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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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.

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

Analyzing DealsCash FlowNet Operating IncomeUltimate Nomad ChecklistWeek 2Week 3Week 4Week 5Week 6Week 7Week 8

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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 DealsNet Operating IncomeReturn On InvestmentUltimate Nomad ChecklistWeek 18Week 3

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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.

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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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 Application DeadlineContract Deadline: Loan Objection DeadlineContract To Close: Loan and CreditFinancingNet 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 Application DeadlineContract Deadline: Loan Objection DeadlineContract To Close: Loan and CreditFinancingInterest 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 Application DeadlineContract Deadline: Loan Objection DeadlineContract To Close: Loan and CreditFinancingInterest 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 Application DeadlineContract Deadline: Loan Objection DeadlineContract To Close: Loan and CreditDown 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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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

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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.

Mark this task complete when you have determined your Rent.

Analyzing DealsASAPLeaseLease OptionNet Operating IncomeRentUltimate Nomad ChecklistWeek 55

Improvements

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

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