What Is NOI in Real Estate?
NOI, or net operating income, is property income after operating expenses and before debt service. It helps investors evaluate property-level performance before a specific loan or tax situation.
Estimates are based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, tax, or lending advice.
Run the number, then pressure-test the assumptions.
NOI, or net operating income, is property income after operating expenses and before debt service. It helps investors evaluate property-level performance before a specific loan or tax situation.
Use this page to understand the metric directionally, then compare it against financing, reserves, repair risk, cash flow, and your own constraints.
NOI = effective gross income - operating expenses
If a property collects $50,000 after vacancy and has $18,000 in operating expenses, NOI is $32,000.
Use the formula inside a full deal model
DealSharp helps compare assumptions, debt service, cash flow, and risk flags so this metric is not reviewed in isolation.
Open DealSharpHow to read this number
The useful move is not treating one number as a final answer. Use it to decide which assumptions deserve more review, then compare the result against cash flow, financing, reserves, repair risk, and your own constraints.
Inputs required
- Metric inputs shown in the formula or calculator.
- Income, expense, debt, value, and cash assumptions where relevant.
- Investor-provided numbers that should be checked against source documents.
Outputs explained
- Scenario estimate based on the inputs.
- Plain-English context for comparing the metric.
- Limitations and assumptions to review before relying on the result.
Assumptions to review
- Inputs are estimates supplied by the user.
- Market rent, lender terms, taxes, insurance, repairs, and legal details can change the result.
- DealSharp does not provide financial, investment, legal, lending, tax, or accounting advice.
What this tells you
- NOI is a core property-income metric.
- It feeds cap rate, DSCR, and valuation conversations.
- It helps separate property performance from financing choices.
What this does not tell you
- NOI is not the same as cash flow because it excludes debt service.
- It is not taxable income and does not replace accounting or tax review.
Common mistakes
- Including mortgage payments in NOI.
- Forgetting vacancy and credit loss.
- Using seller-provided expense numbers without verification.
FAQ
Does NOI include property taxes?
Property taxes are usually operating expenses and reduce NOI.
Does NOI include loan payments?
No. Loan payments are debt service and are normally analyzed after NOI.
Run the full deal before deciding
This page helps with one metric or workflow. DealSharp is built for full real estate deal analysis: assumptions, financing, cash flow, repair scenarios, DSCR, cap rate, and risk flags based on your inputs.
Open DealSharpDisclaimer
DealSharp provides calculation and scenario-modeling tools for informational purposes only. Outputs are estimates based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, lending, tax, or accounting advice. Verify important decisions with qualified professionals.