Net Operating Income (NOI)

Category: finance

The total revenue generated by an income-producing property, minus all necessary operating expenses.

NOI measures a property's ability to generate cash flow before any debt service or income taxes are deducted. Revenues include collected rent, parking fees, and laundry income, while operating expenses include property taxes, insurance, maintenance, and management fees. Capital expenditures (CapEx) are explicitly excluded from this calculation.

Common Examples

• We managed to increase our portfolio's net operating income by renegotiating our commercial maintenance contracts and passing water utilities back to tenants.
• The underwriter scrutinized our trailing twelve-month expenses to confirm that our stated net operating income wasn't artificially inflated.