David Zook, an Escondido, CA-based private investor, purchased the 32-unit Casa Quieta at 2745 W. Colter St. for slightly more than $1 million from a family trust based in San Diego. Built in 1969, the 11-building Casa Quieta sits on 2.1 acres and is comprised entirely of two-bedroom units averaging 850 sf. The average rent is $575 per month. Only 17 units were occupied at closing--a result of mismanagement and neglect, says Greg Thielen, a senior investment adviser with Hendricks & Partners in Phoenix.
Zook obtained an $820,000 bridge loan, which closed at a 10% interest rate from Englewood, CO-based Merchants Mortgage & Trust Corp., according to Thielen. The buyer has slated extensive improvements, including new parking and landscaping, with additional plans to refinance upon completion.
Casa Quieta was on the market merely days and generated several offers before the seller entered negotiations with Zook, who was able to close below the $1.2-million ask. For a property that was 50% occupied, Thielen says it was critical that a strong buyer was identified. Escrow lasted three months because the original lender backed out of financing the deal, he tells GlobeSt.com.
"Obviously, getting a loan is a really, really big part of it, so we picked somebody who had the financial strength to get a loan, given the occupancy of the building," says Thielen, who represented the seller in the deal. Zook was self-represented.
A tenant-in-common partnership, headed by San Francisco-based Mike Riordan, has purchased the 35-unit Casa Valia at 1815 W. Colter St. from Jerry Fay of Portland, OR. Constructed in 1970, the two-bedroom units average 800 sf.
Thielen says the buyer obtained a 30-year, $972,950 acquisition loan from Phoenix-based Metropolitan Financial Corp. to finance the deal. Extensive upgrades are in the works for a complex with two vacancies at closing.
The buyer closed below the $1.6-million ask as part of a 1031 Exchange, with escrow lasting two and a half months, Thielen says, adding the new owner's financial strengths also were key. From the buy side's perspective, the incentives to buy included an 8% cap rate and prospect of a light rail stop to be constructed near the property in the next two years. Rents average $575 per month.
"The street has several condo developments under construction. Overall, the area appears to be getting better," says Thielen. The CB Richard Ellis Inc. Phoenix team of Brett Polachek and Todd Braun represented the buyer.
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