The Willowbrook Apartments is in for a facelift following the purchase of the 184-unit complex by The Apartment Company from Encinitas.
The Reno market is increasingly attractive to out-of-state investors.
“Investors in Reno don’t see the same value as investors from San Francisco or San Diego,” Kenneth Blomsterberg, first vice president investments with Marcus & Millichap, said in a phone interview with the Northern Nevada Business Weekly. “Ten years ago they wouldn’t have considered Reno.”
Times have changed. More and more investors are turning to the Reno market, considered a tertiary market compared to the Bay Area as a primary market and Sacramento metro area as a secondary market. In both areas, prices are higher and the opportunities for a healthy return on investment fewer.
Investors “are chasing yields,” he said.
Recently Blomsterberg with associates Ryan Rife and Benjamin Nelson brokered the sale of the 184-unit Willowbrook Apartments in Reno to Encinitas, Calif.-based The Apartment Company.
It’s the fifth multi-family complex in Reno purchased by the company. Marcus & Millichap brokered the previous two deals in less than two years: the 116-unit Green Leaf Pines apartments on Carville Boulevard, and the 100-unit Sunset Ridge apartments on Centennial Way.
The Apartment Company purchased Willowbrook for $14,748,000, or about $80,000 per unit. The transaction was recorded June 14. The complex last sold in 2004 for $12.7 million, according to the Washoe County Assessor’s website.
The Apartment Company, which also has multi-family investments in southern California and Las Vegas, was attracted to Willowbrook’s location, which has easy access to shopping, the Atlantis Casino, and the Reno-Sparks Convention Center. They are C-class apartments in a B-Class neighborhood, Blomsterberg explained.
“The goal is to reposition the property,” Blomsterberg said. To “bring a C property to a B-minus, or a B property.”
The company plans to invest approximately $1.2 million on deferred maintenance projects, beginning with exterior improvements such as siding, windows, landscaping and asphalt, and then starting on interior improvements.
Even without the improvements, the complex was at 95 percent occupancy at the close of the sale, typical of the high-occupancy most apartments in the area are enjoying in this post-recession period, which adds to the market’s attraction to investors.
Vacancies are so low when a multi-family complex goes on the market, it’s sometimes difficult to show an empty apartment to potential buyers unless the owner makes a point of leaving a unit vacant.
The Apartment Company is just one example of out of state investors interested in the Reno market.
Blomsterberg said his associates at Marcus & Millichap see a lot of multi-family property investors from the Bay Area, Sacramento and San Diego looking for property in the Reno area. Recently, a buyer from Omaha, Neb., began looking for a first investment in this market. Another investor from Vancouver, BC is “rooting around Reno,” he said.
Now, it’s not unusual to have 8-10 offers for a property from as far away as Connecticut and New York, Blomsterberg said.
“The market is just red hot,” he said. “Our biggest issue right now is having product out there to sell.”