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What is Net Operating Income ("NOI") in real estate?

Revenue - Operating Expenses

Net Operating Income is used to calculate capitalization rate ("cap rate"), a fundamental quantitative valuation metric for real estate investing.

Depending on the type of real estate, revenue can include:

  • Rental revenue
  • Service fees
  • Parking revenue
  • Vending machine revenue

Operating expenses include:

  • property management
  • vacancy
  • uncollectible rent revenue
  • insurance
  • property taxes
  • maintenance