Definition
A property's annual revenue minus operating expenses but before debt service and taxes, the key metric for commercial real estate valuation. Abbreviated NOI, it's the number that makes or breaks whether your investment property is actually profitable.
Example Usage
Despite $500,000 in gross rents, the property's NOI was only $320,000 after accounting for maintenance, management, insurance, and vacancies.
Origin
Accounting terminology adapted to real estate investment analysis in mid-20th century
Fun Fact
NOI divided by purchase price yields cap rate, the fundamental metric investors use to compare properties across different markets and asset classes.
Source: Real estate investment analysis standards
Related Terms
Translate This Term
See “net operating income” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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