What is net operating income (NOI)?
Net operating income (NOI) is a property's income after operating expenses, but before debt service and capital expenditures.
NOI = effective gross income − operating expenses. It captures what the property earns from operations: rent and other income, minus the costs to run it (taxes, insurance, management, repairs, utilities). It deliberately excludes financing and capital items.
Because NOI strips out debt and capex, it lets buyers compare properties on operations alone, and it feeds directly into valuation: divide NOI by a market cap rate and you get an implied value.
Why it matters
NOI is the engine behind a deal's value. Almost every pricing conversation, and the cap rate itself, starts from it.
Where it shows up in your OM
omgen drafts the financial summary where NOI appears, using the income and expense figures you provide and labeling them by source. A review pass flags figures that don't reconcile before you export.
Frequently asked questions
- What is included in NOI?
- All operating income (rent and other property income) minus operating expenses such as property taxes, insurance, management, maintenance, and utilities. It is income from operations before financing and capital costs.
- Does NOI include debt service or capital expenditures?
- No. NOI is calculated before mortgage payments (debt service) and before capital expenditures. Those are accounted for after NOI when calculating cash flow.
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