Resources · Glossary
What is net operating income?
NOI (net operating income) is property revenue minus operating expenses, before debt service, capital expenditure and income tax. It is the standard measure of a property's operating profitability.
| Term | Area |
|---|---|
| NOI (net operating income) | Performance metrics |
| Income & expense management | Modules |
| Dashboards & reports | Modules |
How do you calculate NOI?
Start with gross potential rent, subtract vacancy and credit losses, and add other income such as parking, fees and recoveries to get effective gross income. Then subtract operating expenses: property tax, insurance, repairs and maintenance, utilities, management and payroll.
NOI = effective gross income − operating expenses. Mortgage payments, depreciation, capital improvements and income taxes are excluded, which makes NOI comparable across properties with different financing. Investors divide NOI by value to get a cap rate.
See also: Income & expense management and Dashboards & reports.

What does an NOI calculation look like?
Example (illustrative figures). Gross potential rent $1,200,000; vacancy and credit loss $60,000; other income $40,000; effective gross income $1,180,000. Operating expenses $480,000. NOI = $1,180,000 − $480,000 = $700,000.

Does NOI include mortgage payments?
No. NOI is measured before debt service, so it reflects the property's operations regardless of how it is financed. Lenders compare NOI with debt payments to calculate the debt service coverage ratio. Income taxes, depreciation and amortisation are also excluded from NOI, which is why it is widely used to compare properties with different owners and capital structures.
Is NOI the same as cash flow?
No. Cash flow after NOI also deducts debt service, capital expenditure, leasing commissions and reserves. A property can have healthy NOI but weak cash flow if it is highly leveraged or needs major capital work. For that reason, owners usually review NOI and cash flow side by side rather than relying on one figure.
Why does NOI matter for valuation?
Income-producing property is often valued by dividing NOI by a market capitalisation rate. Small changes in NOI can therefore move value significantly, which is why owners track revenue and expense lines closely by property. For example, at a 6% capitalisation rate, each additional $1 of annual NOI adds about $16.67 of value (illustrative figures).
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