You are correct. NOI is more complete when reserves for maintenance are factored in. It is almost assured that you will have to do so by the underwriter for a multifamily loan. I am seeing anything from $150 per unit annually to $350. Most often it seems to be $250 per unit.
For commercial properties, the reserves will have a great deal to do with the amount of maintenance that can be expected over a 10 year period. These costs normally require a reserve study. Roof and parking lot repairs or replacement are the larger items for commercial properties in this analysis. The dollars estimated over the period, divided by number of months prior to a call for the capital investment.
Items like tenant improvements and leasing commissions in commercial properties are factored in below the NOI line.
Onward and upward T.F..... Rob Baird
Jun 17, 2011