The APOD: A Must-Have Report When Evaluating Rental Property Performance

jim kobzeff

by James Kobzeff
Jan 26, 2023

The APOD, or Annual Property Operating Data, is one the more popular reports real estate investors and brokers use when evaluating the potential profitability of rental income properties because of its ability to quickly provide investors with the financial data they need to make an informed initial investment decision.

In this article we will discuss the APOD, including it's benefits, shortcomings, and structure. We also will include a screenshot for you to examine.

Overview

The APOD is a comprehensive one-page report of a rental property’s financial performance in the first year.

Think of it as a "snapshot" of how the property is expected to perform during the first twelve months of ownership; a "mini" income-and-expense statement (if you will) because it includes projected annual income, operating expenses, and cash flow before taxes.

Oh, and in case you're wondering, the word "APOD" is simply an acronym for Annual Property Operating Data (i.e., A-P-O-D).

Pros & Cons

  • It's concise (one page)
  • It's easy-to-read and understand
  • It provides investors with enough information they need to make informed investment decisions such as income and expense breakdowns, occupancy rates, and projected returns on investment.
  • It's limited to evaluating only the first year of a rental property's performance
  • It ignores tax ramifications and the time value of money

Structure

There are five essential sections that comprise the APOD report:

  1. Rental Income
    • Gross Scheduled Income (GSI) - The sum of all annual rents as if the units were 100% occupied. Apply any rent you wish (perhaps a market rent) to units that are vacant. The idea is to show the potential when all units are rented and all rent collected.
    • Vacancy and Credit Loss - The potential rental income lost do to unoccupied units or nonpayment of rent by the tenants. I recommend nothing less than 5%.
    • Effective Gross Income (EGI) - This is gross scheduled income reduced by vacancy allowance and represents the amount of rental income you realistically expect the asset to generate.
    • Other Income - The amount of income (if any) you expect can be collected from other sources such as coin-operated washers and dryers, storage rooms, garages and so on.
    • Gross Operating Income (GOI) - The actual amount of income available for you to start paying the bills.
  2. Operating Expenses - The expenses required to keep the rental property in service such as property taxes, property insurance, utilities, trash, repairs and maintenance, property management and so on.
  3. Net Operating Income - The amount of income remaining to service the debt once all the operating expenses are paid by the rental income collected.
  4. Debt Service - The annual sum total of all mortgage payments.
  5. Cash Flow Before Taxes - The cash available after all cash inflows are reduced by all cash outflows. In this case it is cash flow before taxes (CFBT) which means it is money still subject to the owner's income tax liability.

Screenshot

apod
Fig.1 The APOD Report
ProAPOD Real Estate Investment Software
Agent 6 & Executive 10

Did You Notice?

In addition to the pertinent financial data included in the APOD report, ProAPOD creates an APOD that also includes a number of other helpful information about the income property such as:

  1. Name and address of the property
  2. Number of units
  3. Age
  4. Square footage
  5. Price
  6. Down payment
  7. Loan information
  8. Loan-to-value
  9. Debt-coverage-ratio
  10. Break-even-ratio
  11. Cap Rate
  12. Gross Rent Multiplier
  13. Price per unit
  14. Price per square foot
  15. Cash-on-Cash Rate of Return
  16. Name rider

Rule of Thumb

When populated with accurate and realistic numbers, the APOD report can be a useful tool for real estate investors, as it provides a one-page overview of a rental property's financial performance in the first year.

However, it is important to keep in mind that the report is limited in that it only looks at one year of performance and does not take into account tax considerations or the time value of money.

Plus, to make the most informed decision, it is recommended to use the APOD in conjunction with other forms of analysis such as market research and property inspections.

So You Know

The APOD is automatically created and ready to print when you are in both ProAPOD software solutions:

Agent 6
The ideal way to get started with income properties.
Executive 10
When you want to start, build, and grow an income property business.
james kobzeff author

James Kobzeff is a former realtor with over thirty years of investment property experience and is the owner/developer of ProAPOD Real Estate Software.