Marin County apartments: Savvy investors move in to snap up properties

Monday, March 15, 2010, 2:02 am

By Katherine J. Higgins, Bradley Real Estate, katherine@khiggins.com

Katherine Higgins

The Marin County apartment market started strong in the first quarter of 2010 on the heels of an uptick in activity that began in the summer of 2009. Real estate investors sitting on the side lines in the first half of last year moved back in to the market to scoop up distressed apartment properties in good locations.

In mid July of last year, properties that had been sitting on the market for over 12 months with several price reductions finally looked attractive to buyers. Properties priced between $1 million and $2 million with good returns – some as high as 7 percent – were purchased and financed by local lenders.

The most popular locations included San Rafael’s Gerstle Park, downtown San Rafael and Southern Marin locations in Tiburon, Sausalito and Mill Valley. A number of smaller, entry-level properties priced at steep discounts turned over in prices ranging from $700,000 to $1,400,000.

Many of these properties had been purchased at peak prices by novice investors in the boom years of 2003 to 2005. These sellers realized no gains from 2003 to 2009, and many sold at a loss after falling rents and rising operating expenses forced them out of their investments.

I expect to see the continuation of this trend in 2010, with only experienced apartment investors with cash looking for distressed properties. With the softening of apartment prices returns should be near 5 percent for southern Marin properties and up to 6.5 percent for many central Marin apartment investments this year.