CA Investor's $2M Takes 48-Unit Lakeside Complex

Stephen Clark of San Francisco was the winner among three bidders vying for the 48-unit Apple Tree apartments at 1752 W. Jackson Lane when his offer, just $50,000 shy of the asking price, was selected by Phoenix-based seller, Pine1752 LLC, Chuck LaBenz with Hendricks & Partner's Phoenix office tells GlobeSt.com. "The other bidders were at the same level," LaBenz says, "but he was the right choice. He had an exchange and he had the cash sitting there. That put him over the top."

For the money, Clark, who owns another apartment complex in Tucson, got a four-building, class B complex with just two vacancies, a 9% cap rate and one of the few apartment complexes in a growing community located adjacent to Pine Top and Show Low. "It's a good market there for rentals because there hasn't been a lot built and affordable housing is difficult to find in the mountain towns right now," he explains, adding the complex is located near city hall, the post office and police department and just a short distance from area schools.

LaBenz says Clark selected the property because he loved the area with its pine forests and nearby Rainbow Lake, located within walking distance of his recent acquisition. The property's cash flow also made it an appealing deal compared to properties in the Valley further south. Rents for Apple Tree's one- and two-bedroom units range from $540 to $610 per month. "We had very realistic expenses of $3,000 per unit and a 9% cap rate on collections, which is a far cry from what you see in Phoenix, where there would be a five or six cap rate on collections," La Benz says.

The class B complex also is situated in the heart of Lakeside, a former lumber town that is poised for revitalization with a main street that is expected to include boutiques and offices. The sale was handled for the property's former owner by LaBenz while Clark handled his side of the negotiations.