net operating income

net operating income (NOI)

The foundation of almost all analyses of income-producing property such as apartments,office buildings,and retail space.The number is the result of taking all rental and other revenues from the property and then subtracting all reasonably necessary operating expenses.Loan payments do not count as expenses for purposes of the NOI.If you,as the owner,pay yourself a salary of $100,000 a year but your job could be filled by someone at $35,000 a year, it is legitimate to make that downward adjustment in the expenses when presenting figures to a potential purchaser or lender. On the other hand, if you take no salary, do all the office work, make all repairs, and mow the lawn, then you will have to estimate what those expenses would be if a third party owned the project and enter that number as an imputed expense.

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Net Operating Income (NOI)

What Does Net Operating Income (NOI) Mean?

A company's operating income after operating expenses have been deducted but before income taxes and interest are deducted. If this is a positive value, it is referred to as net operating income; when it's negative, it is called a net operating loss (NOL).

Investopedia explains Net Operating Income (NOI)

NOI is a good gauge of a company's performance. Some believe that this figure is less susceptible to accounting manipulation by management than are other figures.

Related Terms:
• Minority Interest
• Net Income—NI
• Nonoperating Income
• Operating Income