All Forum Posts by: Harry Brooklyn

Quote from @Evan Polaski:

@Harry Brooklyn, there is a difference between NOI and cash flow. CapEx has an impact on Cash flow, but not NOI. Capital items are considered non-recurring items, so are non-operating.

By definition and generally accepted accounting principles (GAAP) you should not include these in NOI.

As for your DSCR and Cap rate, again, I would argue technically, they are not calculated in, but often banks will include some form of recurring capex reserve contribution into their DSCR calculation.

So, should you consider these items in the evaluation of an asset, YES! 100%. They will effect your Cash on Cash returns, But they are not NOI, they are below the line impacts to cash flow. The same as interest expense and amortization impact cash flow but not NOI. Or interest rate caps, or partnership level expenses, etc.

Thanks Evan, that's what I was thinking but wasn't sure of.  Many things after cashflow, but less for NOI.  So is the main items for NOI:
1. operation expenses (i.e. owner responsible utilities)
2. property taxes
3. insurance
4. maintenance & repairs
5. vacancy rates
6. snow plowing  (or is this until maintenance?)

* I usually set #4,5 at 5% of gross income

Hi Chris - I realized I wrote a mistake. I know they all are important for NOI and cashflow. What I meant was should Cap Ex and a property manager be factored into computing Cap rate and DSCR?

Cap rate is more for performance of a building, where CapEx is more for reserves. DSCR is what a bank would calculate so I'm unsure if the bank would use CapEx and a property manager in their calculations.

I want to make sure I'm using apples-to-apples comparisons.

Hi,

I am budgeting for the basics for my NOI (and taxes, insurance too):

1. Repairs
2. vacancy rates
3. CapEx
4. Property manager

All of these factor into my CoC returns, but actually should they be factored into the NOI, which I need for Cap rate and DSCR?

Hi,

Does anyone have placeholder amounts (numbers or percents of something...?) they use for total utilities, or broken down by water, electricity, heat if unknown for multifamilies? I’m looking around RI, MA, NH to run numbers and I’m uncertain what to use as estimates. Thanks!

Harry

Thanks Chris.  I was hoping I'd be able to find a reliable free option to try.  I have tried:

1. https://www.roofstock.com/get-neighborhood-rating
  >> Outputs rating in "1-5 stars", but doesn't always have property in the records.
2. https://www.areavibes.com
  >> seems ok, but it will output up and coming areas higher than a well-developed area, so it's of questionable use.

Any free ideas?

I want to learn the neighborhood class rating of a potential investment property. I’m looking for a website where I can enter an address or zip code and it’ll give me a rating. Does anyone know of such a website?