Apartment Investor’s Advisor – Winter Issue 2021
Marin Rents Remain Flat; Vacancies Increase in 2020-2021
Marin landlords had a tough year in 2020, starting with the COVID-19 rental restrictions and eviction moratorium passed by both the state and local governments in the second quarter.
The eviction moratorium has now been extended statewide to June 30, 2021.
The slowing economy contributed to the many tenant move outs that occurred throughout the year and created the softening rental market we are seeing now.
One landlord told me that he did not raise rents at all in 2020 and only plans to raise rents about 5% this year to cover increased operating costs. Facing several turnovers now, he will advertise rent at the rate he was getting in late 2019 and hope for a quick move in.
Most landlords have reported that they are receiving full rent they were charging at the beginning of 2020. But at the beginning of the pandemic, when job losses shot up, some tenants could not pay full rent.
With government assistance, those tenants are either now paying full rent or have vacated their apartments.
My most recent rental survey shows that the apartment market softness is highest in Sausalito, Mill Valley, San Rafael and Novato.
In these locations’ vacancies have almost doubled from this time last year. And it is taking more than two weeks to fill vacant units. Some units are vacant more than 30 days.
I would expect landlords to offer reduced rent in most Marin locations to keep their buildings filled this year and reduce vacancy losses.
1st Quarter 2021 Rents Marin County
| CITY | BEDROOMS | BATHS | RENTS |
|---|---|---|---|
| Sausalito | 1 | 1 | $2250-$3395 |
| 2 | 1 | $2995-$4650 | |
| Tiburon | 1 | 1 | $2600-$3542 |
| 2 | 1 | $2900-$6470 | |
| Mill Valley | 1 | 1 | $1850-$3700 |
| 2 | 1 | $3600-$4700 | |
| Greenbrae | 1 | 1 | $2200-$2975 |
| 2 | 1 | $2800-$4200 | |
| San Rafael | 1 | 1 | $1725-$2600 |
| 2 | 1 | $2095-$3400 | |
| San Anselmo | 1 | 1 | $1800-2777 |
| 2 | 1 | $2100-$3250 | |
| Novato | 2 | 1 | $1675-$3060 |
| 2 | 1 | $2275-$3425 |
Editor’s Letter
Winter 2021
Dear Apartment Owners and Commercial Investors,
Despite the challenges of the COVID restrictions on landlords this year the demand for Marin County apartment properties remained strong. The low inventory has helped keep prices up and continuing low interest rates assisted buyers to make their purchases.
I expect to see increased apartment market activity in 2021, with no significant drops in pricing and an improved government response to the pandemic. Local brokers are including all COVID-19 showing protocols, which includes appointment only showings, masks required for all participants and social distancing. Deals are getting done!!!
If you have been thinking about selling this year do not delay be-cause the demand is there!
For those of you worried about sheltering your real estate gains there are alternatives to owning management intensive apartment proper-ties. Here are a few:
NNN leased properties – You have probably driven by a Burger King, Taco Bell or Starbucks Coffee-these are examples of NNN leased properties. Returns on these properties can be any where from 4.5% – 6.00% depending on which state you decide to purchase in. For more information visit the website of local NNN broker Barry Silver – www.thesilvergroup.com to learn about this type of investment.
Office property with small suites or health related tenants – I recently sold a 10,000 square foot office property in Mill Valley with a veteri-narian and multiple small offices rented by tenants in the wellness industry. The property was purchased for $3,900,000 and had a clos-ing CAP rate at 6%! The property is professionally managed for its owner.
For more information on these exchange strategies, give me a call at 415-302-7730 and we can discuss your real estate goals and how to get there.
Regards,
Katherine J. Higgins
Broker Associate Investments
Marin County Market Apartment Trends for 2021
- Sales inventory remains low in Marin, with a slight drop in number of sales in the 3–4-unit category. However, the booming housing market pushed duplex sales up and apartment sales with 5 or more units were also robust last year.
- Low interest rates for investment properties continue to be below 4% but the loan to value ratio has dropped by many lenders to 50% or less. If you are thinking of buying or exchanging check with more aggressive lenders to finance your deals.
- I don’t expect to see deeply discounted deals this year-even in 2020 the average cap rates were still in the 4’s. Buy location and added value deals and mitigate your risk that way. Local investors are still making huge profits the old-fashioned way-rehabbing units and raising rents.
