Evaluating cap x on a multifamily deal

[Account Closed]

Hi fellow members,

I hope everyone is healthy, and doing well. 

I was wondering if anyone can help me understand at which point I should factor in the Capital Expenditures when evaluating a multifamily deal? I am understanding that these numbers are not part of the Net Operating Income as they are not considered routine yearly expenses. If this is correct then I would like to understand when exactly is the time to factor these costs into my budget? 

Thanks in advance!

[Joseph Cacciapaglia]

Cap Ex is a below the line expense, meaning it doesn't go into your NOI calculation. However, it should go into your cash flow projection. So in an oversimplified example, my projections look like this:

   EGI 

- OpEx 

= NOI

____________ (the line)

- CapEx

- Debt Service 

= Cash Flow