Typical Numbers

[Jason Merchey]

I looked at my first commercial property - my chiropractor's office. The owner listed it at $1.5m, it has 8250 square feet and has a NOI according to what the realtor told me, of $75,000. It's 1/3 occupied.

I'm not very experienced, but my friend ballparked the cost per square foot in this suburb of Charleston SC as about $1.25 per foot, and this is listed up at $1.80 per foot. Also the NOI is horriffic. I was also under the impression from reading two books that the debt coverage ratio a bank likes to see is 1.2 or higher.

When I told the broker I was confused, he simply replied "My suggestion would be that you spent time looking in the market, and be in touch if you have any questions." 

This leads me to believe that he actually thinks that $1.5m is a decent list price. Am I smoking crack?