Operating Income Statement

[Bill Gutman]

I'm learning how to complete a operating income statement for a single family home. I've got the comparable rent schedule down, as far as determining the estimated market rent.

Is there any guidelines or any completed income statements that anybody could refer to me that I may view to get a better understanding. If I saw a completed one that was done CORRECTLY (this is my main hurdle) I thing I could work my way through it.

Just curious.....thanks.

 

[Nancy Wyatt]

What I do is go through the questions with the homeowner. Don't forget insurance. I also include the real estate taxes.

Many of these item will be paid be the tenant. I put that on the line.

As for the appliances ect. You can somewhat tell by a cursory inspection the remaining life if the homeowner does not know how old they are. Marshall and Swift also addresses the average life span for these items.

Don't be afraid to call the homeowner back and ask. And put in the report "per homeowner"

 

[Pamela Crowley (Florida)]

READ the paragraph near the top of the first page.

MOST of this information is to be supplied to the appraiser by the applicant (owner/borrower) via the lender!!!

 

[Chris Colston]

Originally posted by Pamela Crowley (Florida)@Mar 20 2004, 07:45 PM
READ the paragraph near the top of the first page.

MOST of this information is to be supplied to the appraiser by the applicant (owner/borrower) via the lender!!!

And how many lenders do you know who actually have that information? :rofl:

Way back when when I was rookie appraiser, I tried that approach....man did I ever get in trouble with my boss!! He said I was supposed to be the professional that the lender relied on not the other way around.

Now adays, I look at the local market and ask the investor/owner for the figures. If there are expenses that the tenant pays, like electricity and fuel I type PAID BY TENANT. For replacement cost I use M&S, as well as local home improvement stores. In most cases, it's a single investor with one or two properties and will most likely replace the stove, dishwasher or frig with one of "average" quality from either Sears, Lowes or Home Depot. Carpeting, too. Just check the newspapers for ads on the price of carpeting including installation. You can ask local roofers what the cost of new roof would be. I keep the ads in the work file incase someday someone asks for the reference material.

 

[Ben Vukicevich SRA]

Bill,

Taxes and insurance are not included on the Operating Income Statement. They are already accounted for in the PITI calculations made by the lender to qualify the borrower. Adding them there would be "double dipping" and denying the borrower additional funds to qualify for the loan.

Go here for an example:

http://www.appraisal.com/pdf/sample_2to4_f...y_appraisal.pdf

Scroll down to the Operating Income Statement.

Ben

 

[George Hatch]

For apartment property expenses, I have used a bi-annual publication "Apartment Opetrating Expenses Guidelines" published by the Apartment Appraisers and Consultants, Inc. These guys are apartment specialists (MAI shop, I believe) in SoCal and compile their expense estimates based off of their files. They list typical taxes, business licenses, utility costs, maintenance, pretty much everything, including replacement reserves. They break out their maintenance expenses by age and building type, address elevator and HVAC maintenance contracts, the works.

Matter of fact, I believe they due for a new update if they haven't already published it. Like I said, they publish every two years and my most recent copy is from yr2002. Some of the localized expenses like taxes and utilities wouldn't be that helpful for someone out of the area, but the maintenance, painting, cleaning, security, reserves, etc., would seem to be pretty consistent almost no matter where you work.

If you do a lot of apartments you might want to check them out.

 

[Nancy Wyatt]

Sorry for the bad info Bill. Thanks Ben, I agree with your reasoning. I have just always added taxes and insurance

I was taught that way decades ago, and never questioned it.

 

[Ben Vukicevich SRA]

Nancy,

I'm not well known for my "reasoning" on the forum.

Hey, beat your old mentor on the head. :blink: :blink: The instructions not to add taxes and such are on the first page of the 216.

Actually, it's a fairly common mistake because the preparation of the typical I&O expense statement taught to appraisers considers those items. Fannie and Freddie just have to be different. :blink: :blink:

Ben

 

[Russ]

Ben, where is your monthly housing expense? (PITI payments) Your O & I is incomplete and the "net cash flow" figure is misleading.

 

[Ben Vukicevich SRA]

Russ,

That's not mine..It's something I found on the internet for the poster to review.

I don't put in the PITI either because I don't know the interest rate..but I leave all the boxes blank for the underwriter to do so and calculate the net.

Ben