What is NOI | Commercial Real Estate Definitions

What is NOI | Commercial Real Estate Definitions

There are many words, terms and phrases in the world of Commercial Real Estate. When buying, selling, leasing or investing in real estate, it’s important to know and understand what these terms mean. With over a century of combined experience, our brokers are happy to help explain what they mean and why they are important in the world of Tucson commercial real estate. Today, we’re talking about NOI. What is NOI? According to Investopedia, “Net operating income (NOI) is a calculation used to analyze the profitability of income-generating¬†real estate investments. Net Operating Income is a before-tax figure, appearing on a property’s income and cash flow statement, that excludes principal and interest payments on loans, capital expenditures, depreciation, and amortization.”

According to a recent FitSmallBusiness article, “You can calculate net operating income for your real estate investment by using the generally accepted net operating income formula, which is your potential rental income plus any additional property-related income minus vacancy losses minus total operating expenses.” There are also typically some expenses that are not included when calculating Net Operating Costs.¬† It’s important to be aware and understand a property’s unique characteristics. Use the Net Operating Cost calculator to determine a property’s value and whether or not it’s a wise investment.

This calculator can easily help you determine the Net Operating Income of a property. For more information on investing in Commercial Real Estate, please contact one of our brokers or view our current commercial real estate listings.  With over 100 years in business, no one knows the Tucson Commercial market like us! We would be happy to be of assistance with any of your commercial real estate needs.

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