Net Operating Income (NOI)

Net Operating Income (NOI) is a key performance metric used in real estate and property investment. It represents the income generated by a property or real estate asset after deducting operating expenses but before accounting for capital expenditures, interest, taxes, and depreciation. NOI is essential for determining the profitability of a property or portfolio and is commonly used by investors to evaluate the performance of real estate investments.

The formula for NOI is:

NOI = Gross Income from Property - Operating Expenses

Operating expenses include costs like property management fees, maintenance, utilities, insurance, and property taxes. NOI is a key factor in calculating the capitalization rate (Cap Rate), which is used to assess the value of a real estate investment.