Net operating income (NOI)

Net operating income (NOI) is a property’s income after subtracting normal operating expenses. In multifamily, it is commonly calculated as effective gross income minus total operating expenses, before debt service and capital expenditures are deducted. NOI is a core measure of how well a property’s day-to-day operations are producing income.

A 200-unit community collects $3,000,000 in annual rental and fee income and has $1,150,000 in operating expenses such as payroll, utilities, insurance, taxes, repairs, and management costs. Its NOI is $1,850,000.

NOI helps operations leaders connect daily decisions—rent collection, renewals, staffing, maintenance, utilities, and expense control—to property performance. Because NOI is also used in valuation and lending analysis, small changes in revenue or controllable expenses can affect asset value, financing capacity, and portfolio strategy.