What is Net Operating Income ?
Net Operating Income (NOI) is a crucial financial metric used in real estate investment analysis. It represents the total revenue generated from a property minus all operating expenses required to operate and maintain the property, excluding mortgage payments, income taxes, and other financing costs. Operating expenses typically include property taxes, insurance, utilities, maintenance, property management fees, and any other costs directly related to the day-to-day operation of the property. NOI provides investors with a clear picture of the property's profitability before factoring in financing and tax considerations, making it a valuable tool for evaluating the potential income-generating capability of an investment property. Investors use NOI to calculate other key performance indicators such as the capitalization rate (cap rate) and cash-on-cash return, helping them make informed decisions about real estate investments based on their financial goals and risk tolerance.
How to Calculate Net Operating Income?
Net Operating Income calculator uses Net Operating Income = Total Property Revenue-Operating Expenses to calculate the Net Operating Income, The Net Operating Income is the total revenue generated from a property minus operating expenses but excluding debt service and income taxes. Net Operating Income is denoted by NOI symbol.
How to calculate Net Operating Income using this online calculator? To use this online calculator for Net Operating Income, enter Total Property Revenue (TPR) & Operating Expenses (OE) and hit the calculate button. Here is how the Net Operating Income calculation can be explained with given input values -> 59500 = 67500-8000.