Net Operating Income (NOI)
Gross rent minus vacancy and operating expenses. Excludes mortgage and income tax.
Net Operating Income is the property's earnings before financing and income tax. It's the numerator of cap rate and the foundation of commercial valuation.
Formula: NOI = (Gross Scheduled Rent − Vacancy) − Operating Expenses.
What counts as operating expenses
- Property taxes
- Insurance
- Property management
- Repairs and maintenance
- Utilities (landlord-paid)
- Capex reserve
- HOA, landscaping, pest control, etc.
What does NOT count
- Mortgage principal and interest
- Depreciation
- Income tax
- Capital improvements (new roof, new HVAC) — these are capex, separate
On commercial property, every $1 of added NOI typically creates $10–$15 of equity (1 ÷ market cap rate). That's the engine behind value-add multifamily.
Underwrite real deals with these numbers
PLINTH's marketplace shows verified cap rate, cash-on-cash, and NOI on every listing.
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