Finance
Net Operating Income (NOI)
A property's total income minus operating expenses, excluding mortgage payments and income tax. Used to calculate cap rate and evaluate real estate investments.
NOI deliberately excludes mortgage payments, income tax, depreciation, and one-time capital expenditures so it reflects the property’s own earning power, not the owner’s financing choices. It is the numerator in the cap-rate and debt-coverage ratios lenders scrutinize.
Key Formula & Relationship
NOI = Gross Operating Income - Total Operating Expenses
Reviewed by the Calculover Editorial Team for mathematical and practical accuracy.
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