Increasing NOI for a BRRRR Cash-Out Refi.

[Hilary Graves]

Hi all! My husband and I are about to execute our very first BRRRR- with our very first property. (Oh my gosh, I've been waiting for this moment!) It's a 5-unit that we bought 6 months ago for $299,000, put $50,000 into it (new floors, countertops, painted cabinets, new hardware, painted exterior, bought coin-op laundry machines), increased the rents dramatically, added pets fees, and now we plan to pull all of our money back out so we can rinse and repeat.

Yesterday I met with my multi-family appraiser friend, just to validated our new value before pulling the trigger. He estimated that it should appraise for somewhere around $500,000 which is wonderful (we would get 75% of that, which is $375,000). So I'm not complaining at all, BUT in my spreadsheet, I had it closer to $512,000 because I was counting the extra laundry income ($84/month x 12 months / 8.2% cap rate = $12,292). According to my appraiser friend, you don't count laundry income in the NOI. Is that standard?? If so, why doesn't it count?

Thank you in advance.

Hilary

Co-owner, Bilary Property Group, LLC