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Your NOI Calculations Are Probably Not What You Ended Up With

A new study from Archer shows how far afield things can land.

By Erik Sherman | June 09, 2022 at 08:11 AM

Planning finances and cash management are often treated as givens in most industries, including commercial real estate. There’s some new evidence that often in real estate one of the basic calculations—expectations of net operating income—is frequently far off from eventual reality.

Any potential deal needs some degree of underwriting. Someone has to determine, even at the start, before any possibility of an offer, whether a property has the ability to generate enough income to make a purchase ultimately profitable. That often means a back-of-the-envelope calculation, according to real estate technology firm Archer.

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