Santa Monica
Santa Monica is the most tightly regulated multifamily market on the Westside, and one of the most in-demand. That combination makes it a complicated place to sell if you are working with the wrong broker, and a very lucrative one if you are not. The Santa Monica Rent Control Board sets the rules here, the buyer pool is deep but selective, and your rent roll tells the whole story before a single showing happens.
The Group CRE has closed over $488 million in Los Angeles multifamily transactions, with deep experience across the Westside coastal markets. Taylor Avakian knows the Santa Monica market from the inside: the regulatory structure, the typical buyer underwriting, the price-per-unit benchmarks by neighborhood within the city, and the reasons a well-run process generates offers that a passive listing strategy never will.
Get Your Free ValuationMarket Overview
Santa Monica is a supply-constrained coastal market with a long history of strong rent performance and institutional-quality investor demand. Cap rates in Santa Monica range from approximately 4.85% to 5.25% in early 2026, reflecting a market that has held its pricing better than many interior LA submarkets during the broader cap rate expansion of the past two years.
Properties here typically range from duplexes and fourplexes to 12 to 30 unit buildings, most of them built between the 1940s and the 1970s. Larger 50-plus unit complexes exist along major corridors but trade infrequently. Price per unit generally runs from $350,000 to $550,000, depending on rent control exposure, unit size, and proximity to the beach. Ocean Avenue and the blocks immediately adjacent to the Third Street Promenade command significant premiums.
The buyer pool leans toward experienced Westside investors, 1031 exchange buyers parking proceeds from larger LA County sales, and family trusts managing multi-generational portfolios. Institutional capital occasionally enters for larger assets. Cash transactions are common. Most buyers come in with a clear underwriting model and a defined hold period.
Rent Control
Santa Monica operates one of the most protective rent control systems in California, administered by the Santa Monica Rent Control Board. The ordinance covers most rental units in buildings with two or more units that were constructed on or before April 10, 1979. Single-family homes and condominiums are generally exempt under the Costa-Hawkins Rental Housing Act (Civil Code Section 1954.52).
For the current rent increase period, Santa Monica Rent Control caps annual increases at the lower of 2.3% or $60 per month — significantly more restrictive than California’s AB 1482 statewide cap of 8.0% and more restrictive than the City of Los Angeles RSO, which allows 3.0% through June 30, 2026.
Pre-April 10, 1979 Buildings — Covered by SMRCO
Most rental units in buildings with two or more units constructed on or before April 10, 1979 fall under the Santa Monica Rent Control Ordinance. Annual increases are capped at the lower of 2.3% or $60 per month. Long-term tenants in these buildings may carry rents 20% to 40% below current market, creating a substantial rent gap that becomes the central underwriting issue for every buyer. Buyers will model vacancy turnover projections, deferred rent recovery timelines, and relocation assistance requirements.
Post-1979 Buildings — Generally Exempt from SMRCO
Buildings constructed after April 10, 1979 are generally not covered by the Santa Monica Rent Control Ordinance. Units built before January 1, 2005 may instead be subject to AB 1482 statewide protections, which cap annual rent increases at 8.0% for the current period (5% plus the applicable CPI). Post-1978, pre-2005 units still carry annual increase limits that buyers underwrite carefully. Verify your specific building’s status with a California real estate attorney.
The April 15, 2026 Court of Appeal ruling in Apartment Association of L.A. County v. City of L.A. (B336071) found that the City of Los Angeles cannot tie relocation fees to lawful rent increases on Costa-Hawkins-exempt units. That ruling was issued as unpublished and does not directly govern Santa Monica’s separate ordinance, but it reflects a broader legal debate around relocation assistance obligations directly relevant to Santa Monica owners considering rent increases before a sale. Informational purposes only. Not legal advice.
Verify the current Santa Monica Rent Control annual allowable increase directly with the Santa Monica Rent Control Board at smgov.net/departments/rent/ before publishing. Set annually. For informational purposes only. Does not constitute legal advice.
Transfer Tax
Measure ULA is a City of Los Angeles ordinance. Santa Monica is an independent city and is not subject to the Measure ULA transfer tax surcharges that affect properties within the City of Los Angeles.
