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Net Operation Income (NOI) Definition

Net operating income, often abbreviated as NOI, examines real estate investments, which produce income for investors. NOI is equal to all profit from the asset minus any operating expenses, which were a necessity.

While the most obvious revenue generated from a real estate investment is rental income, properties also have the potential to generate revenue from parking, laundry services and other maintenance related services. In order to keep these services available and generating a return, there are operating expenses to upkeep the building.

Even more so, when calculating net operating income, one must remember this is a before-tax number and does not include the principal and interest payments on any loans, depreciation or amortization.