NOI (net operating income)

NOI (net operating income) — annual gross scheduled rent minus vacancy and all operating expenses: association dues, RPT, insurance, repairs, capital reserves, and a management fee even when self-managing — but never the loan payment. NOI measures the building; debt belongs to your financing structure. Every underwriting metric derives from it: cap rate (÷ price), yield-on-cost (÷ your cost), DSCR (÷ debt service). Carson’s line, endorsed by this course: the most important formula in rental property investing.

First used in: 3.4 · Underwriting: the Gallinelli math