Owners in Santa Monica avoid the 4% surcharge on sales above $5.4 million (for transactions closing after June 30, 2026) and the 5.5% surcharge on sales at or above $10.9 million that apply inside the City of LA. A beachside 12-unit building trading at $8 million inside the City of Los Angeles would face over $380,000 in Measure ULA and base transfer taxes. The same building in Santa Monica avoids that surcharge entirely.
Santa Monica properties are subject to the LA County documentary transfer tax and any applicable Santa Monica city-level transfer tax. The absence of any Measure ULA equivalent is a real, quantifiable selling point when marketing a Santa Monica asset to buyers who are also evaluating properties across the city line.
Verify current Santa Monica city documentary transfer tax rate with escrow counsel before quoting specific figures. For informational purposes only.
Santa Monica's supply constraints and coastal premium have made it a relative outperformer during recent market volatility. But several factors are converging that make the current window worth evaluating carefully.
Depreciation recapture and long-held basis issues are real for most Santa Monica owners who have held for more than 10 years. 1031 exchange strategies into markets with 6% to 7% cap rates are increasingly compelling for sellers who want to shift from below-market income to current market income without paying a tax bill all at once.
State housing law, including AB 2011 and SB 9, is creating incremental density pressure that could affect your ability to manage the property as a simple rental going forward. Executive Directive 19 (signed April 27, 2026) further streamlines ADU permitting across California's jurisdictions. Owners with large parcels or underbuilt lots are increasingly being approached by developers. Knowing what your land is worth, not just your income, is part of understanding your true exit number.
| Factor | Details |
|---|---|
| Typical cap rate range | 4.85% to 5.25% (Q1 2026) |
| Common property types | Duplexes, fourplexes, 6-30 unit buildings; 1940s-1970s construction |
| Price per unit range | $350,000 to $550,000+ (coastal blocks command premium) |
| Rent control exposure | Santa Monica Rent Control Board; pre-April 10, 1979 buildings with 2+ units |
| Annual rent increase cap (SMRCO) | Lower of 2.3% or $60/month (verify current year with SMRCO) |
| Measure ULA applicability | Not applicable (Santa Monica is not within City of Los Angeles) |
| Primary buyer profile | Westside investors, 1031 exchange buyers, family trusts, occasional institutional |
Owners considering a sale often want to understand how Santa Monica stacks up against Venice, Beverly Hills, and other nearby markets. The short answer: Santa Monica sits at an intersection of high demand, strict rent control, and above-average price-per-unit values that makes it distinct from every submarket around it. Here is how the numbers compare.
| Factor | Santa Monica | Venice | Beverly Hills |
|---|---|---|---|
| Median Price Per Unit | $500K to $650K | $450K to $600K | $600K to $850K |
| Current Cap Rate Range | 3.5% to 4.5% | 3.75% to 4.75% | 3.0% to 4.0% |
| Gross Rent Multiplier (GRM) | 16x to 20x | 15x to 19x | 18x to 22x |
| Rent Control Regime | Santa Monica RSO (strictest in LA) | Los Angeles RSO | AB 1482 only (no local RSO) |
| Typical Days on Market | 45 to 75 days | 50 to 80 days | 55 to 90 days |
| Primary Buyer Profile | Institutional, 1031, and HNW coastal investors | Private investors and value-add buyers | High-net-worth, family office, and 1031 |
| Vacancy Rate (Stabilized) | Under 3% | 3% to 5% | Under 3% |
Figures represent current market ranges for mid-size multifamily assets (5 to 30 units). Individual properties vary based on unit mix, rent roll, condition, and location within each submarket.
Venice is the market most sellers instinctively compare Santa Monica to, and they share some meaningful overlap: beachside desirability, strong renter demand, and a buyer pool that values location above almost everything else. But the key difference is regulatory. Venice falls under the Los Angeles RSO, which is itself restrictive, but Santa Monica has its own Rent Control Board with tighter annual allowable increases, a separate relocation assistance structure, and owner move-in rules that differ from the City of LA framework. That regulatory distinction tends to compress cap rates in Santa Monica relative to Venice on comparable buildings, which is part of why price-per-unit metrics in Santa Monica often run 5% to 15% higher than Venice on equivalent properties. Buyers who know this market pay a premium for it.
