but it still has pros and cons. Here they are.
Pros
• It helps you find the properties’ initial value to your company at the start of your property search. You will have a general idea if it is a good or bad investment. It’s a great starting point. • It gives a great overview of a property’s total revenue when you are operating out of it. You will be able to see pretty early if there is a negative net total. • It helps lenders make a choice. Often it is more reliable than credit scores. If your company is young and doesn’t have much income history, it can be a huge help as well, even if lenders play with the numbers.
Cons
• The biggest con is that the NOI can be manipulated slightly by lenders. It makes sense why they would, but don’t always assume your exact numbers will be used. • The NOI is not always constant. It depends on your company’s income. Getting a loan based off it is for an amount of time, and your income may rise or fall in that amount of time. • It doesn’t represent pure cash flow. You need to spend money on other parts of your business, and those fees may go up and down. Your NOI will almost always rise and fall because of aspects like this. • It can change if you decide to manage the property differently (if you have any tenants). You may raise or lower rent. Most of the cons involve rising and falling
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