Deal Metrics
What is NOI (Net Operating Income)?
NOI is the income a property produces after operating expenses are removed, but before the mortgage is applied.
Answer
NOI is the income a property produces after operating expenses are removed, but before the mortgage is applied.
Formula: NOI = Effective Gross Income − Operating Expenses
Example: Rent = $2,000/month Vacancy = $100/month Effective Gross Income = $1,900/month Operating expenses = $650/month NOI = $1,250/month
Why this matters: NOI shows the property's income before financing. It's useful because it isolates the property performance independent of loan terms and is used in cap rate and DSCR.
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