Read NOI Before the Price
Separate real net operating income from seller headline income before judging value.
The skilled move is to underwrite the income before you underwrite the price. Start with effective gross income Gross scheduled rent is the theoretical rent if every unit pays the stated lease amount. Effective gross income adjusts that number for vacancy, credit loss, concessions, and other recurring income such as parking, laundry, storage, reimbursements, or fees. If the top line is inflated, every metric below it becomes false precision. Subtract normal operating expenses Operating expenses are the recurring costs needed to run the property: property taxes, insurance, repairs and maintenance, utilities paid by the owner, management, payroll, contracts, and administrative…
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