What is my NOI and Cap Rate for this Property

[Asher Anthes]

Okay, so I've been learning about NOI and cap rates and I'm curious to figure out what mine is for the house I currently own. I live in it, but also rent it out to some friends.

Purchase Price: $105,000
Renovations: $15,000 (not sure if this is included)
Gross Yearly Rental Income: $16,200
Property Taxes: $2,200 per year
Home Owners Insurance: $330
HOA: $190
Other operating costs (eg. routine rerpairs): $400
Vacancy rate: not sure what number to use here??

NOI: $13,080?

Cap rate: $13,080 / $105,000 ?? 12.5%

Is this close to correct?
And, where do I factor in debt service? Because that seems to be a more important ratio as that reflects my cash returns?

Thanks for the help guys, I'm new and have a lot to learn!

[Joel Owens]

For NOI you do not factor in debt service.When you are selling debt service will look different for every buyer.

You can give an example of debt service when selling to show what returns could be given so much down at XX price.

You also have depreciation not included in NOI.NOI is a quick baseline for a potential buyer to look at a property based on a certain return.

Having said that the NOI has to be verified with schedule E tax returns and bank deposits.The worse the records kept when you sell the less than can be verified by the buyer and a lower price you will get.The reason is the buyer will then have to price in the risk with a lower offer not being able to verify all the hard data.

Is HOA per month?? Sounds too low for the year. 400 for repairs for a year is a pipe dream.

What about eviction,lost rents,reconditioning to rent again??

Most SFR properties don't look at NOI but more of the comparable sales approach versus the income approach for acquisition with appraisals and lending.