The 11-unit Sun Garden Apartments building, on NE Purcell Boulevard in Bend, has sold for $1.16 million.
The transaction marked a rare opportunity for investors to acquire a rental property in Bend, said real estate brokers involved in the sale.
Michael McComb and Katie Fuller, husband and wife, purchased the property March 18. The couple owned rental property in Seattle but have sold all but one four-plex since moving to Bend in 2014, McComb said Tuesday.
He said he’s not looking to suddenly increase rents.
“I was a renter for many years, so I really relate to my renters,” McComb said. “That’s their home; it’s my investment but it’s their home.”
He plans to put a fresh coat of paint on the building and address other immediate maintenance issues. He said he prefers to keep his rents slightly below market rates. With tenant turnover will come improvements to each unit in turn, he said.
“There’s a way to do this right,” McComb said.
Until 2013, the assessed value for tax purposes of the 25-year-old, 10,407-square-foot building exceeded the market value assigned it by Deschutes County. Its market value shot up from $474,280 to $642,920 the following year and to $726,590 this fiscal year, according to county records. The county assessor collects real estate tax based on assessed value of a property, which is derived from the real market value.
The rise in Sun Garden’s value reflects the demand for apartment complexes in Bend for investment purposes, brokers said.
“In general, when you put a property like this on the market, there’s a lot of competition for it,” said Ron Ross, a broker with Compass Commercial Real Estate Services. Ross and Compass broker Terry O’Neil represented the seller, Arthur Willett and Pineridge Apartments LLC.
“In general, the demand for multifamily property is very, very high in Central Oregon. There are very few willing sellers,” Ross said.
McComb and Fuller bought the apartment building, located about two blocks south of St. Charles Bend, through a 1031 exchange. A 1031 exchange allows an investor to defer taxes on capital gains from a real estate sale by using the proceeds to purchase another investment property. The transaction must take place through a third party within 45 days of the first sale closing and involve only commercial or other property. A primary residence does not qualify, Ross said.
A real estate investor may never pay the capital gains tax, provided he or she continues exchanging one property for another, Ross said. “There’s no limit to the number of times you can exchange.”
Apartment buildings currently may provide a higher and more reliable return than many other investments, Ross said. Buyers may finance at lower interest rates and the demand for rental units keeps apartment buildings full, he said.
Alex Robertson, of John L. Scott Real Estate in Bend, who represented McComb and Fuller, said apartment buildings in Bend may provide a return comparable to places like Portland.
— Reporter: 541-617-7815, email@example.com