Net Operating Income (NOI)
A property's income after operating expenses but before mortgage debt service, used in the income approach to value.
Quick flashcard
What does Net Operating Income (NOI) mean on the Texas real estate exam?
Answer: A property's income after operating expenses but before mortgage debt service, used in the income approach to value.
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Net Operating Income (NOI) definition
Net operating income is the income a property produces after subtracting operating expenses such as taxes, insurance, maintenance, and management. It does not subtract mortgage payments, because debt service is a financing cost, not an operating cost.
Net operating income drives the income approach: value equals net operating income divided by the capitalization rate.
Source basis
Definition checked against the official sources below on .
On the exam
Exam trap
Tested in
Value & Appraisal (11 of 80 National)
From definition to recall
See this term inside a real exam question.
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