Beverly Hills operates under a fundamentally different regulatory environment. Buildings there trade under state AB 1482 only, which means substantially fewer restrictions on rent increases and unit turnover. That lighter framework produces higher GRMs and a smaller cap rate spread, and it attracts a distinct buyer profile: family offices and high-net-worth investors underwriting to long-term hold. In Santa Monica, that same buyer pool competes against institutional capital specifically targeting rent-controlled coastal assets. That broadened competition, when properly run, drives better outcomes at close. Beverly Hills commands higher nominal price-per-unit values, but Santa Monica often generates more competitive offer processes on stabilized properties because of the depth and diversity of its buyer pool.
Mar Vista and Culver City offer a useful reference for sellers considering a 1031 exchange out of Santa Monica. Both submarkets carry lower price-per-unit values (typically $300K to $480K per unit depending on location and unit mix) and somewhat higher cap rates (4.25% to 5.25% for stabilized assets). Buyers targeting those markets are generally underwriting to value-add upside through rent increases as units turn over under LA RSO. Santa Monica buyers, by contrast, have already priced in the regulatory constraints and are underwriting to long-term coastal appreciation. Neither approach is wrong. What matters for a Santa Monica seller is understanding that the buyer paying your price is not making a mistake. They know what they are buying and why it commands a premium.
The Bottom Line
Santa Monica is not the highest-cap-rate market on the Westside, and it is not the cheapest entry point for buyers. What it offers is a combination of irreplaceable coastal location, deep institutional demand, and long-term value stability that very few markets in Los Angeles can claim. Pricing it correctly and running a process that puts that combination in front of the right buyers is the difference between a good result and a great one.
Owners considering a sale often want to understand how Santa Monica stacks up against Venice, Beverly Hills, and other nearby markets. The short answer: Santa Monica sits at an intersection of high demand, strict rent control, and above-average price-per-unit values that makes it distinct from every submarket around it. Here is how the numbers compare.
| Factor | Santa Monica | Venice | Beverly Hills |
|---|---|---|---|
| Median Price Per Unit | $500K to $650K | $450K to $600K | $600K to $850K |
| Current Cap Rate Range | 3.5% to 4.5% | 3.75% to 4.75% | 3.0% to 4.0% |
| Gross Rent Multiplier (GRM) | 16x to 20x | 15x to 19x | 18x to 22x |
| Rent Control Regime | Santa Monica RSO (strictest in LA) | Los Angeles RSO | AB 1482 only (no local RSO) |
| Typical Days on Market | 45 to 75 days | 50 to 80 days | 55 to 90 days |
| Primary Buyer Profile | Institutional, 1031, and HNW coastal investors | Private investors and value-add buyers | High-net-worth, family office, and 1031 |
| Vacancy Rate (Stabilized) | Under 3% | 3% to 5% | Under 3% |
Figures represent current market ranges for mid-size multifamily assets (5 to 30 units). Individual properties vary based on unit mix, rent roll, condition, and location within each submarket.
Venice is the market most sellers instinctively compare Santa Monica to, and they share some meaningful overlap: beachside desirability, strong renter demand, and a buyer pool that values location above almost everything else. But the key difference is regulatory. Venice falls under the Los Angeles RSO, which is itself restrictive, but Santa Monica has its own Rent Control Board with tighter annual allowable increases, a separate relocation assistance structure, and owner move-in rules that differ from the City of LA framework. That regulatory distinction tends to compress cap rates in Santa Monica relative to Venice on comparable buildings, which is part of why price-per-unit metrics in Santa Monica often run 5% to 15% higher than Venice on equivalent properties. Buyers who know this market pay a premium for it.
