82.1 F
San Fernando
Thursday, Mar 28, 2024

Upgrades Mean Higher Rents for Apartments

As more new apartment buildings spring up with fancier features and higher rents, investors see potential in older complexes with cheaper rent they can eventually raise. That was the mindset behind Chicago real estate investment firm Waterton’s recent purchase of Candlewood North in Northridge for $43.7 million. The apartment complex, built in 1964 at 9830 Reseda Blvd., needs serious upgrading as well as seismic retrofitting to decrease the risks of damage and injury from earthquakes. Mark Stern, senior vice president of acquisitions, said Candlewood was a good example of Waterton’s model. “We thought that there was some rental upside, and thought it could use what we do – our value-added business plan, because there’s stuff that’s outdated and could be modernized,” Stern said. Waterton plans to install wood-style flooring in the 189 units, update the cabinets, add solid-surface countertops, tile the backsplashes and install stainless steel appliances. It will also upgrade lighting and plumbing fixtures and put in new window treatments. The common areas will be improved, including the façade, the elevator cab and landscaping. Waterton will likely start work over the next two months as apartment become vacant and finish in about three years, Stern said. The company usually spends between $8,000 and $10,000 a unit, Stern added, excluding what it costs to update common areas and do outside work. Current rents at Candlewood are affordable for tenants in the middle-income bracket, Stern said, but the company plans to increase them after renovations. Those will be “modest,” he added. “It depends on what we’re spending,” Stern said. “We still want them to be affordable, and still want to be able to charge a lot less than new properties.” The complex was between 94 and 95 percent occupied when the deal closed, according to Stern. Waterton buys multifamily properties across the country and began buying in the L.A. area about two years ago. Hot Market Report The Los Angeles area, particularly Santa Clarita Valley, is expected to be the country’s second hottest home market next year, according to a report by realtor.com, the official site of the National Association of Realtors. The organization based that ranking on a nearly 7 percent anticipated jump in home prices in the Los Angeles-Long Beach-Anaheim area next year. A second metric, sales activity, is predicted to jump 6 percent, according to realtor.com. The area is behind the Phoenix-Mesa-Scottsdale area on the ranking, which came in as the nation’s top market next year out of the country’s 100 largest metropolitan areas. There, home prices should rise 6 percent but activity is up 7.2 percent. “The overall Los Angeles region can be considered a turnaround market for sales,” said Javier Vivas, manager of economic research at realtor.com. “This year, the growth rate of sales has been well below that of the national rate, turning negative during the summer. Yet, it is projected to grow by 6 percent next year.” In Santa Clarita, homes are selling in 32 to 58 days, faster than the 41 to 51 days’ pace of the overall country. Plus, homes receive 1.7 percent more showings than homes in the county overall, and up to almost 2.5 times more than homes nationally. Additionally, four out of eight ZIP codes in the valley – including Stevenson Ranch, Canyon Country and Newhall – are considered “very hot” by realtor.com. Vivas attributed those statistics to quick inventory turnover in the area and consistent price appreciation, both of which are getting buyers’ attention. “This turnaround performance is largely driven by growth in employment, supported by new home construction,” he said. The Oxnard-Thousand Oaks-Ventura metropolitan area ranks 22 in the organization’s hottest market predictions for next year. Home prices there are expected to rise 5.2 percent while sales should increase 5.4 percent. Nationally, however, growth will be slower for the housing market, the organization predicts, largely due to the anticipated rise in interest rates. Celebrity Hire Major League Baseball player and local Joshua Satin is returning to the area – this time working for Tarzana apartment investment firm Gelt Inc. Satin, 31, retired from baseball in June after an injury, and has been hired by Gelt as its asset and acquisitions coordinator, finding apartments to buy and helping the company acquire them, Gelt said. Satin had a nine-year career playing with the New York Mets, Cincinnati Reds and San Diego Padres. He has invested in apartments on his own for five years. Satin was born in Hidden Hills and attended Harvard-Westlake School in Studio City. Staff Reporter Carol Lawrence can be reached at (818) 316-3123 or [email protected].

Featured Articles

Related Articles