What is NOI (Net Operating Income)?
Net Operating Income is the total income a rental property generates minus all operating expenses, but before mortgage payments. It measures how much money the property itself earns regardless of how it is financed.
Formula
NOI = (Annual Rent × Occupancy%) - Operating Expenses
Good
Any positive number
Great
NOI that produces a cap rate of 6%+ relative to property value
Watch For
Negative NOI means the property loses money before you even make a mortgage payment
Frequently Asked Questions
What is a good NOI for rental property?
A good NOI is Any positive number. A great NOI is NOI that produces a cap rate of 6%+ relative to property value. Be cautious if Negative NOI means the property loses money before you even make a mortgage payment.
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