The Madeline, an apartment community on Audelia just north of Forest Lane, has new owners, Dallas-based Knightvest Capital. It is not infrequent for property to change hands these days, but this one is a bit of a downer.
The Madeline a few years ago was, to put it bluntly, a dangerous, drug and crime infested dump. Then Joe Killinger and George Pino, a couple of guys from Los Angeles with experience improving troubled properties in rough neighborhoods, bought the place, implemented a learning center for kids and a system for weeding out criminals. (Read our story about that here …)
But circumstances were not in their favor, Killinger says. “The day we closed on the property in 2008 was the week the stock market crashed,” he says, “so it’s been a struggle since day one.”
Then, this past summer “was hell”, he says. There was a shootout near the train tracks behind the complex and several apartment windows were hit. Frightened tenants moved out. Things got progressively worse. Occupancy went from 90 percent to 50 percent; good tenants moved and bad ones were evicted. “One lady was evicted in the morning and by that afternoon we found a group had broken into her apartment and was cooking drugs.”
The air conditioning system had troubles and the property was in such need of repairs that Killinger and his partner were there nearly every day for months fixing things themselves.
They worked at it, but eventually Killinger, Pino and their investors were unable to meet the financial demands and the bank recently sold the note to Knightvest, which will now manage the property.
“It kills me because we put so much time and energy into this,” Killinger says. “We still want to be involved in this community.”
Killinger and Pino own one North Dallas property a few miles from The Madeline. They own five in LA and manage about 40 there. Killinger says the goal next is to sell some of the LA properties (the ones that have plateaued insofar as improvements) and create a fund to purchase other Dallas properties.
He says that in California, they have rehabilitated properties that are in rougher areas than this. If he had deeper pockets, he says, they could have made it work.
Killinger says he is hopeful that the new owners/managers Knightvest Capital might keep in place some of the programs, such as the learning center, that he and Pino implemented at The Madeline, and that Lake Highlands apartment owners will increasingly utilize the Rent Rite directory (which the two founded and have shared publicly) that screens tenants for criminal backgrounds, rental history and more (more on that here …) . On the bright side, he adds that Knightvest has the funds to make many of the complex’s needed improvements and that the remaining tenants are mostly good and hardworking people.
