what is net operating income

In Buying Property - Asked by Jeff H. - May 19, 2009
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Answer(s)

Paul S.
Broker/Agent
Glendora, CA

Net operating income (NOI) is gross income minus expenses without debt service. Expenses are the expenses it takes to operate like taxes, insurance, maintenance, etc. Do not include debt service on a loan as an expense when calculating NOI. Since NOI is one ingredient of cap rate it follows that cap does not include debt either. Cap s the relationship of the net operating income (NOI) to the price, expressed as a percentage. If you need more information contact me at 626 485-5163 or paulsylvester@remax.net
Paul Sylvester,CCIM

May 19, 2009
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Doug C.
Lender/Mortgage Broker
Richmond, VA

Net operating income, or NOI, is simply the cash flow available to support debt service. Generally it can be figured as gross income minus all operating expenses. On a business tax return, it will generally be the net income plus depreciation plus interest. That is the most common.

May 19, 2009
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Paul S.
Broker/Agent
Glendora, CA

Just to be clear. NOI has nothing to do with a loan or depreciation. NOI is calculated as if you owned the property free and clear and has nothing to do with what you use the income for, be it a loan payment or a trip to Vegas with a hot chick. It is strickly a calculation for determining how much you have left over after expenses.

May 19, 2009
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Tai L.
Broker/Agent
San Diego, CA

Gross Income - Operating Expense = NOI.
NOI is also used to find out the CAP. To find the CAP it is NOI/Sales Price.

May 22, 2009
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