"This is a building where the buyer bought it on negative cash flow and he's looking to reposition," Brian Smuckler, a vice president and director of the national multi-housing group at Marcus & Millichap in Phoenix, tells GlobeSt.com. The property had gone on and off the market for about one year before the latest deal took shape.
The buyer, El Cajon, CA-based Cuatro J. LLC, beat out eight competing offers and closed escrow with seller Jonathan Holmes of San Jose, CA, in less than 30 days. The buyer brought a down payment to the table, with the balance of the purchase price being covered by seller-provided financing.
"Basically it was a deal where the seller had employed several management companies. It was very mismanaged and had an excessive amount of deferred maintenance," says Smuckler. "At closing there were 10 units that weren't even rentable. The buildings needed an excessive amount of capital improvement."
Located at 2150 W. Missouri Ave., Christown Villas were built in 1960 on 1.8 acres. The complex contains five one-bedroom units, 19 two-bedroom units and four three-bedroom units on 1.8 acres, with rents of $450, $600 and $700, respectively.
One incentive for the buyer was the fact that 82% of the units are two and three bedrooms, boasting some of the largest floor plans in the immediate area, says Smuckler. Another was the low-density aspect of the property, with only 28 units set on nearly two acres, he adds.
"There has been a lot of out-of-state capital that's just chasing limited product here," says Smuckler, the only broker working the deal. "There are very few true value-added deals where someone can reposition in this size range."
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