First-Time Texas Buyer Picks Up 71 Units in Arlington

In selling the asset, a private investor from Westlake Village, CA, turned a $500,000 profit with a two-year hold and $300,000 rehab of the 39-year-old complex at 1500 W. Lovers Lane, Jeff Dowdle with Marcus & Millichap's Dallas office tells GlobeSt.com. Arlington Square's buyer is a private investor from Arden, NC, who has kept the manager in place and assigned oversight to relatives living in the area.

Dowdle says the seller is setting up a 1031 Exchange with the gain, scrutinizing class B deals in Dallas and Phoenix. Arlington Square was on the market four months at $1.9 million. "He made about $500,000 on the deal," Dowdle confides.

Arlington Square's upside lies in a 15% vacancy, but the primary hurdle in making the close was its grandfather status on the 2.4-acre development, land now zoned for commercial services. A previous contract fell out when the would-be buyer didn't qualify for financing, Dowdle says. The Arden investor, securing the required extra insurance, closed with a package from LaSalle Bank of Chicago. To help sweeten the deal, the seller also guaranteed rent on four units for the next fiscal quarter and paid upfront out of the proceeds, according to Dowdle.

The Arlington Square mix consists of 43 one-bedroom, one-bath units with 603 sf; 20 two-bedroom, one-bath designs with 925 sf; and eight three-bedroom, two-bath apartments with 1,029 sf. The monthly rents are $525, $625 and $725, all bills paid with a built-in fee for electricity. The concessions are one month free and no deposit on a year's lease.

Dowdle, the seller's broker, says the buyer's plan is to run the complex as is, keeping the name and lowering the vacancy. "He's not interested in a quick upside as a lot of people are," Dowdle says of the market-rate rents. "Once he gets the occupancy, he's got a good cash flow there." Tommy Lovell, also in Marcus & Millichap's Dallas office, negotiated for the buyer.