NOI = effective gross income (rent + ancillary, minus vacancy and credit loss) minus operating expenses (property taxes, insurance, utilities, repairs, management fee, payroll, reserves where applied). It is the input every cap-rate, DSCR and debt-yield calculation depends on.
The most common underwriting argument is over what belongs in NOI. Pro forma NOI usually assumes stabilized occupancy and trended rents; T-12 NOI uses the actual trailing 12 months. Lenders will use their own conservative NOI (often closer to T-12 with adjustments for reserves and replacement). When two parties disagree on a deal's value, they almost always disagree on NOI first.
