Net Operating Income

Net Operating Income (often abbreviated NOI) is the income you receive from your investment after all your expenses except the expense of debt. It does NOT include your mortgage payment.

Net Operating Income then is the cash flow you’d receive on a property if you did not have a loan on it.

Net Operating Income/Purchase Price of the property is the Cap Rate of the property.

Net Operating Income Related Tasks and Resources

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Watch the recording of the live presentation of "Analyzing Deals 101: an Intro to Cash on Cash Return on Investment" available on:

https://learntoberich.com/cash-on-cash/

Mark this task as complete once you've watched it.

Analyzing DealsASAPCash FlowClassesFirst Meeting: Analyze DealNet Operating IncomeReturn On InvestmentUltimate Nomad ChecklistWeek 18Week 2

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Analyze properties daily as they come in from automatic property searches. Save a copy of Brian's Deal Analysis Spreadsheet for each deal you analyze in your Dropbox folder for this deal/purchase.

If the deal looks interesting after analyzing it, request a showing.

Mark this task complete once you've analyzed deals for the day.

Analyzing DealsCash FlowFirst Meeting: Analyze DealNet Operating IncomeUltimate Nomad ChecklistWeek 2Week 3Week 4Week 5Week 6Week 7Week 8

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Call your Insurance Agent and get an Insurance Quote estimate to use when analyzing properties using Brian's Deal Analysis Spreadsheet.

You'll modify this slightly based on the price of the property you're analyzing.

You may want to discuss with your Insurance Agent additional coverage for Loss of Rent.

Your Insurance Quote typically varies based on your credit score and the deductible amount you choose.

Mark this task complete when you have an insurance estimate to use when analyzing deals using Brian's Spreadsheet.

Analyzing DealsASAPFirst Meeting: Analyze DealsNet Operating IncomeUltimate Nomad ChecklistWeek 2

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Analyze properties daily as they come in from automatic property searches. Save a copy of Brian's Deal Analysis Spreadsheet for each deal you analyze in your Dropbox folder for this deal/purchase.

If the deal looks interesting after analyzing it, request a showing.

Mark this task complete once you've analyzed deals for the day.

Analyzing DealsCash FlowNet Operating IncomeShowings: Request ShowingUltimate Nomad ChecklistWeek 2Week 3Week 4Week 5Week 6Week 7Week 8

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If the property looks interesting and you're considering it, create a property folder in your Dropbox folder.

Mark this task complete when done.

Analyzing DealsCash FlowNet Operating IncomeShowings: Request ShowingUltimate Nomad ChecklistWeek 2Week 3Week 4Week 5Week 6Week 7Week 8

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If the property looks interesting and you're considering it save a copy of the deal analysis spreadsheet for this property to the property folder in Dropbox.

Use the file naming convention:

"YYYY-MM-DD - 1234 Main St - Analysis Spreadsheet.xlsx"

Where YYYY is the four digit year, MM is the two digit month, DD is the two digit day of the month and 1234 Main St is the street address of the property.

Mark this task complete when done.

Analyzing DealsCash FlowNet Operating IncomeShowings: Request ShowingUltimate Nomad ChecklistWeek 2Week 3Week 4Week 5Week 6Week 7Week 8

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We are currently testing this as a service, but we've subscribed to a company where we can pull rental comparables for properties.

If you are analyzing a property and it looks interesting, you can email James and Tammy and ask them to pull rental comparables to see what fair market rent might be on the property.

Be sure to include the following in your email request:

  • Address of the property
  • Number of bedrooms (required to do rent comps)
  • Whether it is a SFH or apartment (the two choices for rent comps)
  • Whether you want just the report or the report and the CSV of the rent comps data if you plan to do some additional work on the data yourself in Excel

Mark this task complete when done.

Analyzing DealsCash FlowNet Operating IncomeShowings: Request ShowingUltimate Nomad ChecklistWeek 2Week 3Week 4Week 5Week 6Week 7Week 8

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If after analyzing the property it looks interesting, request a showing by emailing your Real Estate Broker.

TIP: If you're working with James and Tammy, be sure to email both of them since James may not be in his email and Tammy could setup up the showing before James will even be back in his email. If you just email James, he may not even see it until much later and then he'll typically forward it to Tammy to setup the showing.

Be sure to include:

  • Property address
  • MLS number if possible
  • Your availability to be able to see the property (provided the Seller can accommodate that day and time)
  • Any additional questions you might have about it (if any)

Mark this task complete when done.

Analyzing DealsCash FlowNet Operating IncomeShowings: Request ShowingUltimate Nomad ChecklistWeek 2Week 3Week 4Week 5Week 6Week 7Week 8

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In all but a small number of cases, we recommend fixed-rate 30 year mortgages for Nomads.

