*Correction* NOI = Effective Gross Income - OpEx. In the video (1:28), you stated that NOI = Gross Rental Income - OpEx. EGI includes a vacancy factor while GRI does not. To accurately and safely underwrite a property, make sure to factor in a vacancy rate of at least 5%.
Wow. I thought I would be familiar with most of the terms, but turned out I hardly knew any of them. Only knew maybe two or so out of the whole bunch. Since, I had to watch multiple times and sure I wanted to watch multiple times more.
Me and a couple of my veteran buddies are in Clarksville Tennessee looking to get into commercial real estate. Is there any chance that You would be willing to mentor? And I don’t mean something for nothing
ROI can also stand for retail office industrial. This is great content and very helpful. I am new to CRE and am an assistant to an appraiser so this is all perfect for me to learn. Thank you!
Cap rates are not a return. Cap rates measure value. The formula is V=i/r In a 5 cap market investors have paid $20 for NOI. In a 10 cap market they paid $10. Where is the "return"? You are misinforming people.
The “return” is shown if you treat it like you paid for the property in full. For example, if the NOI is $100K and the Purchase Price is $1M, the cap rate would be 10%. This would mean that if you paid for the property in full ($1M in cash), your “return” would be 10% annually since it would take 10 years to make back your investment of $1M. It looks like you are misinformed…
@@Joe_Foley Cap rates NEVER include financing! They measure what investors HAVE paid for NOI. How would you know if a property was bought with cash or not? Geez. Now you are saying cap rates measure time!!! Here's a question I'd like to see you try to answer, where are you getting the value to calculate a cap rate?
@@Joe_Foley 1. A cap rate is not a return metric. 2. The cap rate is a valuation metric. 3. The cap rate is the same if you pay cash or finance 100%. 4. Cash on Cash is a return metric. 5. If you do not use leverage then the CoC return will be the same as the cap rate by happenstance. 6. But they measure different things. 7. The cap rate will measure the value of NOI. V=i/r is the formula. 8. If you buy $1 NOI at 5% cap rate you paid $20. If you bought at a 10% cap rate you paid $10. 9. f you use cap rates incorrectly and pay $20 in a $10 market then your cash on cash without leverage is 5%. BUT you overpaid by double!!! Still think you will be getting a 5% CoC return? 10. NOPE!
*Correction* NOI = Effective Gross Income - OpEx. In the video (1:28), you stated that NOI = Gross Rental Income - OpEx.
EGI includes a vacancy factor while GRI does not. To accurately and safely underwrite a property, make sure to factor in a vacancy rate of at least 5%.
This was so helpful and understandable. Appreciate the calm, kind spirit you bring! I enjoy listening to this kind of video!!
I enjoyed the video, clear in the explanation and was able to caught my attention for the whole vídeo
Great beard… I trust him
Haha it’s all in the beard!
Great video, I'm gonna save it so I can watch it over and over
There we go! 🤙🏼
Wow. I thought I would be familiar with most of the terms, but turned out I hardly knew any of them. Only knew maybe two or so out of the whole bunch. Since, I had to watch multiple times and sure I wanted to watch multiple times more.
It needs its own dictionary! Haha
Great video
Thank you
Thank you so much !
Amazing help
THANK YOU
Great video..clear, concise and to the point.
Boom! Appreciate that
Me and a couple of my veteran buddies are in Clarksville Tennessee looking to get into commercial real estate. Is there any chance that You would be willing to mentor? And I don’t mean something for nothing
Excellent
nice video
Thank you, Akshay
ROI can also stand for retail office industrial. This is great content and very helpful. I am new to CRE and am an assistant to an appraiser so this is all perfect for me to learn. Thank you!
I’m glad you enjoyed it!
Great overview!
Cap rates are not a return. Cap rates measure value. The formula is V=i/r In a 5 cap market investors have paid $20 for NOI. In a 10 cap market they paid $10. Where is the "return"? You are misinforming people.
The “return” is shown if you treat it like you paid for the property in full. For example, if the NOI is $100K and the Purchase Price is $1M, the cap rate would be 10%. This would mean that if you paid for the property in full ($1M in cash), your “return” would be 10% annually since it would take 10 years to make back your investment of $1M.
It looks like you are misinformed…
@@Joe_Foley Cap rates NEVER include financing! They measure what investors HAVE paid for NOI. How would you know if a property was bought with cash or not? Geez. Now you are saying cap rates measure time!!!
Here's a question I'd like to see you try to answer, where are you getting the value to calculate a cap rate?
@@Joe_Foley
1. A cap rate is not a return metric.
2. The cap rate is a valuation metric.
3. The cap rate is the same if you pay cash or finance 100%.
4. Cash on Cash is a return metric.
5. If you do not use leverage then the CoC return will be the same as the cap rate by happenstance.
6. But they measure different things.
7. The cap rate will measure the value of NOI. V=i/r is the formula.
8. If you buy $1 NOI at 5% cap rate you paid $20. If you bought at a 10% cap rate you paid $10.
9. f you use cap rates incorrectly and pay $20 in a $10 market then your cash on cash without leverage is 5%. BUT you overpaid by double!!! Still think you will be getting a 5% CoC return?
10. NOPE!