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Net Operating Income
Net Operating Income is property income minus operating expenses, used to measure multifamily performance and support valuation decisions.
Definition
Net Operating Income (NOI) is a property’s income after subtracting normal operating expenses. It excludes mortgage debt service, capital expenditures, depreciation, and amortization. In multifamily, NOI is a core measure of property performance and is commonly used in valuation.
Example
A 200-unit apartment community collects $3,000,000 in annual rental and other property income. After $1,150,000 in operating expenses such as taxes, insurance, utilities, payroll, repairs, and management fees, its NOI is $1,850,000.
Why it matters
NOI helps operations leaders see whether day-to-day property performance is improving or weakening. Because valuation often depends on NOI, even small changes in revenue, expense control, maintenance efficiency, or resident retention can affect asset value and investment decisions.