Net operating income (NOI)
Asset-Backed Securities glossary · Collateral & Cash Flow Modeling
Definition
For income-producing property, effective gross income less operating expenses.
Net operating income (NOI) in plain English
For a property that earns money — an apartment building, a mall — Net Operating Income is the profit from just running it. You take all the rent and fees actually collected ("effective gross income"), then subtract the everyday costs of keeping it going: maintenance, property taxes, insurance, management. What's left is NOI, basically the building's yearly earnings before any loan payments. It's the single most important number for judging a commercial property's value, the same way a lemonade stand's real worth is the cash left after cups, lemons, and sugar.
Also called: NOI
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