Calculating your Net Operating Income (NOI) on Mexico Properties
Buying a rental property in Mexico can be very exciting but it can also be overwhelming when we do not know what to expect from our investments. Now that you ve made the decision to purchase a home or condo for rental purposes in Mexico, or you ve already purchased one, we need to have a starting point for our rental income.
Although each of our financial and personal goals are very different and we invest for various reasons, the pathway to your success in becoming a Landlord will require that you know how to calculate your Net Operating Income (NOI). Some of us want a monthly cash flow, while others just want to reach a break-even point. Some of us do not mind subsidizing our investment because we know that our return can be realized in the tax benefits and the appreciation. In order to understand how your Mexico investment property will potentially perform on a monthly or yearly basis, use the following formula:
MEXICO Potential Gross Income (PGI)
Minus – Bad Debt and Vacancy
Equals = Effective Gross Income
Effective Gross Income
Minus – Expenses (include management fees, repairs, leasing fees, etc)
Equals = Net Operating Income (NOI)
Next week we will examine how to determine what our Mexico rental property will rent for.
Kami Kemp is both a Texas Realtor and Real Estate Broker in Arizona with Prime Properties. She is a member of the Texas Association of Realtors, the National Association of Realtors and National Association of Residential Property Managers. She began her career in Property Management and Leasing in 1990, has served on various education committees through local associations and has taught many Fair Housing compliance and marketing classes throughout her career. www.TOPmexicorealestate.com