Real Deal REInvestor Network

In Commercial Real Estate, the numbers are the key to establishing the value of a property. In the first stage of evaluation,  the investor will want to determine the Net Operating Income of the subject property. Now... You may be asking yourself... "What is the NOI?"

Here is a quick definition.

Net Operating Income. Is the income after deducting for operating expenses but before deducting for income taxes and interest.

Here is a quick break down of how you would arrive at the NOI.

INCOME

  Gross Scheduled Rent Income                
  + Other Income                
TOTAL GROSS INCOME     

- VACANCY & CREDIT ALLOWANCE

= GROSS OPERATING INCOME

- Operating Expenses :
  Accounting 
  Advertising            
  Insurance (fire and liability)  
  Janitorial Service
  Lawn/Snow
  Legal
  Licenses
  Miscellaneous
  Property Management
  Repairs and Maintenance   
  Resident Superintendent     
  Supplies                    
  Taxes
     Real Estate              
     Personal Property        
     Payroll                  
     Other                    
  Trash Removal               
  Utilities
     Electricity              
     Fuel Oil                 
     Gas                      
     Sewer and Water          
     Telephone                
     Other

= Net Operating Income

The NOI is  often viewed as a good measure of the income producing asset's performance. Many investors believe this figure is less susceptible than other figures to manipulation .

We talk in more detail about commercial investing in our Real Deal Webinars. Make sure to RSVP for our Next Call.

Regards,
Rick Melero
www.HisRealEstateNetwork.com/commercial