Net Operating Income

Rental Income

Rental Income: The rental income is the total funds collected from tenants as part of the leasing arrangement.

Ancillary Income

Ancillary Income: The ancillary income is the non-rental income sources of a property earned on the side, such as the proceeds earned from selling parking permits, late fee charges, and access to on-premise amenities.

What is NOI in real estate?

NOI stands for "Net Operating Income" and measures the profit potential of income-generating properties before subtracting non-operating costs.

NOI Formula

Net Operating Income (NOI) = (Rental Income + Ancillary Income) - Direct Operating Expenses

Direct Operating Expenses:

The operating expenses are incurred by a property for its day-to-day operations to continue running, such as property management fees, property taxes, property insurance, utilities, and maintenance work.