Net operating income (NOI)
Net operating income (NOI) is a property’s total income minus its operating expenses, measured before mortgage payments and income taxes. It is a core measure of how much a property earns from operations.
The formula
NOI = effective gross income (rent and other income, less vacancy) minus operating expenses (management, maintenance, insurance, property taxes, and similar). It excludes financing costs and capital expenditures.
Does NOI include the mortgage?
No. NOI is calculated before debt service. Mortgage payments are subtracted after NOI to arrive at cash flow.
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