Calculating NOI question

[Brian Orr]

Hey all, I'm curious to know how this gets represented, maybe you can help? Here's the example of a small 10 unit syndicated deal, which is currently self-managed...

Current OpEx water, sanitation, maintenance, taxes, insurance, landscaping, exterminator, but I'd also have these:

Property Manager 8%

Asset Manager 2%

Preferred Return 5%

CapEx Reserves 5%

Because these are specific to what my operation would be, and may or may not be expenses incurred by a future owner, how are these looked at by the bank when considering a refi, or by a future buyer? Is this 20% considered in operating expenses therefore above NOI, even though it's somewhat discretionary?

[Brock Mogensen]

Property management fee and CapEx reserves are included in your expense number when calculating NOI. Asset management and pref are NOT included in your expenses when calculating NOI. Depends on the class of property for what % your expenses are underwrote at.