NOI (Net Operating Income)

NOI is the pre-financing operating cash flow of a property. It captures the property's operating performance independent of the capital structure (debt or equity) used to acquire it. This makes NOI the cleanest comparison metric across properties with different financing.

NOI = Total Revenue (rents + ancillary) - Property Operating Expenses (utilities, insurance, property tax, repairs, management fees, marketing, supplies, salaries directly attributable to the property). It excludes interest expense, income taxes, depreciation, and capital expenditures.

For coliving, NOI calculation hinges on whether bundled service revenue (cleaning, food, community programming) and the cost of those services are counted as operating revenue/expense or as separate ancillary lines. Most operators include them, getting consistent treatment across properties is the harder part.

Three NOI variants you'll see in coliving operator pitches: (a) **Property NOI**, pure operating cash flow at the building level, excludes corporate overhead. This is what real-estate buyers underwrite to. (b) **Operator NOI** (sometimes called 'house margin'), property NOI minus the operator's centralized brand/tech/CS costs allocated per-bed. This is what institutional sponsors care about; it tells you the company's true operating margin. (c) **Adjusted NOI**, operator NOI plus add-backs (founder salary normalization, one-time setup costs, etc.). Frequently used in fundraising decks to inflate the headline number. Always ask which variant a pitch is using. Reasonable stabilized NOI margins in coliving: 18-28% for master-lease operators (constrained by the lease as a quasi-fixed cost), 25-35% for owned-asset operators (before debt service).