Then again, when you consider replacement costs, which Stone figured at about $100,000 a unit, it once again becomes a basement bargain for a cash-rich investor with time to wait out the process.

In Woodlawn Park, Fla. another “highly-distressed” multifamily deal recently traded hands for $2.8 million, or $25,727 a door. It was a complex bankruptcy sale that not all investors are brave enough to water.

The multifamily asset was overleveraged, undercapitalized, and literally out of money to support its operations. The buyer actually had to front money to keep on the utilities before they closed on the deal. There are plumbing issues. Sewage was backing up into the units. The roofs need replaced, and so on.

But again, when you consider the upside—the multifamily property sold at auction at $20.20 a foot and the replacement cost is pegged at about $75 a foot—this highly-distressed deal becomes quite the basement bargain for the right investor. The multifamily complex sits on 15 acres of prime Pinellas County land.

The moral of the story is this: highly-distressed multifamily assets are making their way to the market more frequently. Industry watchers expect to see more class B and class C multifamily properties with plenty of distress hit the market. Rehabbing older multifamily buildings takes less time than building new apartment complexes and with vacancy rates declining across the Southeast, highly-distressed doesn’t look as distressed as it did a few years go.