1. What is Net Operating Income (NOI)?

Net Operating Income (NOI) is a calculation used to analyze the profitability of income-generating real estate investments. It equals all revenue from the property minus all reasonably necessary operating expenses.

2. How Does the Calculator Work?

The calculator uses the NOI formula:

Where:

• Gross Operating Income — All income generated by the property including rent, parking fees, service charges, etc.
• Operating Expenses — All costs associated with operating the property including maintenance, insurance, property taxes, utilities, etc.

Note: NOI excludes capital expenditures, income taxes, and financing costs.

3. Importance of NOI in Real Estate

Details: NOI is a key metric in real estate investing because it shows the property's operating performance before financing and taxes. It's used to calculate cap rates, evaluate property values, and assess investment potential.

4. Using the Calculator

Tips: Enter your total property income and operating expenses in dollars. The calculator will automatically compute your NOI. Be sure to include all relevant income and expense items for accurate results.

5. Frequently Asked Questions (FAQ)

Q1: What expenses are NOT included in NOI?
A: NOI excludes mortgage payments, capital expenditures, depreciation, and income taxes.

Q2: How is NOI different from profit?
A: NOI shows operational profitability before financing and taxes, while net profit includes all expenses and income.

Q3: What is a good NOI for a rental property?
A: A "good" NOI depends on the property type and location, but generally you want positive NOI that covers debt service with room for profit.

Q4: Can NOI be negative?
A: Yes, if operating expenses exceed income. This indicates the property is losing money from operations.

Q5: How often should I calculate NOI?
A: Investors typically calculate NOI monthly or quarterly to monitor property performance.