NOI build
Gross rent to net operating income.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: noi build.Updated 30 September 2026
What it does
The property-level income everyone reads. Gross rental income from the rent roll, plus other income and expense recoveries from tenants, less a general vacancy and credit loss allowance, gives effective gross income; less recoverable operating expenses and the management fee gives NOI. Capital reserves and leasing costs sit below it, because the cap rate, the loan constraints and the DSCR all read NOI as the market defines it.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 10–19: Purchase price, Closing costs, % of price, Other income ($ per sq ft a year, parking and storage), General vacancy and credit loss, % of gross…
- NOI, rows 6–10: Gross rental income, Other income, Expense recoveries, Less general vacancy and credit loss…
- NOI, rows 13–16: Recoverable operating expenses, Management fee, Net operating income, NOI margin
- NOI, rows 19–21: Capital reserve, Leasing costs, Cash flow before debt service
What a reviewer looks for
- Capex or leasing costs deducted above NOI, which understates value at the cap rate.
- Recoveries booked without the expenses they recover.
- NOI called EBITDA and valued on a multiple.
Learn it, then build it
Vocabulary: Net Operating Income (NOI), Cap Rate (Capitalisation Rate).