depreciation on the cash flow analyzer

[Chris Lang]

the spreadsheet figures depreciation as a negative under total operating expenses.

My agent/advisor says not to figure that in  Why would it be there if I was not to use it?

I'm analyzing a 23 unit apartment complex. Is he right??? anyone...

Thank you

Chris

[Brandon Hall]

@Chris Lang Perhaps you should consult with a new agent/advisor. 

Depreciation will not change the specific deal, but will absolutely change your after tax return, which is of the upmost importance to you. 

When you analyze deals, you primarily underwrite to the net operating income (NOI) which does not factor in interest on financing, amortization, and depreication. This is because thee three items do not change how well the property itself operates as they are not operating expenses.

However, you do need to include these items in your calculations to determine how the deal will affect your personal tax and financial position. Any good advisor should be telling you the same.