For Sale

$675,000

Property Type

Retail, Office, Multi-Family, Business

Building Size

13,744

Lot Location

Eastern CT

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Two Commercial buildings in Opportunity & Enterprise Zones. In the heart of downtown Norwich. 138 Main St is 1st Class Office Space 146 Main St needs Complete Rehab. Needs New Elevator (Has Elevator Shaft).  13,744 total SF. Public Water & Sewer, Gas. Zone: CC – Chelsea Commercial District. Across from Norwich Courthouse. On street parking and parking garage PERMITTED USES: Multi Family, Office, Retail, Bars, Taverns, Cafes. Near the Thames & Shetucket Rivers. Views  from top floors!!!

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Lyman Guide

Ways to Financially Analyze a Commercial Real Estate Investment

Commercial real estate (CRE) is a numbers game

So, financial analysis is the foundation for making informed commercial real estate decisions

  • Helps you evaluate financial performance, investment return, property values
  • Helps you arrive at the value of a purchase, compare purchase options

Key measures

  • Net operating income (NOI)
    • NOI = gross income — operating expenses
    • Lenders use this to determine the maximum loan amount they’ll approve
  • Debt-service-coverage ratio (DSCR)
    • DSCR = NOI / annual debt service
    • Tells you the cash flow available to service the property’s debt
    • DSCR of 1.25 or higher normally adequate for a CRE investment
  • Capitalization rate (cap rate)
    • Cap rate = NOI / property’s market value
    • Used to determine the rate of return expected on an investment property
    • Can also calculate a property’s value based on a desired rate of return, using the following formula:
      • Property value = NOI / cap rate
    • Useful for comparing the relative values of alternative CRE investments
    • Higher cap rate generally indicates a higher return, but also, typically, a higher risk
  • Return on Investment (ROI)
    • REI = NOI / amount invested
    • The higher the ROI, the better the investment
  • Cash-on-cash return (CoC)
    • CoC = annual pretax cash flow / total cash invested
    • The higher the CoC return, the better the investment