Jonathan CroninREI Accelerator, Rei Accelerator · Multifamily Real Estate Investor & Coaching Leader

💡 The Power of Driving NOI

21 Jan 2025

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A short monologue by Jonathan Cronin about how driving net operating income (NOI) affects property valuation. He explains that properties with significantly increased NOI (around 45–50%) are worth materially more, but rising interest rates and cap rates (from ~5% to ~6%) have reduced current valuations compared with earlier estimates (roughly $7.5–8M if rates had stayed lower).

It's a property that is, you know, well stabilized, doing good B asset. It's not like you would be in a position to say, okay, we've got to sell it and we're taking a 30% haircut, you know what I mean? Like, and there will be people that will pay the number that it is because it's a good property. Now, that being said, in that tranche, there are going to be people that maybe bought it in 21 and they didn't drive NOI by 45 or 50%. Right? Most people are going to have a challenge because the reason we're in our position of where we're in like that is because we drove NOI by 45, 50%. Now, if interest rates hadn't gone up and cap rates hadn't gone from five to six, that's probably worth about seven and a half to $8 million. It's not worth that much today because of those reasons.