What is Net Operating Income (NOI)?

Net Operating Income (NOI) is one of the most common financial measurements used to evaluate income-producing commercial real estate. It represents a property’s income after normal operating expenses have been deducted but before mortgage payments, income taxes, depreciation, and certain other owner-specific expenses.

NOI helps investors compare the financial performance of different properties using a consistent measurement. While it’s an important metric, it should be considered alongside other factors such as market conditions, tenant quality, property condition, and long-term investment objectives.

If you’re evaluating investment property, I’d be happy to explain how NOI fits into the overall analysis.