Real Estate Investor · Orlando, FL · Member since 2016 · 185 posts · 53 votes
Hi there,
I am trying to refi one of my apartment buildings in Norwich, CT. The building is a 4-unit apartment building with 2 small office spaces.
As part of the refi process I ordered an appraisal for the property. Based on the comps obtained the value for the property came back very low. When I read his report I saw he was using an ultra-conservative cap rate of 12.2%! One of the issues is that it's been difficult to find comps for this building based on the area but I was honestly gobsmacked when I saw such an awful cap rate.
Now I'm trying to find information to convince the appraiser to move the cap rate so I can get a better (and hopefully more realistic) appraisal value.
Does anybody have information on the Norwich/New London CT area and has a good understanding of the cap rates in that area? If so I'd love to chat with you for a couple of minutes to get your thoughts. I'd be happy to share the appraisal if that would help.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
10-12% Cap Rates in Norwich and New London sounds about right, @Robert Lindsley. Groton, Waterford, Stonington will all be lower. Based on conversations with lenders and brokers as well as knowledge from specific deals, we're seeing 8-9.5% in Groton, 5-8% in Stonington. 8-9% in East Lyme.
Real Estate Agent · West Hartford, CT · Member since 2016 · 449 posts · 476 votes
6y
Hey @Robert Lindsley I’m familiar with the area- I grew up in new London county. I primarily invest in central ct now but still Follow the market down there. 12.2% is pretty high for that area. If you provide me with the street (or close to it) and more details of the property I can probably help you come up with better comparables.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
10-12% Cap Rates in Norwich and New London sounds about right, @Robert Lindsley. Groton, Waterford, Stonington will all be lower. Based on conversations with lenders and brokers as well as knowledge from specific deals, we're seeing 8-9.5% in Groton, 5-8% in Stonington. 8-9% in East Lyme.
Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
6y
I'd agree with the gist of this thread @Robert Lindsley, that does seem like a conservative cap rate, even for Norwich. Have you tried reaching out to the appraiser and asking where he got his cap rate of 12.2%? Perhaps he can bring to your attention some properties or deals that you weren't privy to. Certainly a tough situation to be in, given that it's not quite residential and not quite commercial (by unit size, at least). Let us know how it turns out!