What is Net Operating Income?

A definition of Net Operating Income

“Net Operating Income (NOI) is a measure of a real estate investment’s profitability. Calculated by subtracting operating expenses from gross income, it excludes taxes and financing costs, focusing solely on operational efficiency.”

Net Operating Income in Business Glossary - What is a Net Operating Income?

Business Glossary > What is Net Operating Income?


Examples of Net Operating Income in a Sentence:

The investor used the net operating income to assess the property’s profitability.

Calculating net operating income helps in comparing different investment opportunities.

Understanding net operating income is crucial for real estate investors.

Why is Net Operating Income Important in Business?

Net Operating Income is vital for real estate investors as it provides a clear picture of a property’s operating efficiency without the influence of financing or tax implications. It helps in assessing the profitability and performance of real estate investments, guiding investment decisions.

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Associated Terms

Here are some associated business terms and synonyms for “Net Operating Income”:

  • NOI
  • Operating Income
  • Operating Profit

XYZ Real Estate’s Net Operating Income

XYZ Real Estate calculated its net operating income to evaluate the performance of its current properties. By focusing on NOI, they were able to make strategic decisions to improve their operational efficiency and profitability.

Final Notes on Net Operating Income

When analyzing net operating income, investors should consider:

  • The reliability of the income figures
  • The consistency of expense allocations
  • Market conditions affecting similar properties

Factoring in these considerations ensures a more accurate assessment of the investment’s viability.


This has been a definition of Net Operating Income meaning.

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