Net Operating Income (NOI)
NOI is gross operating income minus operating expenses, representing property profitability before financing costs and taxes. It is the fundamental metric for property valuation and performance.
| NOI Calculation | Components |
| Start: Gross rental income | Total rent collected |
| Add: Other income | Parking, storage, laundry |
| Subtract: Vacancy loss | Expected vacant periods |
| Equals: Effective gross income | Realistic revenue |
| Subtract: Operating expenses | Management, maintenance, insurance, taxes |
| Equals: Net operating income | Property profit before debt |
| NOI Uses | Application |
| Property valuation | Value = NOI / Cap rate |
| Performance measurement | Compare to projections or benchmarks |
| Debt service coverage | NOI / Annual debt service |
| Cash flow basis | NOI minus debt service = net cash flow |
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