DAYTONA, FL-A brave local investor is taking a risk on a distressed bank-owned multifamily property with few tenants and many problems. But the investor is betting on the long-term value add in a recovering beach town market.

Franklin Street Real Estate Services brokered the sale of the multifamily property, which is located at 2525 N. Oleander Avenue, for $385,000. The sales price represents $27,500 per unit and $32.58 per square foot. The asset last sold for $970,000 in 2005. The buyer saw a deal on an acquisition that closed 39% under the previous purchase price. The all-cash deal closed in less than 30 days.

Kevin Kelleher, Bob Goldfinger, and Darron Kattan, all of Franklin Street, represented both the seller and buyer in the transaction. The Oleander Apartments had been foreclosed on and was owned by the bank.

"The property was 30% occupied at the time of sale and it needed significant renovations,” Kelleher tells GlobeSt.com. “The buyer was a local real estate investor who believed he could reposition the property and achieve rents which were 25% above the current asking rents.”

With its proximity to the ocean and a significant fix-up, Kelleher believes that rent growth would be achievable. Renovating the multifamily project and stabilizing occupancy with good management should insure future appreciation since it is close to the beach.

“This apartment sale represents another great example of the market’s demand for well-located apartments in Florida,” Kelleher says. “It was the excellent location of this property, only a couple of hundred yards from the world famous Daytona Beach, which drove immediate and strong demand.”

Built in 1969, the Oleander Apartments consist of one two-story concrete block building. The roofs are pitched and covered with composite shingles. The parking lot is paved and the building has excellent frontage on Oleander Avenue.

Still, only time will tell if the buyer see the upside potential on the deal and see a better fate than the previous buyer. Sold as is, Kelleher notes the buyer has to make strong marketing push and renovations to create cash flow.