Run The Rentruntherent
Back to Learn
Key Metrics

NOI

Net Operating Income (NOI)

NOI is the total income a property generates minus all operating expenses, before debt service (mortgage payments).

Formula

NOI = Gross Income - Vacancy - Operating Expenses

Operating Expenses Include

  • Property taxes
  • Insurance
  • Maintenance & repairs
  • Property management fees
  • Utilities (if landlord-paid)
  • HOA fees

Operating Expenses Do NOT Include

  • Mortgage payments (principal + interest)
  • Capital expenditures
  • Depreciation
  • Income taxes

Why It Matters

NOI is the foundation for calculating cap rate, debt service coverage ratio, and property valuation. It represents the true earning power of a property before financing.