Marin County Apartment Sales 2020
| MARIN COUNTY APARTMENT SOLD 2020 – 3-4 UNITS | ||||
|---|---|---|---|---|
| Address | Price | DOM/CDOM | # of Units | CAP |
| 107 Stadium Ave., Mill Valley | $1,300,000 | 24/24 | 3 | 4.49 |
| 1509 San Anselmo Ave., San Anselmo | $1,475,000 | 166/169 | 3 | 4.80 |
| 23 Fairfax St. #3C, San Rafael | $960,000 | 176/176 | 3 | 5.30 |
| 203 Picnic Ave., San Rafael | $1,185,000 | 116/116 | 3 | 5.20 |
| 1712 5th Ave., San Rafael | $1,330,000 | 70/70 | 3 | 3.00 |
| 332 Bayview St., San Rafael | $1,395,000 | 34/34 | 3 | 4.80 |
| 3985 Tomales-Petaluma Rd., Tomales | $750,000 | 93/93 | 4 | 5.08 |
| 1 Clay Ct., Novato | $1,680,000 | 42/42 | 4 | 0.00 |
| MARIN COUNTY APARTMENT SOLD 2020 – 5+ UNITS | |||||||
|---|---|---|---|---|---|---|---|
| COE | Address | Price | # of Units | $/Unit | PSF | GRM | CAP |
| 1/31/20 | 1601 Bridgeway, Sausalito | $4,500,000 | 10 | $450,000 | $574 | 20.74 | 2.80% |
| 1/31/20 | 1441 Casa Buena Dr., Corte Madera | $20,550,000 | 32 | $642,188 | $674 | 16.05 | 3.98% |
| 1/30/20 | 1732 Lincoln Ave., San Rafael | $7,600,000 | 19 | $400,000 | $530 | 17.00 | 3.70% |
| 2/14/20 | 700 Lincoln Village Circle, Larkspur | $222,500,000 | 342 | $650,585 | $747 | – | – |
| 5/22/20 | 310 Bayview St., San Rafael | $5,972,500 | 14 | $426,607 | $562 | 14.88 | 4.37% |
| 6/16/20 | 60 Magnolia Ave., San Anselmo | $2,400,000 | 7 | $342,857 | $504 | 18.19 | 3.00% |
| 6/23/20 | 1 Shelley Dr., Mill Valley | $2,395,000 | 6 | $399,167 | $577 | 15.34 | 4.15% |
| 6/26/20 | 1304 & 1306 Leafwood Dr., Novato | $2,600,000 | 12 | $216,667 | – | – | – |
| 7/10/20 | 71 Roque Moraes Dr., Mill Valley | $2,350,000 | 5 | $470,000 | – | – | – |
| 9/3/20 | 1356 Lincoln Ave., San Rafael | $3,850,000 | 8 | $481,250 | $616 | 13.75 | 5.03% |
| 9/8/20 | 300 Olema Rd., Fairfax | $2,400,000 | 10 | $240,000 | $286 | 11.80 | 4.91% |
| 9/9/20 | 406 Maple St., Mill Valley | $3,300,000 | 8 | $412,500 | $504 | 15.56 | 4.66% |
| 9/18/20 | 460 Canal St., San Rafael | $3,600,000 | 13 | $276,923 | $231 | 12.65 | 4.68% |
| 10/1/20 | 1-22 Mallard Rd., Belvedere | $20,645,000 | 22 | $938,409 | $938 | 14.14 | 4.52% |
| 10/28/20 | 37 Reed Blvd., Mill Valley | $2,750,000 | 8 | $343,750 | $550 | 1596 | 4.21% |
| 11/13/20 | 147 Ross St., San Rafael | $3,650,000 | 6 | $608,333 | $726 | 13.96 | 4.94% |
| 12/16/20 | 300 Channing Way, San Rafael | $106,000,000 | 254 | $417,323 | $478 | – | – |
| 12/30/20 | 47-49 Lyford Dr., Tiburon | $9,250,000 | 16 | $578,125 | $485 | 16.00 | 3.62% |
| TOTALS/AVERAGES | $426,312,500 | 792 | $460,816 | $561 | 15.43 | 4.18% | |