NOI (Net Operating Income):
GOI (Gross Operating Income) - Expenses = NOI
Net Income (Income AFTER expenses, but Before Debt Service)
NOTE: DO NOT include your debt service (i.e. mortgage payment) in the expenses in the equation above. DO, however, include Bad debt, vacancy, utilities, turnover, etc. Essentially it is the net income that you would bring in yearly if you owned the property free and clear.
NOI is perhaps the most useful number of the bunch. After all, it really doesn't matter how much you bring in, what matters is how much you keep. This number will come up when talking to sellers, buyers, bankers, mortgage brokers, etc.
(Reprinted from the article posted by Hibby76 Edited by WD)
Here is the article that i got the info you were looking for. I do not know why I just didnt post the link. So, here you go just click on it and it should take you straight there.
When you read this little figure NOI on some beautiful presentation which shows that the property under presentation is making money hand over fist. View it with great care for this is truly a subjective amount.
You really want to check it out. Check for true vacancy rate, check for true prior repairs per last annual statement.
The one goody I saw in a posting the other day was. Check the last submitted income tax return and see if the figures jib.
I mean he might fib a little to you to help sell a property but Uncle Sam? maybe not.
NOI (Net Operating Income):
GOI (Gross Operating Income) - Expenses = NOI
Net Income (Income AFTER expenses, but Before Debt Service)
NOTE: DO NOT include your debt service (i.e. mortgage payment) in the expenses in the equation above. DO, however, include Bad debt, vacancy, utilities, turnover, etc. Essentially it is the net income that you would bring in yearly if you owned the property free and clear.
NOI is perhaps the most useful number of the bunch. After all, it really doesn't matter how much you bring in, what matters is how much you keep. This number will come up when talking to sellers, buyers, bankers, mortgage brokers, etc.
(Reprinted from the article posted by Hibby76 Edited by WD)
[ Edited by WheelerDealer on Date 02/04/2004 ]
Thank you very much. That was a great description!
Here is the article that i got the info you were looking for. I do not know why I just didnt post the link. So, here you go just click on it and it should take you straight there.
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&sid=467
[addsig]
When you read this little figure NOI on some beautiful presentation which shows that the property under presentation is making money hand over fist. View it with great care for this is truly a subjective amount.
You really want to check it out. Check for true vacancy rate, check for true prior repairs per last annual statement.
The one goody I saw in a posting the other day was. Check the last submitted income tax return and see if the figures jib.
I mean he might fib a little to you to help sell a property but Uncle Sam? maybe not.
cum grano salels.
Lucius
would you use the last tax returns as a gauge of the prior years NOI, expenses, etc?
Yep
Look at the schedule "E" in the return