When evaluating real estate investments—especially multifamily properties—there’s one number that stands above the rest: Net Operating Income, or NOI. It’s the cornerstone of how properties are valued, how deals are underwritten, and how investors like you get paid.
At Jasper Gates Capital, NOI is central to our investment strategy. Whether we’re analyzing a new acquisition or tracking performance across our portfolio, NOI tells us how well a property is performing—and how much value we can create.
📊 What Is NOI?
Net Operating Income (NOI) is the total income generated by a property after operating expenses, but before debt service (mortgage payments), taxes, and capital expenditures.
In short, it’s the profit generated by the property itself, excluding financing and tax decisions.
🧮 How to Calculate NOI
Here’s the basic formula:
Gross Operating Income includes:
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Rental income (from all units)
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Other income (e.g., laundry, pet fees, parking)
Operating Expenses include:
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Property management fees
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Maintenance and repairs
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Utilities (if paid by owner)
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Property insurance
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Property taxes
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Marketing and administrative costs
What’s NOT Included in NOI:
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Mortgage payments
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Income taxes
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Capital expenditures (major renovations or replacements)
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Depreciation (a non-cash expense)
💰 Why NOI Matters to Investors
1. It Determines Property Value
Multifamily properties are typically valued based on their NOI, using the capitalization rate (cap rate):
So, increasing NOI by $1,000 a month ($12,000 annually) in a 5% cap rate market adds:
That’s the power of NOI-driven value creation.
2. It Measures Operational Efficiency
By tracking changes in NOI, we can see how well the property is performing—whether through rent increases, reducing expenses, or improving occupancy.
3. It Drives Investor Returns
NOI growth leads to higher cash flow, increased equity value, and better refinance or sale outcomes—all of which benefit passive investors in a syndication.
🔧 How We Improve NOI at Jasper Gates Capital
At Jasper Gates Capital, every property we acquire has a clear, actionable plan to improve NOI. Strategies may include:
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Renovating units to justify higher rents
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Adding new income streams (e.g., pet rent, storage, Wi-Fi)
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Improving tenant screening and retention
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Reducing utility costs through energy-efficient upgrades
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Re-negotiating vendor contracts and optimizing management
Every dollar saved or earned adds value for our investors.
📌 Example: NOI in Action
Let’s say we acquire a 100-unit property:
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Gross Rental Income: $1,200,000/year
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Other Income: $50,000
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Operating Expenses: $500,000
NOI = ($1,200,000 + $50,000) – $500,000 = $750,000
At a 5% cap rate, this property is worth:
$750,000 ÷ 0.05 = $15,000,000
If we increase NOI to $800,000 through rent increases and expense reductions, the new value becomes:
$800,000 ÷ 0.05 = $16,000,000
That’s $1 million in created value, without needing to rely on market appreciation.
🧠 Final Thoughts
Whether you’re a passive investor in a syndication or a hands-on owner, understanding NOI is critical to evaluating deals, tracking performance, and maximizing returns. It’s not just a number—it’s a roadmap for value creation.
At Jasper Gates Capital, we use NOI as one of our most important tools in building investor wealth through carefully selected and expertly managed multifamily assets.
🔗 Want to Learn More About NOI and Our Investment Strategy?
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