Belmont Manor is situated on the south side of 8 Mile Road, just east of Dequindre Road and I-75 in Detroit. This garden style community was built in 1956 and has received numerous updates in recent years including the complete rehabilitation of numerous units, new boilers, windows and parking lots. Ownership currently maintains a unit enhancement program; whereby they are upgrading units over time out of the properties existing cash-flow as tenants vacate. The continued improvements have allowed occupancy to remain high and demand is not wavering, as evidenced by the ongoing waiting list for upcoming available units.
The property offers a diversified and extremely competitive unit mix comprised of 43 studios with approximately 550 sq. ft. of living space, 95 one-bedroom units with approximately 650 sq. ft. of living space and 13 two-bedroom units with approximately 750 sq. ft. of living space. The unit’s themselves are in excellent condition with many of the units upgraded through the aforementioned unit-upgrade program.
Belmont Manor is a stabilized asset with a physical occupancy of 100%. Based on our meticulously conducted rent comparable study, it was determined that rents are below market when applying both the price per square foot and average rent methods. This conclusion is further supported by the above market occupancy levels the complex is currently operating at. From an underwriting perspective, IPO has conservatively forecasted a year-one Pro Forma NOI of $462,292 based on a modest increase in rents. When accounting for additional increases up to market rents, the NOI rises considerably, creating a significant amount of value-add potential without significant additional financial investment. For example, a modest $25 increase in average rents would increase the value of the asset by over $600K.
IPO has seen a drastic improvement in pricing over the course of the last 36 months and it is our professional opinion that values will continue to trend upwards throughout 2019 as a result of historically low multifamily inventory coupled with low interest rates and an abundance of equity and debt in the marketplace. Belmont Manor represents a stabilized asset with considerable upside potential that can provide handsome & steady returns to a multifamily investor for many years to come. To arrange a confidential tour of this asset and to view the actual operating data, please contact IPO immediately.