Property Valuation
A property's gross income minus operating expenses, before mortgage payments and income taxes.
Net operating income is calculated by subtracting operating expenses from effective gross income. Operating expenses include property taxes, insurance, maintenance, management fees, and utilities, but NOT mortgage payments (debt service), capital expenditures, or income taxes. NOI is the key figure in the income approach to valuation (Value = NOI ÷ Cap Rate) and is used to evaluate the financial performance of investment properties.
Exam Tip
NOI = Gross Income - Vacancy - Operating Expenses. Mortgage payments are NOT operating expenses — do not subtract them when calculating NOI.
Full definition locked
Unlock all 100+ glossary definitions, study modules, practice exams, and Carl — your AI tutor.
Start free →One-time $59 · No subscription
Study Guide
Property Valuation
Key concepts and exam tips →
Practice
NY Real Estate Property Valuation
Free sample questions →
Preparing for the NY Real Estate Exam?
Unlocked covers Net Operating Income (NOI) and every other concept on the NY Real Estate Salesperson Exam — with study modules, practice questions, spaced-repetition flashcards, and Carl, your AI tutor.
click for a haiku!