NOI
Real EstateDefinition
Net Operating Income. Rental income minus operating expenses (property tax, insurance, maintenance, vacancy, management) — but BEFORE debt service, depreciation, and capex. The core real-estate cash-flow metric.
NOI is the numerator in cap rate calculations. Drives appraisal value via direct capitalization (Value = NOI / Cap Rate). Growing NOI per square foot is the key operating KPI for income-producing real estate.
NOI is the numerator in cap rate calculations. Drives appraisal value via direct capitalization (Value = NOI / Cap Rate). Growing NOI per square foot is the key operating KPI for income-producing real estate.
Formula
NOI = Gross income − Operating expenses
Example
A multifamily property collects $200K/year in rent. Op expenses: $80K. NOI = $120K. At a 5% cap rate, value ≈ $2.4M.
Related tool
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