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NOI Guides

Everything an investor needs to know about what a rental really earns before the mortgage, written to go with the calculator.

  1. What Is Net Operating Income (NOI)? The Number Behind Every Rental Valuation

    Net operating income is rent minus vacancy and operating expenses, before the mortgage. What NOI includes, what it leaves out, a worked example, and why it sets price.

  2. NOI Formula: How to Calculate Net Operating Income Step by Step

    The NOI formula, line by line: gross scheduled income, vacancy, effective gross income, each operating expense and what stays out. Three worked examples and the errors that inflate NOI.

  3. What Counts as an Operating Expense in NOI (and What Does Not)

    Operating expenses in NOI: the full list of what to include, from taxes and insurance to reserves and management, what to leave out, and how each line moves value.

  4. Operating Expense Ratio: What a Good Expense Ratio Looks Like for a Rental

    Operating expense ratio benchmarks for rental property: how to calculate it, what lean, typical and heavy ratios look like, what drives them, and why a low ratio on a listing is a warning.

  5. NOI vs Cash Flow: Why the Property's Income and Your Income Are Different Numbers

    NOI vs cash flow explained: NOI is what the property earns before debt, cash flow is what you keep after the mortgage. A worked example with a loan, and where DSCR and cash on cash fit.

  6. NOI and Cap Rate: How Net Operating Income Sets a Property's Value

    NOI and cap rate together set what a rental is worth: value equals NOI divided by cap rate. See $28,892 of NOI priced at 4% to 10%, and why each $1,000 of NOI is worth $15,385.

  7. How to Increase NOI: 12 Ways to Raise Net Operating Income on a Rental

    How to increase NOI on a rental property: 12 ways to raise income or cut operating expenses, with the dollar value of each at a 6.5% cap rate, and the two moves that only look like they help.

  8. NOI vs ROI: What Each One Measures, and When to Use It

    NOI vs ROI: net operating income measures the property, ROI measures your cash. See both on a $500,000 rental with $28,892 of NOI, side by side.

  9. The Income Capitalization Approach: How Appraisers Value a Property From Its NOI

    The income capitalization approach explained: the formula appraisers use, how to build a stabilized NOI, how to pick a cap rate, and a full worked example.

  10. NOI vs EBITDA: Property Income and Business Earnings Are Not the Same Line

    Net operating income vs EBITDA: NOI is one property's operating income, EBITDA is a whole company's earnings. See the bridge between them, line by line.

  11. How to Calculate NOI for a DSCR Loan: The Lender's Version of the Number

    How to calculate net operating income for a DSCR loan, the vacancy, management and reserve assumptions lenders impose, and a worked DSCR on a $500,000 house.

  12. NOI Margin: How to Calculate It and What Range to Expect

    How to calculate NOI margin: NOI divided by effective gross income, worked on a $500,000 rental at 63.4%, plus typical ranges and what an outlier means.

  13. Negative NOI: Can Net Operating Income Be Negative, and What It Means

    Yes, net operating income can be negative. What a net operating income loss means, the usual causes, what it does to cap rate and lending, and how to fix it.

  14. Pro Forma NOI vs Actual NOI: Checking the Numbers a Seller Hands You

    Pro forma NOI vs actual NOI in real estate: how to test a seller's projection against trailing 12 and in-place numbers, with stabilized NOI explained.