Shafiq Hirani CCIMReal Estate Advisor, REMAX Distinctive · Real Estate Advisor at RE/MAX Distinctive Commercial | Washington, DC | Your Guide To Profitable Real Estate Ventures

Reduced NOI Secrets: Lender & Buyer Deal Breakers Explained #shorts

8 May 2026 · 1 min

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In this short video, Shafiq Hirani CCIM outlines the most common adjustments lenders and buyers make to a property's Net Operating Income (NOI) during underwriting. He explains that lenders often normalize income by reducing it for undermarket rents, stripping out one‑time income spikes such as late fees or laundering income, and adding a management fee even when the property is self‑managed. On the expense side, lenders may highlight deferred repairs or lapsed insurance that make expenses appear lower than reality, and they typically require a reserve for replacement even if the owner has not set one aside. These adjustments can significantly lower the reported NOI and are frequent deal‑breakers for buyers.

Chapters

Here are the most commonly adjusted reduced NOI when a lender and a buyer evaluate the building. Undermarket rents— good news for the buyer, but it means that income today is lower than what the income could produce. One-time income spikes, late fees, laundering income that is usually high, one-time payments— these get removed from the normalized calculations. Missing management fee— even if the property is self-managed, Lenders add this anyways. This is one of the most common surprises. Understanding expenses. If repairs have been deferred or insurance has not been renewed, these expense bases look better than it is. The lenders know it. Low or missing reserves. Lenders typically add a reserve for replacement even if the owner has been not setting one aside.