what is Net Operating Income

Is it an annual value before or after Taxes.?
In Buying Property - Asked by Robert W. - Jun 8, 2011
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Answer(s)

Dixon G.
Developer
Tazewell, TN

Net Operating Income (or NOI) is defined as: the annual income generated by an income-producing property after collecting all income from operatings, such as rentals and other uses of the property by others, and deducting all expenses required to operate the property. To answer your question directly it is an annual value before taxes and before debt service (mortgage payments). Here's how you calculate it:
Potential Rental Income
- Vacancy & Credit Losses
= Effective Rental Income
+ Other Income
= Gross Operating Income
- Operating Expenses
= Net Operating Income
NOI is used a valuation tool because it is the best way to describe a property's performance. Financing structures and tax rates differ from investor to investor, so NOI keeps everything on a level playing field before those factors are introduced.
If you're looking to expand your knowledge of income producing properties, valuation, and understanding time value of money and how to calculate returns on investments, the absolute best way is to take a CCIM class. Hope this helps
Dixon Greenwood, CCIM

Jun 9, 2011
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Jim C.
Broker/Agent
Roswell, GA

NOI is the net amount of income (usually from Gross Rent),.. after deducting all expenses namely taxes, Insurance, CAM (common area maintance). Therefore the NOI is subject to taxation as Income

Jun 9, 2011
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Jim C.
Broker/Agent
Roswell, GA

NOI is the net amount of income (usually from Gross Rent),.. after deducting all expenses namely taxes, Insurance, CAM (common area maintance). Therefore the NOI is subject to taxation as Income

Jun 9, 2011
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F J Mel M.
Broker/Agent
Arlington Heights, IL

NOI is the Same as EBIDTA = Earnings before INTEREST (Mortgage/Financing Interest- NOT Interest on Equipment loans, Consumer Loans, or other short term loans); DEPRECIATION (Depreciable Assets as defined by the IRS); TAXES (Income taxes, NOT Real Estate Taxes, etc.); AMORTIZATION (Payments to Principal for Mortgage Financing-NOT Franchise Fees, Consumer Loans, FF& E Loans, and other short term loans). THUS NOI IS A VALUE BEFORE INCOME TAXES.

Jun 9, 2011
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Gregory G.
Broker/Agent
San Francisco, CA

income minus expenses = noi
You pay taxes on the NOI so it would be an annual value before taxes.
Probably not.
.
.
Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
(415)968-6065
greg@nnnbrokersusa.com
http://www.gregorygarver.com

Jun 11, 2011
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Drew R.
Owner/Investor
Austin, TX

A calculation used to analyze real estate investments that generate income. Net operating income equals all revenue generated from the property less all reasonably necessary operating expenses. NOI is similar to EBITDA for companies as it excludes interest income and expense, income taxes, depreciation and amortization.
As an example calculation, if a property generates $200,000 of revenue and incurs $80,000 of operating expenses, then the net operating income would be $120,000. “Note that net operating income is not the same as net income or net cash flow.

Nov 3, 2016
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