Glossary · DealProp
Net operating income (NOI)
Annual rental income minus operating expenses. The standard metric for evaluating a rental property's earning power before financing.
Net operating income, or NOI, is annual rental income minus annual operating expenses. It excludes mortgage interest, principal payments, depreciation, and capital expenditures. It is the cleanest single number for comparing the earning power of one property to another.
A property that grosses $30,000 in rent and spends $12,000 on taxes, insurance, repairs, property management, vacancy reserve, and utilities has an NOI of $18,000.
Why it matters
NOI is the number bankers, accountants, and serious investors use. It strips out financing structure (so an all-cash buyer and a heavily-leveraged buyer compare the same property on the same terms) and accounting smoothing (so you cannot inflate it with depreciation games).
NOI divided by purchase price is the cap rate. NOI divided by debt service is the debt service coverage ratio. Most metrics that matter for evaluating a property as an asset start with this number.
In DealProp
DealProp computes NOI per property and rolled up at the portfolio level. The numerator is whatever rent actually collected. The denominator is whatever expenses actually posted. There is no projection layer hiding the truth.