Beverly Hills operates under a fundamentally different regulatory environment. Buildings there trade under state AB 1482 only, which means substantially fewer restrictions on rent increases and unit turnover. That lighter framework produces higher GRMs and a smaller cap rate spread, and it attracts a distinct buyer profile: family offices and high-net-worth investors underwriting to long-term hold. In Santa Monica, that same buyer pool competes against institutional capital specifically targeting rent-controlled coastal assets. That broadened competition, when properly run, drives better outcomes at close. Beverly Hills commands higher nominal price-per-unit values, but Santa Monica often generates more competitive offer processes on stabilized properties because of the depth and diversity of its buyer pool.
Mar Vista and Culver City offer a useful reference for sellers considering a 1031 exchange out of Santa Monica. Both submarkets carry lower price-per-unit values (typically $300K to $480K per unit depending on location and unit mix) and somewhat higher cap rates (4.25% to 5.25% for stabilized assets). Buyers targeting those markets are generally underwriting to value-add upside through rent increases as units turn over under LA RSO. Santa Monica buyers, by contrast, have already priced in the regulatory constraints and are underwriting to long-term coastal appreciation. Neither approach is wrong. What matters for a Santa Monica seller is understanding that the buyer paying your price is not making a mistake. They know what they are buying and why it commands a premium.
The Bottom Line
Santa Monica is not the highest-cap-rate market on the Westside, and it is not the cheapest entry point for buyers. What it offers is a combination of irreplaceable coastal location, deep institutional demand, and long-term value stability that very few markets in Los Angeles can claim. Pricing it correctly and running a process that puts that combination in front of the right buyers is the difference between a good result and a great one.
Santa Monica rent control creates a gap between in-place rents and market rents that is often larger than anywhere else on the Westside. That gap is real equity sitting locked in your building. The question is not whether it exists, but whether you are getting full credit for it in your sale price.
The answer depends entirely on how the deal is positioned and who is in the room bidding. Buyers who understand the Santa Monica market will pay for the upside. Buyers who do not will discount it. A broker who has worked in this market, who knows the typical rent bump timeline, who understands how buyers model Santa Monica vacancy turnover, will put the right buyers in the room and present the gap as a feature rather than a liability.
Combine that with the absence of Measure ULA on your transaction, and you have a structural cost advantage over comparable properties in the City of Los Angeles. That needs to be communicated clearly in your marketing.
The Group CRE will walk you through a no-pressure valuation based on actual closed comparables, your specific rent roll, and current buyer demand on the Westside. No online estimates. No generic cap rate math. Just a straight answer about what your building is worth and what it would take to sell it.
Request Your Free Property ValuationSanta Monica multifamily properties are trading at cap rates between 4.85% and 5.25% as of early 2026. The coastal location, supply constraints, and strong long-term rental demand support values even as cap rates elsewhere in Los Angeles have expanded. Price per unit typically ranges from $350,000 to $550,000, with beachside blocks commanding significant premiums.
No. Measure ULA is a City of Los Angeles ordinance and does not apply to properties in Santa Monica, which is an independent municipality. Santa Monica sellers avoid the 4% and 5.5% transfer tax surcharges that apply to high-value sales inside the City of LA, which can represent hundreds of thousands of dollars in savings on a mid-to-large building transaction.
Yes. The Santa Monica Rent Control Board (SMRCB) regulates most rental units in buildings with 2 or more units constructed on or before April 10, 1979. Annual rent increases are currently capped at the lower of 2.3% or $60 per month, among the strictest caps in California. Post-1979 buildings may be subject to statewide AB 1482 protections instead. Verify your specific unit status with the SMRCB or a California attorney.
Start with a thorough rent roll analysis to identify your below-market units and the realistic timeline for rent recovery. A skilled broker will position the gap between in-place and market rents as quantifiable upside, attract buyers who understand the Santa Monica market, and run a competitive process. Taylor Avakian at The Group CRE has guided Westside sellers through this exact scenario many times.
Value depends on your in-place rents, the spread to market rents, unit mix, building condition, and cap rate environment. At 4.85% to 5.25% cap rates, a Santa Monica building generating $200,000 in annual net operating income is worth roughly $3.8 million to $4.1 million before adjustments for deferred maintenance, below-market rents, and specific location premiums. Call The Group CRE for a property-specific valuation.
