An investor just paid $6.8 million for two 1950s-era South Beach apartment buildings with plans to renovate the units and lease them out at market rates.
The deal was announced Thursday by listing brokerage Marcus & Millichap, which represented seller Nick Molina. It includes the low-rise apartment buildings at 1035 9th Street and 1044 Pennsylvania Avenue, which have 22 and 16 units, respectively.
Molina purchased the buildings through two separate deals in April 2013 for a combined $4.425 million, according to county records. He financed those deals with a pair of mortgages from the seller totalling $2.94 million.
“The properties had unfavorable debt that needed to be assumed and we were able to overcome this challenge by identifying a buyer who understood the future potential of the assets,” Felipe Echarte of Marcus & Millichap said in the sales announcement. “[The buyer plans] to renovate the units and raise the rents to market levels to increase cash flow and take advantage of continued appreciation in the market.”
Evan Kristol and Harrison Rein of Marcus & Millichap also represented the seller, while Mendel Fellig of Judith Rosen & Associates brought the buyer.
The two buildings are garden-style apartments mostly composed of studios — 28 overall — with a handful of one-bedroom, one-bathroom residences.
Rein told The Real Deal that average rents at the 9th Street building were $1,117 per month, with the Pennsylvania Avenue property fetching a very similar monthly rate of $1,106. Depending on the extent of the renovation, he said, a one-bedroom unit along Pennsylvania Avenue could easily command $1,650 a month at market rate.
Because the sale has not yet been recorded in county records, the buyer is unknown.
Multifamily properties are becoming one of South Florida’s most hotly traded asset types. Last year, $1.2 billion worth of rental properties were traded between developers and investors in the region, with experts citing rising rental rates and demand from millennials as drivers behind the market surge.