35 Lake St

Norwich, CT 06360

$299,000B

6 bd · 3.0 ba · 1,632 sqft · Built 1910 · MultiFamily · Active · 15 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,771/mo
• Mortgage (P&I): −$1,568
• Tax + insurance: −$404
• HOA: −$0
• Vac / Maint / Mgmt: −$1,002
• Net cashflow: $1,797/mo
• Annual: $21,567/yr
• Cap rate: 13.73%
• Cash-on-cash: 26.56%
• DSCR: 2.18
• 1% rule: 1.60%
• Cash to close: $83,720

Investor read

• This is a 3 × 2-bed/1-bath units multifamily listed at $299k.
• At list price, monthly cash flow is $2k ($22k/yr) — positive. Per door: $599/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $299k).
• It's been on market 15 days — a 2% lower offer ($295k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $295k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $9k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#18 in CT, #1,391 nationally) — a professional / high-income tenant draw. Strengths: housing A+, health & safety A+, commute A-; Watch: schools D+.
• Norwich School District (urban): math 19% / reading 29% proficiency, ranked #139 of 153 in CT (top 91%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 62% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: flood insurance adds $56/mo; built in 1910 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+6.6%/yr); 241 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 487 units permitted in Southeastern Connecticut Planning Region in 2024 (244 in 5+ unit buildings).
• 7 sale attempts since 28y ago; this cycle's ask is 30% above the opening price — seller raised mid-cycle; expect resistance to lowballs.
• Current owner paid $240k; 25% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 6.6% rent growth), your $84k cash investment doubles in ~5 years — after that, you're playing with house money.
• Climate carrying-cost: severe flood risk; major wind risk, 64% chance of damaging wind over 30y; extreme-heat days projected 7→17/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 13.7% vs local median 4.0% in Norwich — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• At $4,771/mo this rent would consume 87% of the median local household income ($66k/yr) (locally 1643% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1910 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.