However, there are two situations we'd consider ARMs.

First, if you're buying the property and are 100% positive you're going to be putting a Tenant-Buyer in the property and you will be out of the property before the mortgage will adjust, then you can consider using an ARM.

Second, if you're buying the property with partners and the only loan you can get with the partnership is an ARM then you can also consider an ARM. However, in this case you probably should be putting a Tenant-Buyer in the property so it probably still falls under the first reason above.

Interest rates for ARMs (Adjustable Rate Mortgages) tend to be a little lower than the interest rates on fixed-rate 30 year mortgages. But the ARM interest rates can adjust over time causing much higher monthly payments and significant negative cash flow after the interest rate adjusts. This adds additional risk that you could have opted not to take on.

Mark this task as complete if you have decided to get fixed-rate mortgage or an ARM.

Analyzing DealsCash FlowContract Deadline: Loan Objection DeadlineFinancingNet Operating IncomeOptionalTenant BuyersUltimate Nomad ChecklistWeek 10

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Often for Nomads it is better to pay a one-time up front PMI (Private Mortgage Insurance) payment instead of monthly PMI on their loans.

This may mean coming to Closing with a little more cash.

Sometimes it means voluntarily raising your interest rate with your Lender to get a credit to pay for some or all of the up-front PMI.

Discuss these two scenarios with your Lender to see which one makes more sense to you.

Mark this task complete once you've discussed this with your Lender and decided which you'll pick.

Analyzing DealsCash FlowContract Deadline: Loan Objection DeadlineFinancingInterest RateNet Operating IncomeOptionalPrivate Mortgage InsuranceUltimate Nomad ChecklistWeek 10

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Talk to your Lender to see if buying down your interest rate makes sense in your specific situation.

Sometimes, especially if you have extra cash and you plan to hold the property for a long time, it makes sense to pay additional points to get a lower interest rate.

Mark this task complete once you've talked to your Lender about these options, analyzed them yourself and decided to buy down your interest rate or not.

Analyzing DealsCash FlowContract Deadline: Loan Objection DeadlineFinancingInterest RateNet Operating IncomeOptionalUltimate Nomad ChecklistWeek 10

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Sometimes if you have extra cash for down payment it might make sense to increase down payment.

We often consider this as an alternative to to paying up-front PMI or buying down the interest rate. If we're putting less than 20% down, one way to lower our monthly payment is to put more down to get rid of PMI instead of paying the PMI up-front.

Mark this task as complete when you've talked to your Lender about using a larger down payment and decided whether you will or not.

Analyzing DealsCash FlowContract Deadline: Loan Objection DeadlineDown PaymentFinancingInterest RateNet Operating IncomeOptionalUltimate Nomad ChecklistWeek 10

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Call your Lender and get an Interest Rate quote estimate to use when analyzing properties using Brian's Deal Analysis Spreadsheet.

You'll modify this as interest rates change or as your loan program changes for the property you're analyzing.

Mark this task complete when you have an interest rate estimate to use when analyzing deals using Brian's Spreadsheet.

Analyzing DealsASAPCash FlowFinancingNet Operating IncomeUltimate Nomad ChecklistWeek 2

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Determine what Rent you'll charge for the property or, if you're offering a Lease-Option, what Lease-Option Rent you'll charge for the property.

This is often done by researching what Fair Market Rent is.

Some Real Estate Brokers may subscribe to a service that allows them to pull rental comparables to help to determine rent.

Mark this task complete when you have determined your Rent.

Analyzing DealsASAPLeaseLease OptionNet Operating IncomePrepare to be a LandlordRentUltimate Nomad ChecklistWeek 55

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Watch the recording of the live presentation of "Analyzing Deals 201: Selling with Lease Option" available on:

https://learntoberich.com/how-to-analyze-a-lease-option-deal-with-brians-spreadsheet/

Mark this task as complete once you've watched it.

Analyzing DealsASAPCash FlowClassesLease OptionNet Operating IncomeReturn On InvestmentTenant BuyersUltimate Nomad ChecklistWeek 19

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Watch the recording of the live presentation of "Cash Flow Explosion" available on:

https://learntoberich.com/how-to-maximize-rental-property-cash-flow/

Mark this task as complete once you've watched it.

Cash FlowClassesLease OptionNet Operating IncomeReturn On InvestmentTenant BuyersUltimate Nomad ChecklistWeek 48

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Watch the recording of the live presentation of "Analyzing Deals 301: Multi-Family for Nomads" available on:

https://learntoberich.com/analyzing-deals-301-multi-family-for-nomads/

Mark this task as complete once you've watched it.

Analyzing DealsClassesMulti-FamilyNet Operating IncomeUltimate Nomad ChecklistWeek 20

Improvements

The following are improvements I plan to make to this page in the future.

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