Net Operating Income (NOI)
Fremont, CA Trends
Cap Rate Analysis
Glossary of Terms
Ways to Hold Title
Net Operating Income
Self Directed IRA
Tax Deferral Strategies
Types of Commercial Leases
Significance of Net Operating Income (NOI)
NOI is a key indicator of financial strength.
Perhaps, there is no indicator more important than the NOI when it comes to performing due diligence.
The NOI is a before-tax computation of actual gross revenue less operating expenses and an allowance for anticipated vacancy.
Download this spreadsheet to calculate the NOI
NOI does not include debt service (mortgage) or income taxes.
Before calculating the NOI, ask for the Following documentation (aka Financials) from the seller
DOCUMENTATION REQUIREMENTS FOR NET OPERATING INCOME CALCULATION
Profit and loss (aka P & L) statements for year-to-date and the previous two years
Current rent roll
Current list of anticipated / required capital improvements
Why the owner is selling
What is owed on the property
The NOI revelation - what you will learn
NET OPERATING INCOME REVELATION
Actual monthly income and expenses
NOI month-by-month trends - are they increasing or decreasing
Unusual expenses - question the seller
Unpaid rent and concession losses
Number of units occupied
Actual rent for each unit