A the APOD: a Popular Real Estate Analysis Report

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A the APOD: a Popular Real Estate Analysis Report

The APOD: A PopuPopularlar Real Estate Analysis Report The APOD (Annual Property Operating Data) report is arguably one of the most popular real estate analysis reports investors, agents, brokers, and others engaged in real estate investing use during the investment decision process. Real estate analysts like the APOD primarily because it gives a one-page ‘snapshot’ of the property's financial performance over the course of the first year; a mini income- and-expense-statement because it includes the projected annual income, operating expenses and cash flow. In most cases it will provide enough data for the investor to decide whether or not there was enough profitability to pursue the investment further. Structure There are four sections of the investment's annual property operating data that essentially comprise an APOD. Rental income, operating expenses, debt service, and cash flow. It is structured as follows: • Gross Scheduled Income (GSI) - The sum of all annual rents as if the units were 100% occupied. • Vacancy and Credit Loss - The potential rental income lost due to unoccupied units or nonpayment of rent by the tenants. I recommend nothing less than 5%. • Effective Gross Income (EGI) - This is gross scheduled income reduced by vacancy allowance and represents the amount of rental income you realistically expect the asset to generate. • Other Income - The amount of income (if any) you expect can be collected from other sources such as coin-operated washers and dryers, storage rooms, garages and so on. • Gross Operating Income (GOI) - The actual amount of income available for you to start paying the bills. • Operating Expenses - The expenses required to keep the rental property in service such as property taxes, property insurance, utilities, trash, repairs and maintenance, property management and so on. • NeNeNetNe t Operating Income (NOI) - The amount of income remaining to service the debt once all the operating expenses are paid. • Debt Service - The annual sum total of all mortgage payments. • Cash Flow - The cash available after all cash inflows are reduced by all cash outflows. To Summarize: Gross Scheduled Income - Vacancy and Credit Loss = Effective Gross Income + Other Income = Gross Operating Income - Operating Expenses = Net Operating Income - Debt Service = Cash Flow The APOD is not perfect because it only evaluates the first year of a rental property's annual property operating data and does not include consideration for tax shelter or time value of money. Nonetheless, when populated with accurate and realistic numbers it will provide real estate investors with a concise and easy-to-read report that will benefit initial real estate investment decisions. .

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