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
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