What is NOI in Real Estate?
Net operating income (NOI) in real estate refers to the income generated by a property after all operating expenses have been paid. It is a measure of the profitability of a property and is calculated by subtracting the total operating expenses of the property from the total gross income generated by the property.
For example, if a property generates gross rental income of $10,000 per month and has operating expenses of $5,000 per month, its NOI would be $5,000 per month. Operating expenses for a property may include expenses such as mortgage payments, property taxes, insurance, utilities, maintenance, and repairs.
NOI is an important consideration for real estate investors, as it can help to determine the profitability of a property and the return on investment for the owner. It is also an important consideration for property owners, as it can affect their ability to cover the expenses associated with owning and operating the property.
NOI can be affected by a variety of factors, such as the gross rental income generated by the property, the operating expenses of the property, and the demand for rental properties in the local market. In general, properties with a higher NOI are considered to be more attractive to investors, as they offer a higher potential return on investment.
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