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PHOENIX-A local multifamily investor, planning to pick up 1,000 units this year, has acquired the 122-unit Mountain Springs Terrace in an off-market deal for $7 million or $57,459 per unit. The buyer plans to maintain it as a rental for awhile and then invest $35,000 to $40,000 per unit into a condo conversion.

Mountain Springs Terrace LLC, an affiliate of Right Place Properties, is starting out the play with an upfront investment of $80,000 to clean up 18 vacant units. “Usually we hold our properties for two or three years, clean them up and operate them as apartments, then renovate the units as they become available,” explains Natan Jacobs with locally based Red Door Commercial Inc. San Floriano Co. LP of Redondo Beach, CA is the seller of the 18202 N. Cave Creek Rd. complex.

Jacobs, who brokered the deal single-handedly, tells GlobeSt.com that the buyer liked the 1983-built complex partly because it fits its business model of acquiring distressed properties and revitalizing them before selling them at affordable prices. “We’ll look at almost anything when it comes to buying, but we primarily like between a D and B, because where we make our money is with the renovation,” he adds. The average price of a Right Place-renovated condo is $160,000, he adds.

The broker says Mountain Springs Terrace’s location was a chief selling point. “That neighborhood’s been going through a redevelopment. It has a lot of brand-new residential luxury apartments and condos, with new retail,” he says. “Ten years ago, this was the edge of town. But now Phoenix has come further north to meet it.”

In addition, the upside potential is strong as well in terms of rent. Jacobs says Mountain Springs Terrace’s average rent is $575, but the market average is $750. “Once we clean up the location, we can raise the rates,” he says. “It typically takes us about six months to get it upgraded.”

Gold Star Property Management will lease and manage the 85%-occupied complex. The unit mix is one- and two-bedrooms, measuring from 675 sf to 875 sf.

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