Net Operating Income (NOI)
The total income generated by a property after deducting all operating expenses, but before deducting mortgage payments, capital expenditures, and income taxes.
NOI Formula
NOI = Gross Rental Income - Operating Expenses
Operating expenses include property taxes, insurance, property management fees, maintenance, utilities (if owner-paid), and vacancy reserves. Mortgage payments are NOT included in operating expenses because NOI measures the property's performance independent of financing.
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