How to sell an apartment building in Los Angeles

2–4 units vs. 5+ units in Los Angeles

A duplex, triplex, or fourplex sells like a house: conventional and FHA owner-occupant buyers, the residential MLS, and a buyer pool heavy with house-hackers and small investors. Five units and up is commercial: buyers use commercial or DSCR loans, underwrite net operating income, expect an offering memorandum, and shop on cap rate and price per unit. Los Angeles adds a layer on both sides: the same tenant rules apply whether the building has three units or thirty, and the buyer will price them in.

The Los Angeles rules that ride with the sale

• RSO (Rent Stabilization Ordinance). Inside the City of Los Angeles, rental units in buildings with two or more units built on or before October 1, 1978 are generally covered: annual increases are capped at a percentage set each July by the Los Angeles Housing Department (LAHD), and tenancies end only for the ordinance's listed reasons. A sale does not reset rents and is not a reason to end a tenancy. Know which of your units are covered and say so in the package.
• Just Cause Ordinance. Since 2023, most non-RSO rentals in the city also require just cause to end a tenancy once a tenant has been in place six months, with relocation assistance for no-fault terminations. Buyers know this; never market “vacant delivery” unless it is lawful and already achieved.
• Relocation assistance and buyouts. No-fault evictions carry relocation payments that scale with tenancy length and tenant circumstances. Voluntary tenant buyouts are allowed but regulated: the city's Tenant Buyout Notification Program requires disclosures to the tenant and a filing with LAHD. If a buyer's plan depends on buyouts, the price should reflect their real cost and uncertainty.
• Annual registration and the rent registry. RSO buildings must be registered with LAHD every year, with unit-level rent data reported. Buyers compare the registry to your rent roll and to the leases; mismatches are the fastest way to a re-trade.
• SCEP. LAHD's Systematic Code Enforcement Program inspects rental buildings on a cycle; open citations must be disclosed and usually cleared or credited.
• Soft-story retrofit. The city's 2015 ordinance ordered retrofits of wood-frame soft-story buildings, with deadlines that have largely passed. Buyers and lenders will ask for the compliance certificate; an unretrofitted building sells at a discount that is usually larger than the retrofit cost.
• Statewide rules still apply — AB 1482 caps and just-cause protections for buildings the RSO does not reach, security deposits transferring to the buyer, and 24-hour written notice for showings.

What Los Angeles buyers underwrite (assemble it first)

• Rent roll that reconciles to the leases and the LAHD registry — current rent, lease dates, deposits, concessions, and each unit's RSO status.
• Trailing 12 months of actual income and expenses. Buyers add a management fee if you self-manage and back out owner-specific items.
• Leases and estoppel certificates from every tenant — start early; collecting them in a large building can take weeks.
• Capital items and compliance: roof, plumbing, electrical, seismic status, open permits, SCEP history, and the balcony/exterior-elevated-element inspection report where the state's inspection laws apply to your building.
• Utilities and metering — master-metered buildings are underwritten differently.

Measure ULA and transfer taxes: know the number before you price

Every sale inside the city pays the standard documentary transfer tax — $1.10 per $1,000 to the county plus $4.50 per $1,000 to the city. Sales above roughly $5.3 million also pay Measure ULA: 4% of the entire price, rising to 5.5% above roughly $10.6 million (thresholds adjust each July for inflation; confirm the current figures with the city). ULA is paid by the seller on the whole price, not the amount over the threshold, which is why buildings that would sell just above the line are often priced just below it. Buildings in Long Beach, Santa Monica, Culver City, or unincorporated county follow different schedules — the rule is the city the building sits in, not the mailing address.

How the sale usually runs

1. Pricing. Off NOI, cap-rate and GRM comps, price per unit, and the building's RSO profile (below-market RSO rents are priced as below-market for as long as the tenants stay). See cap rate, NOI & GRM explained.
2. Marketing. An offering memorandum, the MLS and commercial platforms, and direct outreach to Los Angeles investor lists. Occupied units are shown with proper written notice.
3. Offer and due diligence. Typically 15–30 days to review documents, inspect units, confirm financing, and often order a Phase I environmental report on larger properties.
4. Escrow and closing. Rents, deposits, and taxes prorate; the building is reassessed to the sale price under Prop 13; transfer taxes and, above the threshold, ULA are paid at closing. Notify tenants in writing of the new owner and where deposits are held.

The 1031 clock

To defer gain with a 1031 exchange, identify replacement property within 45 days of closing and close within 180 days, with a qualified intermediary engaged before your sale closes. Depreciation recapture and capital gains are real numbers on an LA building; talk to your CPA before you sign a listing agreement (our CPA guide covers who to hire).

See the market you are selling into

Browse current multifamily buildings for sale in Los Angeles to see how comparable buildings are being presented and priced, and all commercial real estate in Los Angeles for the wider picture. Statewide rules and the general playbook are in how to sell a multifamily building in California.