How to know When the numbers WORK..

[Constance Rahming]

Once I have the info that I need ( rent roll / operating expenses, etc) how do I use them to calculate if it's worth it to buy an investment property? #MultiFamily #REI

[John Warren]

@Constance Rahming everything we do as investors is to help us get to one number that determines all of the other numbers. The number we are looking for is the net operating income or NOI. The NOI appears simple to figure out on the suface. You take the gross annual income for the property and then subtract all of the operating expenses. The only expense you do not use is your mortgage payment (principle and interest), because we are looking to see how well the property would perform if you buy it "all cash".

Once you have the NOI, you can then pivot to a variety of other metrics. Without the NOI, you cant figure out cash on cash, cap rate, IRR, etc.