NOI Glossary

• Earnings Before Interest and Taxes (EBIT)

  Corporate operating profit; where Wikipedia sends NOI

• Income Approach

  Appraisal method that values property from its NOI

• Operating Expense

  The costs subtracted from income to reach NOI

• Capitalization Rate

  NOI divided by price; turns NOI into a value

• Rental Value

  Market rent, the top line of every NOI

• Net Lease

  Tenant pays some or all operating expenses

• Capital Expenditure (CapEx)

  Improvements that sit outside NOI, except as a reserve

• Real Estate Appraisal

  The discipline that standardised NOI

• Debt Service Coverage Ratio (DSCR)

  NOI divided by the annual loan payment

• Property Tax

  Usually the largest fixed line in operating expenses

• Gross Income

  Income before vacancy and expenses; the NOI starting point

• EBITDA

  Corporate earnings before interest, taxes, depreciation and amortization

• Common Area Maintenance (CAM) Charges

  Expense recoveries billed to commercial tenants

• Gross Lease

  Tenant pays one rent; landlord pays every operating expense

• Depreciation

  Tax deduction for building wear; excluded from NOI

• Real Estate Investing

  Buying property for income and appreciation

• Property Investment Calculator

  Tool that turns price, income and expenses into return metrics

• Cash Flow

  What is left after NOI pays the mortgage

• Commercial Property

  Income-producing real estate, valued on its NOI

• Gross Rent Multiplier (GRM)

  Price divided by gross rent; ignores expenses

• Discounted Cash Flow (DCF)

  Value from projected NOI over several years, discounted back

• Cash on Cash Return

  Cash flow after the mortgage divided by cash invested