Investment Overview

The Leicester-Chesapeake Portfolio represents an exceptional value-add multifamily opportunity in Norfolk's established Ocean View neighborhood. This 10-unit collection comprises two garden-style apartment buildings at 1010 E Leicester Avenue (6 units) and 9108 Chesapeake Boulevard (4 units), totaling 6,500 square feet on 0.36 cumulative acres. Built in 1964, the properties offer substantial upside potential with current rents significantly below market, presenting an immediate opportunity to capture over 100% organic rent growth through systematic unit turnover and strategic upgrades.

Property Overview & Configuration

Both properties feature two-story garden-style construction with functional layouts appealing to Norfolk's diverse renter base. Each building includes exclusively two-bedroom, one-bathroom units averaging 650 square feet—an optimal size for military personnel, young professionals, and small families seeking affordable housing in a desirable coastal location.

1010 E Leicester Avenue:

• 6 units across two-story building
• Two-bedroom, one-bathroom floor plans
• Current average rent: $572/month ($0.88/SF)
• Market potential: $1,250/month ($1.92/SF)
• Upside opportunity: 118% rent increase

9108 Chesapeake Boulevard:

• 4 units across two-story building
• Two-bedroom, one-bathroom floor plans
• Current average rent: $648/month ($1.00/SF)
• Market potential: $1,250/month ($1.92/SF)
• Upside opportunity: 93% rent increase

Both properties feature covered exterior walkways, ample surface parking, and mature landscaping providing natural shading and curb appeal.

Exceptional Value-Add Opportunity

This portfolio represents one of Norfolk's most compelling value-add opportunities with in-place rents at just 48% of market rates. Current gross scheduled rent of $72,240 annually positions dramatically below the $151,500 market potential, creating an immediate path to substantial NOI growth. The properties benefit from:

Immediate Rent Growth Catalyst:

• Portfolio-wide average rent: $602/month
• Market comparable average: $1,115-$1,230/month
• Upside potential: 107% average increase
• Minimal capital required to capture market rents

Strategic Repositioning Plan:As units naturally turn over, modest interior upgrades can justify market-rate rents. Comparable properties in Ocean View demonstrate strong tenant acceptance of $1,200-$1,250 monthly rents for renovated two-bedroom units. Recommended improvements include:

• Kitchen updates: modern cabinetry, countertops, and appliances
• Bathroom renovations: updated fixtures, vanities, and flooring
• Interior finishes: luxury vinyl plank flooring, fresh paint, modern lighting
• Unit amenities: updated HVAC systems, energy-efficient windows

With an estimated $15,000-$20,000 renovation budget per unit, investors can systematically capture $600-$650 monthly rent increases, delivering 3.0-4.0x returns on capital improvements.

Location & Market Position

The Leicester-Chesapeake Portfolio enjoys a prime Ocean View location providing residents with exceptional access to employment, recreation, and coastal amenities. The properties sit within Norfolk's established residential neighborhoods, offering the community feel military families and young professionals seek while maintaining proximity to major employment centers.

Superior Connectivity:

• I-64, I-264, and I-564: Minutes from major highway access
• Granby Street corridor: Direct route to commercial districts
• Norfolk International Airport: 10 minutes
• Naval Station Norfolk: 15 minutes
• Downtown Norfolk: 20 minutes

Nearby Amenities & Recreation:

• Ocean View Beach: Walking/biking distance to Chesapeake Bay beaches
• Sarah Constant Beach Park: Public beach and recreational facilities
• Shopping & Dining: IKEA, Simon Premium Outlets, and diverse restaurant options
• Healthcare: Sentara Norfolk General Hospital nearby
• Schools: Norfolk Public Schools serve the area

Military Housing Demand Driver

Norfolk's position as home to Naval Station Norfolk—the world's largest naval base—creates unparalleled rental demand stability. The military presence provides:

Consistent Tenant Pipeline:

• 70,000+ military personnel stationed in Hampton Roads
• Regular rotation cycles ensure constant move-in/move-out activity
• BAH (Basic Allowance for Housing) rates support market rents
• Military families seek affordable, well-located housing near base

Norfolk Naval Shipyard Employment:Adjacent Portsmouth's Norfolk Naval Shipyard employs thousands of civilian and military personnel requiring housing. The shipyard's critical role in maintaining naval readiness ensures long-term employment stability supporting residential demand.

Economic Base & Employment

Norfolk anchors the Hampton Roads metropolitan area (1.7+ million population) with a diversified economy spanning defense, healthcare, education, maritime commerce, and technology sectors.

Major Regional Employers:

• Sentara Healthcare: Dominant regional health system with multiple facilities
• Norfolk Public Schools: Major public sector employer
• Eastern Virginia Medical School (EVMS): Academic medical center
• Children's Hospital of The King's Daughters: Pediatric specialty hospital
• Old Dominion University: 24,000+ student public research university
• Dominion Enterprises: Technology and classified advertising
• PRA Group: Financial services and debt collection
• Bank of America: Regional operations center
• Port of Virginia: Major East Coast container port

This employment diversity provides recession resistance and year-round demand stability beyond seasonal military rotations.

