If you own an apartment building in Los Angeles, there is a good chance you have never sat down with someone and talked through what you actually want to do with it. Not in a real way. Not with someone who was going to give you an honest answer regardless of what it meant for their commission.
Most owners just keep going. Rents come in, things break, you fix them, and the years pass. That is not a bad thing on its own. But it is also not a strategy. It is a default. And the difference between a default and a decision is often worth hundreds of thousands of dollars.
The reason most owners only know one option is simple. Nobody has ever laid all three out for them clearly.
So here they are.
Option One: Hold and Improve
This is the one almost every owner is already doing, at least in some form. You own the building, you keep it rented, and you manage it as it comes. The question is whether you are doing it strategically or just reactively.
A hold strategy done well looks very different from a hold strategy done by default. It means knowing exactly where your rents sit relative to market and having a plan to close that gap over time. It means understanding your expense ratio and identifying the specific line items that are dragging it higher than it should be. It means looking at your building not just as something to manage but as an asset with a trajectory, and actively steering that trajectory in the right direction.
For a lot of owners, holding is genuinely the right move. The building is performing reasonably well, the market timing for a sale is not ideal, or there are two or three operational improvements that would significantly increase the value of the asset before going to market. In those cases, the best thing we can tell someone is to hold, here is what to work on, and come back in two years.
The problem is not the hold strategy. The problem is holding without knowing why, or holding because it feels safer than making a decision.
Option Two: Refinance and Redeploy
This is the option most owners have never seriously considered, and for a lot of them it is the most interesting one once they see the numbers.
The concept is straightforward. You have equity sitting inside your building. The question worth asking is whether that equity is working as hard as it could be. A building you bought fifteen years ago may have appreciated significantly, which means the return on the equity you have built up inside it is much lower than the return on what you originally invested. In some cases dramatically lower.
A refinance lets you pull some of that equity out without selling the building. You keep the asset, you keep the income stream, and you put the extracted equity to work somewhere else, whether that is another property, a different investment, or simply a position that generates a better return than what the building is currently producing on that capital.
This option requires running the actual numbers. What is your current equity position. What would a refinance cost you in terms of new debt service. What return could that capital realistically generate somewhere else. Those three questions answered honestly will tell you whether this option makes sense for your situation.
For some owners it does not. For others it is the most obvious move they have not made yet.
Option Three: Sell or Exchange
Selling is not a failure. For a lot of owners it is the right answer, and the only reason they have not gotten there is that nobody sat down with them and made the case clearly.
The case for selling is usually one of a few things. The equity in the building has grown to the point where the return on that equity no longer justifies the management burden and the risk of continued ownership. The building requires capital improvements that would take years to recover through rent income. The owner's goals have changed and the asset no longer fits where they are trying to go. Or the owner simply does not want to be a landlord anymore and the stress of managing the building has outweighed the financial benefit for long enough.
When selling is the right move, the next question is whether a straight sale or a 1031 exchange makes more sense. A 1031 exchange lets you defer the capital gains tax on the sale by rolling the proceeds into a qualifying replacement property. For long-term owners with significant appreciation, the tax deferral alone can be worth a serious conversation with a qualified advisor before any decision is made.
Selling is not right for everyone. But for the owners it is right for, getting clear on that sooner rather than later can mean the difference between exiting at the right time and holding through a market cycle that works against you.
How to Know Which One Is Right for You
The honest answer is that you cannot know without looking at the numbers specific to your building and your situation. General rules do not hold up well in a market as varied as Los Angeles, and the right answer for one owner can be completely wrong for the owner down the street with a similar building.
That is exactly the conversation our McCann Multifamily Stress Test is designed to have. We sit down with you, we look at where your building actually stands across the numbers that matter, and we work through which of the three options makes the most sense given your goals, your timeline, and your financial position. There is no prepared conclusion before we start. The answer comes out of the session itself.
Most owners walk in thinking they already know what they should do. A lot of them walk out thinking about it differently. Not because we told them what to think, but because seeing the actual numbers laid out clearly has a way of making the right answer more obvious than it seemed before.
If you have never had that conversation about your building, reach out. It is free, it takes 20 to 60 minutes, and it starts with one question.
What do you actually want from this building?
