Short answer: Net operating income (NOI) is a rental's income minus its operating expenses: taxes, insurance, HOA, vacancy, maintenance and management. It excludes the mortgage, so it describes the property, not your loan.
It uses the same formulas as FirstDoor's full deal score.
Frequently asked questions
How do you calculate NOI?
Start with monthly rent. Subtract property tax, insurance and HOA (monthly), plus your vacancy, maintenance and management percentages of rent. Multiply by 12 for annual NOI.
Does NOI include the mortgage payment?
No. NOI is before debt service. Subtract principal and interest from NOI to get cash flow.
What is the expense ratio?
Operating expenses divided by rent. It shows how much of each rent dollar goes to running the property before the loan.
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