LOS ANGELES—Pendo Investments has purchased a three-property multifamily portfolio totaling 222 units for $46.5 million, an average per-unit price of $209,500. The investor plans to invest an additional $12,000 per unit to upgrade the properties and bring the rents up to market rate.

“Each one of these deals was purchased in the five-cap range and each one of them had a rental upside. When I say rental upside, I mean that after our planned renovation, there are already other properties in the market today that this property will be competing with that are getting rents that are anywhere between 10% to 20% above current rents,” Matt Kardos, EVP at Pendo Investments, tells GlobeSt.com. “We really like the tenant profile and the risk return for these markets. These are all markets that are mostly working class, but they are very infill and there isn't a lot of new supply coming on the market. But, you have a great tenant base with a 97% occupancy rating.”

The three properties are a 111-unit 1970s vintage complex in Garden Grove, a 95-unit 1970s vintage complex in Downey, and a 16-unit 2006 vintage complex in Bellflower, CA. The investor will upgrade each of the interior units, so that the property can compete at the top of the market. “Our renovations are pretty consistent throughout our portfolio. On the interior side, we are doing granite countertops, two-toned paint, new lighting, new flooring and new bathroom vanities,” says Kardos. “On the exterior side, we are doing façade work with new landscaping and signage. In two of the three properties, we are adding playgrounds and upgrading the gym equipment.”

The investor owns a total of nine other properties within a 10-mile radius of each of these properties, including two multifamily properties in Downey that they purchased late last year for nearly $25 million. Once the renovations are complete and lease-ups begin, they plan to resell the properties. “We look for a value-add component, previous under-capitalized ownership and an upside in the current market rental rates by adding value through capital improvements,” Kardos describes about the company's business plan. Pendo Investments purchased the properties with bank loans provided by Chase.