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Net Operating Income (NOI)

Net Operating Income is basically the property’s cash flow, without taking debt service into account. If you purchased the property for all cash and had $0 debt, then the NOI would be the same amount as your Pre-Tax Cash Flow. NOI is an important figure to look at when evaluating an income property deal. Cap Rate is calculated by using the NOI.

NOI = Gross Income  Vacancy Reserve  Expenses

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