Net Operating Income (NOI)
A property’s income after operating expenses but before mortgage payments and taxes.
What does net operating income mean?
NOI is rental income minus operating costs like maintenance, insurance and property tax — excluding financing. It’s the basis for the cap rate and a core measure of a property’s earning power.
Put it to use
Investment Property Calculator An investment property can be an excellent investment. This calculator is designed to examine the potential return you might receive from an investment property. Debt Service Coverage Calculator This tool calculates debt service and illustrates how debt service coverage ratios are impacted by changing income and capital assumptions.
Related terms
Net Operating Income — frequently asked
How do I calculate net operating income?
Take a property’s gross rental income, subtract vacancy and all operating expenses — taxes, insurance, maintenance, management — but not mortgage payments. The result, NOI, is the income the property produces before financing.
What does NOI leave out?
NOI excludes mortgage principal and interest, income taxes, depreciation and capital expenditures. That is deliberate — it isolates the property’s operating performance so investors can compare deals regardless of how each is financed.