The APOD is actually known as the Annual Property Operating Data that is really one of the most important reposts in real estate investing. The reason is a lot of real estate investors rely on the overall report before making an analysis and a confirm investment. It is really surprising to know that any person who has been involved in the real estate investing for whatever period of time has not considered the usage of reports and relied on the fact that the real estate brokers, agents and the analysts of the company would handle those reports.
Now, let us consider why it is so much important for the real estate investors.
Firstly the report is not at all lengthy, and being a single page report, it is really easy to handle, distribute and print.
The includes a huge amount of financial data like sales price, the annual operating price of the property and also the operating exercises, rental income, cash flow before taxes and the debt services, that are relevant to real estate market and it is necessary for the investors. In some scenarios, the APOD also comprises of rates of return like capitalization rate, returns of cash on cash and also the other measures like price per square feet and also price per unit.
This will provide the real estate investors with a first glimpse of rental investment property and also the financial performance at the first year of the ownership. Yes, for a successful real estate investing, this might not be all to make a confirmed decision, but this will definitely offer a quick and easy way for the potential buyers to make a preliminary decision regarding the potential investment opportunity without spending too much on the research digging through a complete rental property analysis.
The APOD is easy to understand and read, because according to Jeff Adams, it only focuses on the real estate investment property’s cash inflow and also the cash out flow for a complete period of one year. This only comprises of a couple of columns that typically do not clutter the report. Thus, it can be previewed very easily. And the financial results will be rather comprehended very quickly.
Now, since all the advantages have been mentioned, you might ask what can be possibly the shortcomings of APOD.
Firstly, the data of the report is completely limited to the first twelve months and thus, it cannot be used for making any longer projections like you can attain in a proforma statement.
Secondly, this does not consider the different elements of the tax shelter and thus it does not provide the data associated along with the income tax liability of the owner like the cash flow after taxes or in case of a future sale. The sales will proceed after taxes.
Thirdly, this does not consider the actual time value for money and within the report; you shall not be able to see the returns like Net Present Value or the internal rate of returns.
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