Using Income and Expense Report

[Simon C.]

Hi Everyone!

What are your experience with the different types of income and expense report published by NAA, ALN, IREM? Does anyone use the submarket data to analyze your deals? I was always told use OE is roughly 50% of GPR as a general rule of thumb. I understand that the 50% is very general and of course it will vary by the submarket and the type of property, condition, age, etc. As such, I assume these types of reports will help shed some light into the expense of owning a property? Like to hear your thoughts! Thanks!

[Todd Dexheimer]

Reports like that and the 50% rule are all general rules. Use them with caution and understand that most of those reports aren't specific to your property. The most important thing to look at is the historical operation of the property, then factor in the expense ratios or nearby properties, consider the differed maintenance, age of building, class of building and other operational expenses you may add or subtract to optimize NOI