Net operating income (NOI) is the project's income after expenses. NOI is vital information for lenders because it represents the amount available to pay back loans. This Template summarizes the expenses incurred by your project and calculates the projected NOI. These results are broken out in four categories:

• Management Expenses, which are expenses related to managing the day-to-day operation of the project.
  
  
• Operations and Maintenance Expenses, which are expenses required to keep the project in working order.
  
  
• Utilities Paid by the Property, which are the costs of utilities paid by the property for electricity, heat and hot water, and sewer and water.
  
  
• Taxes / Insurance / Reserves / Other Expenses, which represent additional expenses related to operating a project.
  
  
• Additional Reserve for Replacement, which are additional funds you anticipate using to replenish the replacement for reserve during the first five years of the project's operations.
  
  
• Total Expenses, which is incurred by a project and is calculated by adding the residential expense, replacement reserve expense, operating reserve expense, and project taxes expense.
  
  
• Net Operating Income (NOI), which represents a project's income after expenses. The Template subtracts total expenses from EGI to determine the projected NOI.
  
  Note that, due to depressed revenue from rents during the rent-up period, NOI could be negative for Year 1. Check to make sure the amount for the initial rent-up reserve that you entered on the Development Costs tab is sufficient to cover any shortfall.