Should Cap-EX or Major Repairs be Factored into NOI?

[Daniel Dietz]

Hello All, 

This is my first post in this forum. My two partners and I have 29 units varying from SFHs to 4-Plexes right now, so have not really looked at NOI on those.

A 16 Unit came up in our smallish but vibrant Midwestern town and I have been running some number on it. 

My understanding of NOI is if there was no borrowing involved and we payed all cash, took the total income (which would account for vacancies already), subtracted our 'expenses' such as minor repairs, snow and grass, insurance, utilities, etc..... you would have your NOI. Divide that by your purchase price and you get your CAP rate.

The few things I am NOT sure of are: property management costs, cap ex budget/costs, or setting money aside for larger repairs that we could write off in a single year. 

Please educate me on the details. 

Thanks, Dan Dietz