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Updated over 9 years ago on . Most recent reply

User Stats

28
Posts
5
Votes
Billy Guyette
  • Property Manager
  • Montgomery, AL
5
Votes |
28
Posts

Apartment complex NOI question

Billy Guyette
  • Property Manager
  • Montgomery, AL
Posted

I'm looking at a 40 unit in my area that is currently for sale and owner operated. I understand that the value of in apartment complex is based on the NOI. The owner of the property self manages and doesn't count his time as an operating expense, thus increasing his NOI. When I value the property and negotiate with the owner, is it fair for me to add what I think management would cost? This would increase operating expenses and give me a different cap rate then what the owner is advertising

Most Popular Reply

User Stats

298
Posts
150
Votes
Daniel Mohnkern
  • Investor
  • Titusville, PA
150
Votes |
298
Posts
Daniel Mohnkern
  • Investor
  • Titusville, PA
Replied

Net operating income for an investment property that you're looking at needs to be from your own calculations before making an offer. If you go by their numbers, it is basically just going pro forma. NEVER accept pro forma numbers.You really need to do your own homework and base your offer on numbers that you know. Otherwise, you're going to get yourself into trouble.

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