👋 NOI / Cap Rate is Pointless

[Justin Goodin]

❌ Stop dividing the NOI by a cap rate to find the value of a deal.

When I come across a potential deal, that's the last thing I do.

It's pointless

→ I want to evaluate how the property is performing NOW

→ Where it COULD BE performing

→ And WHAT it will take to get there.

This involves (at a minimum) checking comps, creating a 5 year proforma, verifying taxes & insurance, and making assumptions about the business plan.

You can't determine if a deal is a pass/go simply from NOI / Cap Rate.

The art of underwriting involves finding value where others miss.

If you're passing on deals just from dividing the in-place NOI by a cap rate, send those over here! 😅