Regional Growth & Development Initiatives

Hampton Roads is experiencing transformative infrastructure investment exceeding $4.5 billion, significantly enhancing regional connectivity and economic competitiveness:

HRBT Expansion ($3.9B):The Hampton Roads Bridge-Tunnel expansion project will dramatically improve commute times between Norfolk and the Virginia Peninsula, scheduled for Spring 2027 completion. This infrastructure enhancement supports continued population and employment growth across the region.

Atlantic Park ($350M):The Pharrell Williams-backed Atlantic Park development in Virginia Beach features a 2.67-acre surf park, dining, entertainment, retail, and residential components. This destination attraction will drive tourism and regional spending, benefiting surrounding rental markets.

Rivers Casino Portsmouth ($340M):Opened January 2023, Rivers Casino has catalyzed entertainment-driven tourism, generating employment and supporting hospitality sector growth throughout Hampton Roads. The facility's success demonstrates the region's capacity to attract and support major entertainment investments.

Financial Performance & Returns

• Asking Price: $800,000
• Price per Unit: $80,000
• Price per SF: $123.08
• Year Built: 1964
• Current NOI: $19,545
• Stabilized NOI: $93,897
• Current Cap Rate: 2.44%
• Stabilized Cap Rate: 11.74%
• Current Occupancy: 82% (includes non-revenue units)

Extraordinary Return Profile

This portfolio offers compelling returns across multiple scenarios:

Conservative Pro Forma (6% Vacancy):

• Gross Potential Rent: $151,500
• Stabilized NOI: $93,897
• Stabilized Cap Rate: 11.74%
• Cash-on-Cash Return: 21.88%
• Total Return (with debt paydown): 24.79%

Based on 70% LTV financing at 6.25% interest with 30-year amortization:

• Loan Amount: $560,000
• Down Payment: $240,000
• Debt Coverage Ratio: 2.27x
• Annual Cash Flow: $52,521

Value Creation Roadmap

Year 1: Foundation & Initial Turns (3-4 units)

• Renovate vacant/turning units to capture immediate rent increases
• Establish property management systems and maintenance protocols
• Implement strategic marketing highlighting location and upgrades
• Target NOI: $40,000-$50,000 (100-150% increase)

Years 2-3: Systematic Portfolio Repositioning (remaining units)

• Continue unit renovations as leases expire naturally
• Capture full market rents across portfolio
• Optimize operational efficiency and expense management
• Target Stabilized NOI: $93,897+ (380% increase from current)

Exit Strategy:Upon stabilization at market rents, the portfolio will command premium valuation based on proven income performance. At an 8.0% cap rate (conservative for stabilized Ocean View assets), the stabilized property value approaches $1,175,000, representing 47% appreciation from purchase price before factoring in additional NOI growth from rent escalations.

Operational Considerations

Current expenses at 67% of EGI reflect below-market rents and significant loss-to-lease. Upon stabilization with market-rate rents, expense ratio will normalize to 34% of EGI, consistent with comparable Norfolk properties. Key expense items include:

• Taxes: Currently $7,680, estimated $9,600 post-renovation
• Water/Sewer: $8,089 (tenant billed in many units)
• Insurance: $3,431 (competitive multi-family rates)
• Management: 8.0% of EGI (industry standard)

Prudent investors should budget for systematic interior renovations as units turn, with capital reserves supporting the value-add business plan.

Comparable Sales Context

Recent Norfolk multifamily transactions demonstrate strong investor appetite across property sizes:

• 1250 Little Bay Avenue (6 units): $133,333/unit, June 2025
• 905-911 Little Bay Avenue (12 units): $163,333/unit, September 2024
• 1219 E Ocean View Avenue (26 units): $125,000/unit, January 2025
• 1976 E Ocean View Avenue (8 units): $200,000/unit, December 2024

The Leicester-Chesapeake Portfolio's $80,000 per unit pricing reflects the value-add nature of the opportunity, with significant basis advantage supporting investor returns.

Investment Thesis Summary

This portfolio uniquely combines:

1. Exceptional Value-Add Opportunity: 107% average rent upside with clear execution path
2. Military Housing Demand: Sustained tenant pipeline from Naval Station Norfolk
3. Attractive Entry Basis: $80,000/unit in market trading at $125,000-$200,000/unit
4. Proven Market Fundamentals: Established Ocean View neighborhood with strong comps
5. Multiple Exit Strategies: Hold for cash flow or sell post-stabilization at premium
6. Regional Growth Catalysts: $4.5B infrastructure investment supporting appreciation

The opportunity to acquire cash-flowing multifamily real estate at 48% of market rents with a clear path to 380% NOI growth is exceptionally rare in today's competitive investment landscape.

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