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Commercial and investmentSubject 16 of 19

Net operating income

Property income remaining after vacancy and operating expenses but before debt service and income taxes in the standard real estate formula.

Also called: NOI

Direct answer

What does Net operating income mean?

Property income remaining after vacancy and operating expenses but before debt service and income taxes in the standard real estate formula.

Exam cue: Calculate effective gross income, subtract operating expenses and exclude financing and income-tax items.

What does it look like in a question?

New York example

A building has $150,000 effective gross income and $60,000 operating expenses, producing $90,000 NOI.

Common exam trap

What should you not confuse it with?

NOI is not cash flow after mortgage payments.

Related commercial and investment terms

Cash flowMoney remaining or changing hands during a period after the receipts and payments included in the stated calculation.Effective gross incomeIncome expected or received after vacancy and collection loss, plus other property income included in the analysis.Gross leaseA lease in which the landlord pays specified property operating expenses from the rent received.LeverageThe use of borrowed money to finance part of an investment.LiquidityThe ease and speed with which an asset can be converted to cash without a substantial loss in value.Net leaseA lease under which the tenant pays specified property expenses in addition to rent.
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The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.

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