NOI for multi family valuation

[Dustin Garrels]

When negotiating purchase price, which scenario for NOI do you use? Trailing 12 months actual? If so, do you adjust for the assumed run-rate for repairs/CAPEX (e.g. a as a certain % of revenue) instead of using actual costs?

[Remington Lyman]

Originally posted by @Janani Kalpathi:

Thanks for raising this @Dustin Garrels!

We are looking to invest in our 1st small MFH property in Columbus, Ohio market and have been in a similar situation on how to budget for CapEx and repairs while analyzing a deal.

 Is T-12 applicable for small MFH (2 - 4 units) properties as well and who provides this info?

Thanks!

 I would write into the contract

111 Investment Property Purchase Clause This Offer is contingent upon Buyer’s satisfactory review of all leases, rental agreements, deposits, past 1 years’ income and expense reports and within 2 calendar days after acceptance of this offer. Seller shall provide such documents and information, representing them to be true and accurate, within 2 calendar days after acceptance. During the pendency and term of this contract, Seller shall not change any existing lease, enter into any new lease or make any substantial alterations or repairs without the consent of the Buyer. Failure by the Buyer to so notify the Seller and/or Seller’s Broker in writing, within the calendar days, shall constitute an election by the Buyer to proceed with the transaction.

That is on the standard BOR additional terms contract