NOI Definition

The NOI (or Net Operating Income) is the total income minus operating expenses (or adjustments), but before mortgage payments, interest, tenant improvements and leasing commissions.

Determining the NOI is where your due diligence comes into play. Always verify the numbers presented to you from the owner and make certain to determine NOI based on how YOU would operate the property. Evaluating the expenses may be a little tricky because you will have to get it verified from third parties but you want to find out about it before you close!

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