Forecasting cash flow

[Account Closed]

Hi guys,

Determining NOI is not problem, but how would you suggest forecasting future NOI for the the next 5-10 years when running a DCF or trying to calculate net present value?

Thank you. 

[Andrew Johnson]

Niddal Momani I stress test whatever is in the T12 (assuming you can get your hands on one). I always try to see what happens if occupancy is less than expected, expenses are higher, how long the property would take to self-support (i.e. build reserves for capex through after-tax cash flow), etc. I get nervous when I have to assume rent growth, raising rents, hope that rents would go up and expenses would be static (unlikely if inflation is a cause), etc. If it doesn't make sense based on a stress-tested T12 then I'm pinning my decision on "hope" or optimism.