Los Angeles Multifamily Rent Increase Update

Last week, I had a chat with a fellow apartment owner about rent increases for 2025, and to my surprise, even seasoned investors are unclear about what’s allowed in LA City versus LA County.

 So I've broken it down below. I hope this clears up any confusion and gives you the clarity you need to plan confidently for the year ahead.

Best,

Taylor

Rent Increase Caps

If you take nothing else from this newsletter, it's this ONE thing.

LA City: Annual rent increases for rental units subject to the City of Los Angeles Rent Stabilization Ordinance (RSO), effective July 1, 2024, through June 30, 2025, is 4%. If the landlord provides gas and electric service to the tenant, an additional 1% can be added.

Source: Los Angeles Housing Department

LA County: In 2025, rent increases will be limited for units already under rent control to 60% of the annual change in the consumer price index — a measure of how much costs in general are rising throughout the economy — with a ceiling of 3%.

Source: Los Angeles County Consumer & Business Affairs

Exceptions for:

• Small Property Landlords — those with no more than 10 units (including outside of L.A. County) — can increase rent up to 4%
• Luxury Units — two bedrooms or less that rented for at least $4,000 a month back in September 2018 — can increase rent up to 5%

Two Multifamily Metrics

Multifamily Sales are Slower – What This Means for You

In Q3 2024, multifamily sales in LA totaled $1.6 billion, up from $1.2 billion in Q2. While that’s progress, it’s still far below the 10-year average of $2.2 billion per quarter.

Why is this happening?

• High Borrowing Costs: Interest rates are at 6-7%, making financing harder for buyers.
• Stricter Lending Rules: Banks are approving fewer loans, so fewer deals are closing.
• Regulatory Uncertainty: Rent control and other rules are making some investors wary of LA properties.

Where is the action?

Well-capitalized buyers are targeting high-quality, stabilized properties, especially in areas with limited supply and strong demand, like Brentwood, Santa Monica, and Venice.

The slower market means less competition for well-funded investors. Let’s find the right deal for your goals — schedule a call, or let me know what you're looking for below.

My Buying Criteria (2 minutes)

Private Buyers are Dominating LA Multifamily Transactions

Over the past year, private buyers have taken the lead in LA’s multifamily market, accounting for 75% of sales, up from their traditional two-thirds share.

Why is this happening?

• Big Players Are Pulling Back: Higher interest rates and pressure from investors are forcing large institutions to buy less or sell off properties.
• Private Buyers Want Stability: Local investors are okay with lower returns if the property is a safe, long-term investment.
• They’re More Flexible: Private buyers are open to all kinds of deals—from fully rented, stable buildings to properties that need some work.

What do private buyers want?

Private buyers are focused on areas like West LA, Silver Lake, and South Bay with strong demand and limited supply. These neighborhoods offer steady rents, reliable tenants, and long-term growth.

Maybe selling hasn't crossed your mind recently, but it's always a good time to know your property value, especially if you own in these high-demand areas.

What's My Property Worth? (30 seconds)

Three Golden Nuggets from a Top Developer

ICYMI: Paul Schon was on No Vacancy this week!

It’s simple economics: the fewer apartments available, the more expensive they’ll be. Skyrocketing construction costs, climbing interest rates, and zoning nightmares have made LA one of the most difficult markets in the world to build. 

Here are some highlights from our conversation:

1. Building in California Isn’t Just Hard—It’s Almost Impossible

Development costs are out of control. Soft costs have jumped from $19 to $50+ per square foot, hard costs are over $350, and getting permits now takes years instead of months. It’s no wonder developers are walking away from projects.

2. There's Multifamily Opportunities in Middle Market

20-40 unit apartment buildings seem to be the sweet spot. They offer great returns, avoid regulatory headaches, and don’t attract institutional competition.

3. The Rules Suck, Play to Win Anyway

California regulations are tough, but the ones who succeed don’t fight the system—they figure out how to use it to their advantage.

Listen to the full episode to learn more about these topics and how to get ahead.

Check it out on:

📺 YouTube

🎧 Apple Podcast

🎧 Spotify

I really appreciate you tuning in. If you enjoyed the episode, please rate us ⭐⭐⭐⭐⭐!

I want to take a moment to say how truly grateful I am for you. My goal is always to provide you with real value, actionable insights, and support as you navigate your investments.

If there’s something more I can do to help or a topic you’d like me to cover, I’d love to hear from you. Your feedback makes this all worthwhile, and it’s how I continue to improve.

Thank you for trusting me to be part of your real estate journey. Here’s to a successful end of the year and a strong start to 2025!

Taylor

FVP, Lyon Stahl

Founder, The Group CRE

916-996-4421