Net Operating Income(NOI)
Net operating income in commercial real estate determines the profitability of a property and its ability to generate a positive cash flow. NOI analyzes the income stream generated from the rents and fees of the real estate asset.
However, it does not consider external factors such as financing and income taxes. From the gross operating income, NOI subtracts the operating expenses of the property which include maintenance and utilities, overhead costs, repair, and so on. Therefore, the formula for calculating NOI in commercial real estate is:
NOI= (Gross Operating Income + Other Income) – Operating Expenses
Read our blog here to know more on Net operating income in real estate and how to utilize it for higher profits and returns.
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