How do banks calculate NOI mid-year?

Question

For the purposes of financing a commercial multi family property in August, how would a bank typically calculate current NOI? Would they look at trailing 12 months? Or take 2019 since it’s the most current full year? Something else?

Chris Seveney · Answer

@Jon Blackburn

When we just refinanced they looked at trailing 12 months. It may vary by lender.

Joseph Gozlan · Answer

They will usually use one of two:

1) Annualized T3 or T6 (sometime T4 or other combination)

2) Trailing Twelve Months of P&L

Ronald Rohde · Answer

1 is definitely more risky, while banks may do it to get a deal, it shouldn't be assumed.

2 is more traditional and conservative.

Alexander Felice · Answer

underwriter will ask for most current financials and look at it against previous year tax returns.

Brian Garrett · Answer

They would calculate it based off the current leases (income) and expenses.

How do banks calculate NOI mid-year?

Most Popular Reply