[caption id="attachment_50694" align="alignleft" width="262" caption="Katherine J. Higgins and Steven Level"][/caption]
MARIN COUNTY -- More than half of all small apartment sales in Marin County (two to four units) were distressed sales in 2011, according to a recent survey by the Apartment Investor's Advisor.
Last year, the majority of sales in this category were either bank-owned properties or at values less than what the owners had paid for the properties in the previous 10years. Short sales indicated the owner was underwater on the property, owing more than the value in today's market.
Most of those sales in Marin were duplexes in San Rafael and San Anselmo purchased in the boom from 2003--2007 and can now be bought at a 40 percent to 50 percent discount. Only a handful was in the best locations, and those sold after receiving multiple offers.
For example, a San Rafael triplex on Fifth Avenue valued at more than $1 million in 2007 sold as a bank-owned property with multiple offers for $550,000. The new owners, an investment group, are currently remodeling the property and intend to hold for at least five years.
Another example is the short sale of a triplex in Sausalito's "banana belt." Located at the corner of Bulkley and Santa Rosa avenues with spectacular Bay views from every room, the triplex sold in mid-July for $1.225 million. The property previously had sold at the peak of the market for $1.638 million.
In the five-plus-unit category, there were only a handful of sales by individuals, and those weren't distressed sales. The two largest sales on record were a 126-unit complex in Corte Madera that sold to an investment group for $43.6 million and 49 units in San Rafael that sold for $9.4 million. The San Rafael sale was part of a portfolio of central Marin apartment properties that all sold to a single investment group in November. Gross rent multipliers, a benchmark for transaction valuation comparisons, for those properties at time of sale ranged from 7.4 for the larger projects to as high as 12.6 for nine units located at 1710 Lincoln Ave. in San Rafael.
While other North Bay counties such as Napa and Sonoma have very little available inventory, any decently priced, newly listed Marin properties are receiving tremendously high buyer interest. This is evidenced by the recent sale of an eight-unit bank-owned San Anselmo property built as condominiums in 2008 and now for rent. Garnering more than 10 all-cash offers, it sold for nearly $2 million.
With lending rates for apartments at their lowest point in years and an unusual number of prospective cash buyers, we anticipate a strong 2012. Competition for properties will continue to increase.
These factors combined with the continuing surge of rental demand and tightening occupancy in all areas of the North Bay, apartment investments should continue to look very positive for long-term real estate investors.