NOI (Net Operating Income)
Gross annual rent minus all operating expenses, before debt service and income tax.
Metrics
How it's calculated
NOI = Gross Rent − (Property Tax + Insurance + Maintenance + Vacancy + Management + Other Op Ex)
Example
$60,000 gross rent − ($6,000 tax + $2,400 insurance + $3,600 maintenance + $3,000 vacancy + $5,400 management) = $39,600 NOI.
Why NOI (Net Operating Income) matters
NOI is the numerator in cap rate, DSCR, and most commercial valuation formulas. It also excludes debt service intentionally — so two investors with different financing on the same property have the same NOI.
Related terms
- Cap Rate
- Net Operating Income ÷ property value. The unleveraged return a property generates, independent of f…
- DSCR (Debt Service Coverage Ratio)
- Net Operating Income ÷ mortgage payment. Measures whether the property's income comfortably covers d…
- Monthly Cash Flow
- Rent minus operating expenses minus mortgage payment. The cash that lands in your account each month…
Where NOI (Net Operating Income) shows up in TrueCap
The analyzer computes this metric on every run from the assumptions you see and can edit, and shows it in the results view.