For long-term hold investors, yes. Santa Monica fundamentals remain strong: occupancy rates consistently above 97%, rents that hold even in softer economic cycles, and a coastal location that protects asset values better than most inland submarkets. Cap rates are low relative to LA averages (3.5% to 4.5% for stabilized buildings), which reflects that premium. The investment case here is appreciation and income stability, not yield maximization. For sellers, that buyer mindset matters because it sustains demand even when interest rates are elevated, and it means a well-run process continues to generate competitive offers.
For long-term hold investors, yes. Santa Monica fundamentals remain strong: occupancy rates consistently above 97%, rents that hold even in softer economic cycles, and a coastal location that protects asset values better than most inland submarkets. Cap rates are low relative to LA averages (3.5% to 4.5% for stabilized buildings), which reflects that premium. The investment case here is appreciation and income stability, not yield maximization. For sellers, that buyer mindset matters because it sustains demand even when interest rates are elevated, and it means a well-run process continues to generate competitive offers.
Stabilized multifamily in Santa Monica typically trades at cap rates between 3.5% and 4.5%, compared to a broader Los Angeles average that runs roughly 4.25% to 5.25% depending on submarket and asset quality. That 50 to 75 basis point premium reflects the combination of coastal location, tenant quality, and the market's historical resilience during downturns. For sellers, that premium translates directly to higher price-per-unit multiples. Working with a broker who knows how to substantiate and defend that premium in the offering is the difference between receiving market price and leaving value on the table.
Stabilized multifamily in Santa Monica typically trades at cap rates between 3.5% and 4.5%, compared to a broader Los Angeles average that runs roughly 4.25% to 5.25% depending on submarket and asset quality. That 50 to 75 basis point premium reflects the combination of coastal location, tenant quality, and the market's historical resilience during downturns. For sellers, that premium translates directly to higher price-per-unit multiples. Working with a broker who knows how to substantiate and defend that premium in the offering is the difference between receiving market price and leaving value on the table.
Most Santa Monica multifamily assets trade between 16 and 20 times gross rents, depending on unit mix, condition, location within the city (North of Montana commands the highest GRMs), and the spread between in-place and market rents. Buildings with rents significantly below market or with deferred maintenance can trade at the lower end or below 16x. Fully renovated buildings in prime locations with institutional-grade management often exceed 20x. The right GRM analysis requires a rent-roll review and comp analysis, not just a square-footage estimate.
Most Santa Monica multifamily assets trade between 16 and 20 times gross rents, depending on unit mix, condition, location within the city (North of Montana commands the highest GRMs), and the spread between in-place and market rents. Buildings with rents significantly below market or with deferred maintenance can trade at the lower end or below 16x. Fully renovated buildings in prime locations with institutional-grade management often exceed 20x. The right GRM analysis requires a rent-roll review and comp analysis, not just a square-footage estimate.
Three risks dominate: regulatory exposure, rent roll transparency, and financing. Santa Monica RSO limits rent increases to a percentage set annually by the Rent Control Board (typically 1% to 3%), meaning below-market rents are not always correctable on a predictable timeline. Buyers need to understand true turnover history, not just current rents, before underwriting upside. On financing, coastal multifamily values are sensitive to interest rate changes, and lenders sometimes apply more conservative loan-to-value ratios in rent-controlled markets. Finally, RSO compliance matters: buildings with unpermitted work, unregistered units, or unresolved relocation history can carry material liability. A thorough pre-market review catches most of these issues before they affect a sale.
Three risks dominate: regulatory exposure, rent roll transparency, and financing. Santa Monica RSO limits rent increases to a percentage set annually by the Rent Control Board (typically 1% to 3%), meaning below-market rents are not always correctable on a predictable timeline. Buyers need to understand true turnover history, not just current rents, before underwriting upside. On financing, coastal multifamily values are sensitive to interest rate changes, and lenders sometimes apply more conservative loan-to-value ratios in rent-controlled markets. Finally, RSO compliance matters: buildings with unpermitted work, unregistered units, or unresolved relocation history can carry material liability. A thorough pre-market review catches most of these issues before they affect a sale.
This page is for informational purposes only and does not constitute legal or tax advice. Consult a licensed California real estate attorney and CPA before making any decisions based on the information above.
