Royal Hotel 238 W 10th St 19 Room Hotel San Pedro, CA 90731 $2,399,999 ($126,316/Room) 5.70% Cap Rate

The Royal Hotel offers investors a rare opportunity to acquire a well-maintained 20-unit SRO property in the heart of Downtown San Pedro, one of Southern California's most dynamic and rapidly transforming submarkets. Positioned steps from the $150M West Harbor waterfront redevelopment, the property provides investors with immediate cash flow and significant value-add upside through lease-up and operational optimization.
Currently 65% occupied, the property generates $244,092 in gross scheduled income with in-place rents averaging $1,565 per unit. With market rents at $1,500+, the asset offers 32% rent upside and a clear path to stabilized returns of a 9.0% cap rate and 6.67 GRM upon full occupancy. A separate 1-bedroom, 1-bath on-site manager's unit supports hands-on ownership or professional property management to maximize tenant retention.
The Royal Hotel has benefited from significant capital investment by current ownership, ensuring long-term durability and reduced near-term capital expenditure for the next buyer. In 2018, the property received a complete electrical and plumbing upgrade, addressing major building systems. In 2023, ownership installed a new roof and replaced the exterior metal staircase, further enhancing the property's structural integrity and curb appeal. Interior improvements include modern LVP flooring throughout, fresh paint, and refreshed unit interiors — delivering a turnkey asset with contemporary finishes. Units are individually furnished with TV, mini-fridge, and vanity, with renovated shared bathrooms featuring tile showers. All utilities are included in rent — water, electric, gas, cable, and internet — allowing ownership to command premium rents while simplifying operations.
The property benefits from an exceptional location adjacent to major economic drivers. San Pedro is home to the Port of Los Angeles, the busiest container port in North America, supporting over 190,000 jobs and generating sustained demand for workforce housing. The World Cruise Center welcomes over 1 million passengers annually, while Downtown San Pedro offers walkable access to restaurants, retail, and the historic Warner Grand Theatre. The upcoming West Harbor development — featuring 42 acres of waterfront restaurants, retail, an amphitheater, and public promenade — is set to further transform the area and drive rental demand.
With limited SRO inventory in the South Bay, high barriers to entry, and strong demographic tailwinds from port and maritime industries, The Royal Hotel represents a compelling investment for buyers seeking yield, upside, and long-term appreciation in a proven infill location.