3 ways cap rates affect your commercial loan - StackSource blog
[{"id": "ejd6jvi", "text": "How do you increase NOI with a loan?", "replies": [{"id": "ejl5zx9", "text": "NOI (Net Operating Income) is independent of the loan. It's a measure of how much money is generated by the property through rents/leases, net of expenses, before the loan is taken into account. It's a key measure to lenders because it tells them how much income would be available to make loan payments, thus determining the maximum loan size.", "replies": [{"id": "ejlfmbl", "text": "Tim, thanks for replying.  In your blog you state that the NOI is increased with the help of the loan.   Now you are correctly stating that the NOI is independent of the loan.   Your first statement is incorrect.  \n\nNOI &amp; cap rates are used to scam novice investors.  Plenty of people here have argued with me that a cap rate is their \"return\" and scammers use that ignorance to sell high cap rate crap to them.   Those of us that know the correct meaning and use of these terms should be careful in our writings.", "replies": [{"id": "ejm2ii8", "text": "Bob? Thanks. When I say that the investor increased the NOI \"with the help of a loan\", what I mean is that the proceeds of the loan and the increased cashflow over the I/O period can be invested back into the property, which can increase NOI if done correctly.", "replies": [{"id": "ejm6d47", "text": "Tim, that makes total sense. Everybody wants to increase NOI whether thru increased rents or thru decreased operating expenses.  Capital in can accomplish that.  Thanks for clarifying.  Bob", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ejk74sf", "text": "Tim Milazzo, can you answer my question?", "replies": [], "depth": 1}]