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Net operating income (NOI)

Net operating income (NOI)

What is NOI?

NOI, or Net Operating Income, is how much money a property makes after all of its costs are taken into account. Property investors can use this metric to understand if their property is actually profitable. NOI is a critical metric for understanding a rental property profitability because it estimates the real dollar value of your investments.

How do I calculate the NOI?

\[ Gross \, operating \, income - Operating \, expenses = NOI \]

NOI Examples

If a rental house brings in an annual GOI of $20,000 against operating expenses of $12,000, the NOI on that rental house is $8,000.

What revenues are included in NOI?

All of the revenue generated by the property, including fees from amenities goes into the calculation.

  • Rental income
  • Amenity fees (eg. Pool, Gym, Parking)
  • Service fees

What expenses are included in NOI?

All of expenses from operations should also be factored into this.

  • Property management fees
  • Uncollected rent (if a tenant defaulted)
  • Insurance costs
  • Property taxes
  • Maintenance and repair costs

Do not include mortgage and loan costs in the Net Operating Income calculation as these are not operating expenses.

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