Hi, I’m Peggy Beauregard. We are the Real Estate Matchmakers. We match cash to deals and deals to cash. We save you time and you make money because the deals come to us and the returns go to you.
And here’s one of the things that’s really important when you’re looking at investing in a piece of property: the income and the expenses. That’s how you get to your net operating income. See? This says “operating,” so this is what it is to operate something.
So, the first thing you look at is your income. Here’s your income. These people have—I’m looking at the same industrial that I showed you previously. This is what the income is per year.
These are reimbursed expenses, which means something like they might pay utilities, and the utilities get paid back by the renter, for instance. I don’t know if that’s exactly what that is, but it could be that. They could pay the water, for instance, but they’re not responsible for water, but because the way it’s structured. So, that could be an expense. I don’t know exactly what it is. You can always find out.
And so, you have what’s called your “Effective Gross Income.
If this were an apartment complex, for instance, it would have the rental income, and then it might have something like RUBBS, and that’s utilities that are reimbursed, reimbursed utilities, RUBBS. Or it might have, if there’s a laundry room, it would have laundry, and then that would have an—that would be an income, additional income.
So, every kind of property has different kinds of income.
And then, so here are the operating expenses, $370,000, and that’s how they get the operating income.
Now, to get that $370,944, there’s the operating expenses. So, they’ve listed everything – real estate taxes, insurance, gas, electricity, water, repairs, property management, very important to have in there.
If you see a—if you’re looking at a property and there’s no management in there, you’ve got to add your management. There is always management. If you are managing it, there’s a management fee. If the owner’s managing it, there’s a management fee. They may be taking it in a different way, but that is an expense. Super important to have it there.
So, mowing and landscaping, which could also—well, they don’t have anything here, because the tenant takes care of that. And then here’s the air conditioning, and the tenant takes care of that. And the parking lot, well, look at that. The tenant takes care of that. So, I was talking about cost segregation, and the parking lot. So, you won’t actually get any depreciation particularly on that, because the tenant takes care of that.
So, that’s how you got your net operating income. There are your expenses, here’s your income. Subtract your expenses from your income, and that gives you your net operating income.
If you have any questions, please let me know.
If you have a property you’d like me to look at, an investment you’d like me to look at, I’m happy to do that. If you have a situation that needs to be resolved, I’m happy to do that, too.
