Old Magnolia Apartments, a 16-unit apartment complex on Maxwell Road between Ga. 9 and Hembree Road, recently sold for top dollar to a California investor. After a brief inspection period and entertainment of multiple offers, Selina Chao closed on the property at just more than $77,000 per unit, or more than $1.2 million.
The complex was built in the 1960s and renovations were completed in 2000 for conversion to condo units. Renovation work included the installation of new kitchen and bathroom sinks, new furnace and air conditioning compressors and new electrical upgrades throughout. Each unit has two bedrooms, one full bath and a small kitchen located off of a family room.
However, the units didn’t sell and the project was re-converted to apartments.
Rents range around $750 per month for each unit.
The property has a rare zoning classification for Alpharetta, R-10M, which allows 10 residential units per acre. The zoning also allows conversion or redevelopment into townhomes, condominiums, new apartments or duplexes. Following a national market trend of re-conversion from condominiums to multi-family, the new owner intends to maintain the property as an apartment complex and capitalize on the strong rental demand for affordable housing in Alpharetta.
Chao, the California investor, saw strong potential in the property with its steady cash flow and a North Fulton market that is difficult to replicate small multi-family properties. That was a reason to invest in the area, she said.
“The Alpharetta/Atlanta market compared to that of California’s fundamentally comes down to fiscal prudence. The Alpharetta/Atlanta market has seen good growth and price gains in recent years but an investor can still get in the game or stay in the game at reasonable prices and make good returns,” Chao said.
Adding comments on the latest mortgage industry problems, she said residential sub-prime foreclosures are at an all time high. Banks from coast to coast are scurrying to calm the secondary markets. Residential home mortgage interest rates continue to rise and show no real signs of coming down, putting the entire financial market under stress.
“This stress has good and bad effects on different market sectors. Multi-family investments will continue to gain “good stress” from these market challenges. It is in this vein that we believe the multi-family market will continue to outperform other real estate investments in the next three to five years,” Chao said.
So, with the combined growth of the area and reasonably priced investments, along with uncertainty in the mortgage industry, investors are finding multi-family investments a good bargain. And, much to the delight of Atlanta property owners, they are choosing to invest their dollars in our local market.