Overview · What & why
A decision, before a calculation.
Buying an existing property means buying contractual rights, operating obligations and physical condition as well as a building. Start with leases and actual collections, then normalize unusual items. A seller’s advertised income may omit recurring expenses, upcoming capital work or the effect of expiring leases. Underwriting turns evidence into a defensible forecast.
A concrete example
Harbor Yard costs $9M plus $200K closing costs and a $100K reserve. At 90,000 SF, $11 net rent and 92% occupancy, rental revenue is $910,800. Less $75K owner expenses produces $835,800 NOI before financing.
What to remember
Purchase price is only one component of the acquisition decision.
Before using this in a project: Executed leases, rent roll, collection ledger, operating history, physical-condition report and purchase terms.