reference
glossary.
25 terms
definition
Net Operating Income (NOI) is the total income generated by a rental property minus all operating expenses, excluding mortgage payments and depreciation. It represents the property's profitability before debt service and is a key metric for evaluating investment properties. NOI is calculated by subtracting expenses like taxes, insurance, maintenance, and management fees from the gross rental income.
examples
- —The duplex generates $3,000 monthly rent but has $800 in operating expenses, resulting in a net operating income of $2,200 per month.
- —Investors use net operating income to calculate cap rates and determine if a property meets their investment criteria.
- —After accounting for property taxes, insurance, and repairs, the apartment building's net operating income was $85,000 annually.