Net operating income

How it is used

Shortened to NOI and central to commercial real estate. Operating costs include management, insurance, repairs and property tax. Investors divide NOI by the price to get the cap rate, and lenders use it to decide how much they can lend.

Example sentences

1. The building's net operating income is 1.2 million a year.

2. Raising rents and cutting energy costs both increase net operating income.

Common collocations

• calculate net operating income
• stabilized NOI
• increase NOI
• NOI margin

Related terms

• cap rateShort for capitalisation rate: a property's net operating income divided by its value or price, used to compare returns on income-producing buildings.
• commercial real estateProperty used for business rather than as a home, such as offices, shops, warehouses, hotels and factories.
• vacancy rateThe share of units in a building, portfolio or market that are empty and not rented at a given time, shown as a percentage.
• rental yieldThe yearly rent from a property shown as a percentage of its price or value. A home worth 200,000 that earns 10,000 a year has a 5% gross yield.

More terms: Commercial Real Estate

• office space
• retail space
• triple net lease
• fit-out
• anchor tenant
• break clause