Special offer
David Wooley

Spam prevention
Rainmaker
2,182,502
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

NOI is huge when arriving at a value . However if you totally lock in on it , you are forgetting that real estate has 4 Annual Returns !!! 

Nov 28, 2020 03:08 AM
Ambassador
3,345,091
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

I echo what Bob "RealMan" Timm and John Juarez said. 

Others have provided helpful responses and Ken Jones has offered to help! 

What a great community. 

Nov 28, 2020 07:45 AM
Rainmaker
5,216,398
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

For commercial type investment proerties it can be very important. Also important to undestand the numbers that contribute to NOI or your calculation is for not!

Nov 28, 2020 04:26 AM
Rainmaker
2,390,595
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

I have not used it David Wooley and I was in the business for 20 years with various degrees of investors. Most investors knew a lot more about thier needs then I did and if they didn't they trusted their accountants to know more than both of us.

Nov 27, 2020 01:51 PM
Rainmaker
1,543,634
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
CEO of Vision Drive Realty - Coastal San Diego

I prefer to perform a CAP Rate analysis, which includes a gross P&L and is fairly accurate as a determiner for whether to invest and what the maximum offer should be.

Nov 29, 2020 02:26 PM
Rainmaker
1,311,397
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

The calculation about which you ask are important to appraisers, for the most part. They are not applicable to valuing homes unless the home will be an investment property. I have never used either approach for valuations. 

Nov 27, 2020 02:19 PM
Rainer
417,221
Caroline Gerardo
Licensed in 20 states - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

NOI is important for commercial. Not so with residential and here is why: the inexperienced residential buyer purchasing income property won't understand the application. It is used in appraisals. Comparables are more weighted over NOI in residential- what would a buyer pay for like kind today. Profit and loss is only as good or honest as the person claiming what they spend.  Net Sales less cost of goods sold equals gross margin. Gross Margin minus a-z costs is the net operating profit... and so forth to net profit or loss. That number might be useful to a buyer.

However an easier way to look at residential income property is the standard that a Lender will use. Rental survey minus principle interest taxes insurance HOA and a 25 percent haircut equals net profit. This does not consider depreciation which helps on income taxes...

 

 

 

Nov 28, 2020 09:01 AM
Ambassador
6,393,154
Bob Crane
Woodland Management Service / Woodland Real Estate, KW Diversified - Stevens Point, WI
Forestland Experts! 715-204-9671

For investment properties it is important to know these types of numbers.  Few agents get past residential so you many not need to know this.

Nov 28, 2020 04:14 AM
Rainmaker
2,781,163
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Formulas shed light on matters at hand to help us make or prove points. Rent, comparable sales and cost to construct plus "math' and other rules of the thumb lead us to the final moment i.e. the calculated risk decision

Nov 27, 2020 05:16 PM
Rainmaker
1,052,211
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

In commercial real estate, knowing NOI or creating one proforma is essential! 

Nov 27, 2020 03:31 PM
Rainmaker
1,844,271
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Nope not me.

Nov 27, 2020 03:18 PM