NOI
Also known as net operating income
Net operating income is the rental income of a property after operating costs, before financing and tax.
Why It Matters
It is the figure a valuation and a loan are built on, which is why how costs are classified matters as much as the rent roll.
Related Terms
- Cap RateA capitalisation rate is a property's net operating income divided by its value, expressed as a percentage: the unlevered yield the building produces.
- Property ValuationProperty valuation is the estimation of what a building is worth, from comparable sales, from the income it produces, or from the cost to replace it.
- DSCRThe debt service coverage ratio is a property's net operating income divided by the debt payments due on it.
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