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This time, it was distributed on CONSPIRIT's official channel on YOUTUBE.

Episode 11: Boost your quality of life with real estate management!I would like to send you the contents.

This time's theme is"Cashflow Tree" (Part 2)

 

By being able to calculate NOI (Net Operating Income),

Now that we know the specs of the property,

Is this the final cash flow? There are still other things to consider, right?

 

The amount to be deducted from NOI is

 

● ADS (annual debt payment)

This is simply the repayment amount of the loan.

ADSs represent the annual sum of principal and interest, which is the sum of principal and interest.

 

By subtracting ADS from NOI, we get

 

●BTCF (pre-tax cash flow)is.

At this point, we are finally seeing cash flow that is closer to reality.

By the way, the "tax" mentioned here is not "property tax",

This refers to income tax and corporate tax after final tax returns and financial statements.

 

So,

 

Finally, you pay the "income tax" and "corporate tax"

 

▲Tax

 

●ATCF (After Tax Cash Flow)

 

It becomes.

This is easy to understand, as it is before and after.

 

Yes, so,

It was only after this ATCF came out that

From the owner's perspective, this means "income and expenditure that is as close as possible to the actual situation."

 

This completes the "cash flow tree"! ... but...

Here's one additional note.

 

This is especially for owners who own a whole building.

Items such as "large-scale repairs" or "renovations" do not appear.

 

Some of you may be wondering, "Isn't that Opex?"

Strictly speaking, this is a measure to "increase value," so

"Operating expenses" should be considered separately,

This is not something to read as a running book.

 

So, (add it to the tree)

 

In this section before subtracting ADS from NOI,

 

▲Capex (Capital Expenses)

 

Add the following item.

It is not wrong to have this Capex case,

Especially for owners who have acquired a used property,

Is it possible to "maintain and improve asset value" through large-scale repairs and renovations?

This should be a necessary move,

I believe that including it will bring us closer to the actual cash movement.

 

 

Now, how should we look at the completed cash flow tree?

To measure the "earning power" or "profitability" of a property, use "NOI"

If you want to see the final cash flow that is closer to the actual situation,

"ATCF", you mean?

 

Whether or not major repairs or renovations are to be carried out

It all depends on the owner's ideas and intentions,

Since ADS loan conditions vary depending on the person,

It is not included when measuring the profitability of a property.

 

So, let's illustrate the cash flow tree:

It will be easier to understand how to use it.

For example, when you start working on improving the profitability of the property itself,

Let's say you think, "Okay, let's increase our NOI."

 

If so, the measures that can be taken are

 

・Increase GPI

・Improve vacancy losses, lease losses, and unrecovered losses

・Reduce operating costs

 

The options are:

 

If you can't increase GPI,

How to reduce expenses

If you can't cut your expenses,

How can we increase GPI?

You need to discuss this with the management company.

 

Rather than looking at it from a micro perspective of what measures to start with,

Thinking from a macro perspective, "How can we increase NOI?"

You can take concrete steps.

 

 

Now, I have explained the cash flow tree.

How does it compare to the "real estate income and expenditure" that you all know?

 

Some people may think that this is too detailed, but

The owner is the one who actually owns the property.

 

Is it okay to decide to make a purchase based on the sales representative's enthusiasm or personality?

We are confident that we will have a long-term relationship with the property,

Using these analytical indicators,

We recommend that you choose a person or management company who can speak logically.

 

 

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Well then, it was Conspi PR!

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