West Walnut is located along Walnut street, near the intersection of Walnut & Davis St. This location is extremely close to both the campuses of Kalamazoo College (¼-mile) and Western Michigan University (1-mile). West Walnut was built in 1965 and has been well maintained over the years with recent improvements including a new parking lot and new 20-year warrantied PVC roof.
The unit breakdown at West Walnut is comprised of 1 one-bedroom, 12 two-bedroom one bath units, and 5 two-bedroom one and a half bath units ranging in size from approximately 650 to 900 square feet. Average in-place rental rates at West Walnut range from $500 on the low-end to as high as $650 for a two-bedroom, one and one-half bath unit. As it pertains to rental rates, after a detailed review of the Rent Roll, IPO has determined that rental rates at West Walnut are considerably below market by as much as $178 on the one bedroom unit and on average $200 below market on the two-bedroom units when compared to the average market price per square foot.
Also notable for investors is the utility structure at West Walnut, which is essentially tenant-paid. The property is separately metered for electric and heat is supplied by electric baseboards. There is no gas at the property and water is master-metered. Currently ownership absorbs the cost of water, but this expense could easily be passed onto the tenant through a utility surcharge. This belief is further fortified by the fact that rental rates are already substantially below market levels. IPO has not applied a water surcharge within our year-one underwriting, but a new owner could easily establish a mere $15 per unit charge that would nearly absorb the full annual water expense. Property amenities include front & rear entrances, ample off-street parking, large balconies, and on-site laundry.