Net Operating Income (NOI)

A park's annual revenue minus operating expenses, but before debt service and capex.

Net operating income is the standard income figure used to value commercial real estate, including mobile home parks. It is calculated as effective gross income (rent collected plus other income) minus operating expenses (taxes, insurance, utilities, repairs and maintenance, management fees, and so on), but specifically excludes debt service and capital expenditures. NOI normalizes income across parks with different financing structures and capex schedules, making it the apples-to-apples metric for comparing parks. NOI per lot is a common benchmark across portfolios, and trended NOI over 12 to 24 months is a primary lender underwriting input.

Related Terms

Capitalization Rate (Cap Rate)

A property's annual NOI divided by its purchase price, expressed as a percentage.
Effective Gross Income (EGI)

A park's total potential rent minus vacancy and collection losses, plus other income.
Park Valuation

The estimated market value of a mobile home park, typically calculated by capitalizing NOI.

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