Joe DownsCEO & Co-Founder, Belrose Storage Group. Founder, Storage Moguls.

Lifestyle expense add-backs: how sellers hide profits and how buyers unlock instant value

3 Feb 2026 · 1 min

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0:48

In this concise presentation, the speaker explains how sellers of income‑producing properties often blend personal lifestyle costs into the business’s operating expenses, thereby lowering the reported Net Operating Income (NOI). Typical hidden items include personal auto or truck usage, travel, meals, and vague consulting fees that serve as a vehicle for the owner to pay themselves. The speaker advises buyers to scrutinize financial statements during due diligence, identify these personal expenses, and “add them back” to NOI—effectively removing them as expenses. This adjustment instantly raises the property’s valuation for the buyer, revealing the true profitability of the business separate from the owner’s personal spending.

Chapters

These three categories categories can significantly impact your bottom line, so understanding them helps you project future profitability more accurately. All right, let's talk about those little sneaky lifestyle expenses that can deflate a seller's reported NOI, and that's bad for them, good for us. These are personal costs that often get mixed into the business financials. So you look for things like personal auto or truck expenses, travel, meals. Keep an eye out for vague consulting fees that might be the owner paying themselves. When you find these, you get to add them back into the NOI, remove them as expenses, if you will, and they instantly increase the property's value for you, not the seller. This adjustment reveals the true profitability of the business, not the owner's personal spending.