Operational Expenditures in Multifamily Real Estate
Also known as OpEx, this category of expenses includes most ongoing costs incurred in the everyday operation and maintenance of an apartment property.
Commercial Mortgage Quick Reference Guide
What Are Operational Expenditures (OpEx) in Multifamily Real Estate?
Operating expenditures, often referred to as OpEx, are the ongoing costs that are incurred in the daily operation and maintenance of an investment property. These types of expenses are very different from capital expenditures, which are expenses related to long-term improvements, additions, equipment acquisition, and repairs that prolong an asset’s economic lifespan. OpEx typically includes the smaller and more frequent costs that property owners encounter, like payroll and utilities. Unlike capital expenditures, operating expenditures are fully tax deductible for the year in which they are incurred.
What Costs Are Commonly Included in Operating Expenditures?
OpEx typically includes most, if not all, of the expenses incurred in the everyday operations of the property. Specifically for multifamily real estate, operating expenditures include (but are not limited to):
Utilities
Property management
Payroll
Maintenance
Minor repairs
Property taxes
Office expenses
Insurance
Software expenses
Contracts
Depreciation expenses
These operating expenses can be subtracted from a property’s gross income to find the net operating income, or NOI — a primary indicator of an asset’s value.
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