What is NOI (Net Operating Income) in Real Estate?
Net Operating Income measures the profitability of an income-producing property before adding in any costs from taxes or financing. It is a mathematical formula that is used to evaluate potential investment properties to see how profitable it is in a single year. This formula is used by real estate experts and investors to quickly assess an investment property’s profitability and revenue after subtracting the necessary operating expenses. NOI considers all the income generated by a property, minus all general expenses. NOI does not calculate income vs. expenses on an investor level, but rather at a property level. Total operating expenses may vary from one person to another, so keep this in mind when looking into different properties.