of first refusal, and relocation assistance (LAMC 47.06 / 12.95.2) regardless of the 1990 build (non-RSO). The $15K/unit assumption is a planning estimate — verify current relocation amounts and tenant categories with land-use counsel using the rent roll.

5. Absorption against new supply

Valley Villas is delivering 75 new-construction condos in the same ZIP. Selling 20 units into that competition may require price concessions or a longer sell-through — both modeled via the sale-price and timeline inputs.

6. The decision clock

The counter expires 7:00 PM, May 17, 2026; contingencies must be removed 12 calendar days after acceptance, with the 3% deposit ($123,000) at risk after that. The conversion-feasibility and 9A diligence above must fit inside that window.

07Diligence Checklist — 12-Day Window

What to confirm before removing contingencies, to replace the model's assumptions with deal facts:

Confirm the planning-area rental vacancy rate meets the 5% conversion threshold (City Planning).
Obtain the City's Report (9A) and price the required work with a contractor.
Get the offering memorandum & rent roll — verify unit count, exact SF, current income, occupancy.
Engage land-use counsel / a condo-conversion consultant for a TTM feasibility & timeline letter.
Confirm tenant relocation exposure (categories, amounts, lease status) against the rent roll.
Lock acquisition & renovation loan terms (rate, points, LTC, term) and replace the financing inputs.
Pull the full MLS closed-condo comp set for 91343 to firm up the sale-price assumption.
Order the preliminary title report — confirm no recorded condo plan and a clean conversion path.