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Data Needed To Make A Commercial Property Investment – Winston Rowe & Associates
Next to negotiating the commercial property purchase price, the due diligence period is probably the most important part of the transaction from the buyer side.
As a commercial real estate investor you need to take a careful and critical look at the income and expense data of any property you are considering investing in.
To begin the analysis of income and expenses is to focus in the following areas.
Gross Scheduled Income is the total annual rent value of all units in the property. This amount includes the actual rent generated by occupied units, as well as the potential rent from vacant units.
Vacancy Allowance is usually expressed as a percentage of the gross scheduled income. As its name suggests, it is an estimate of the amount of potential income that will be lost due to vacancy. Some investors prefer to call this "vacancy and credit loss" so that it also accounts for uncollectible rent.
Gross Operating Income (GOI) is the gross scheduled income less the vacancy allowance. It is also known as effective gross income. In short, it is the amount you actually collect.
Operating Expenses are items such as property insurance and taxes, repairs, utilities, and management fees. Operating expenses include any costs that are necessary to keep the revenue stream flowing. Mortgage payments and depreciation are not considered operating expenses, or are capital improvements.
Net Operating Income (NOI) is the gross operating income less the operating expenses. In other words, it is what is left of your total potential income after all vacancy and expense have been subtracted.
Annual Property Operating Data (APOD) is the real estate equivalent of an income and expense statement.
Winston Rowe & Associates is a no upfront fee commercial real estate advisory and due diligence firm specializes in the financing of commercial real estate transactions.
That's why Winston Rowe & Associates actually wants to speak with clients, so they can truly understand their business and its distinct needs.
The best funding solutions occur when they combine data with consultation and common sense.
They can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com