David L. Winston of Sherman Oaks made an unsolicited offer on the First Avenue Apartments at 633 W. 1st Ave. property to get control of a solid fixer-upper with good potential. "With good operation and enough money to keep the property going in the right direction, he'll do very well," Greg Thielen, with Phoenix-based Hendricks & Partners, tells GlobeSt.com.
Built in 1982, the property was owned by First Avenue Apartments LLC of San Diego, an entity owned by Carmen J. Palmieri, who is now serving time for an investment fraud scheme involving the fraudulent sales of viatical investment contracts.
Under that scheme, Palmieri, through his company, National Medical Funding, bought life insurance policies from terminally ill patients and resold them to investors who paid the premiums in order to collect on a policy's benefit when the patient died. But Palmieri's scheme to turn nearly $8 million from 400 investors into a real estate empire failed after investors learned that many of the policies didn't exist.
The subsequent investigation into the scheme led to the dissolution of Palmieri's real estate empire and court-ordered receivership. Thielen said when he learned the First Avenue apartments were in receivership, he suggested the property to Winston, who was involved in a 1031 Exchange.
Although in some disrepair, Winston realized the complex's potential and made an offer.Thielen said the new owner plans to renovate the interior and exterior and reposition the complex on the market to achieve higher rents.
The deal was arranged for the buyer by Thielen and John Kobierowski, also with Hendricks & Partners. Titan Asset Management handled negotiations for the seller.
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