Module 05 — Property NOI Build & Debt Sizing

Goal

Build NOI from the bottom up, then size a loan to the binding constraint.

Inputs (illustrative)

50-unit multifamily; avg in-place rent $2,200/mo; 5% vacancy/credit loss; other income $60,000/yr; opex ≈ 40% of EGI. Sizing: max 65% LTV of $40,000,000; max 70% LTC of $30,000,000; 1.25x DSCR on stabilized NOI at a 7.80% I/O note rate; 9.0% debt-yield floor.

Concepts featured

• NOI bridge: GPR − vacancy + other income = EGI; EGI − opex = NOI. Exclude debt service, capex, depreciation, and income tax — those sit below NOI.
• Debt sizing = the MIN of four implied loan amounts:
  • LTV: LTV% × value
  • LTC: LTC% × cost
  • DSCR (I/O): (NOI / min DSCR) / note rate
  • Debt yield: NOI / DY floor
• Flag which constraint binds with INDEX/MATCH.

Common mistakes

• Putting capex or debt service above NOI.
• Forgetting the DSCR constraint is I/O (no amortization in the sizing).
• Quoting the largest constraint instead of the smallest.

Your assignment

Open 05_NOI_DebtSizing_ASSIGNMENT.xlsx: build the NOI bridge and each sizing constraint, then take the MIN. Self-Check grades EGI, NOI, each constraint, and the binding loan.