How To Calculate Net Operating Income
The formula for NOI is:
(Gross Operating Income + Other Income) - Total Operating Expenses = Net Operating Income
NOI can only be properly calculated when all income that a property makes is taken into consideration, and all of the general expenses accrued during operation are subtracted. The total income of a property comes from various sources such as tenant rents, parking fees, coin laundry machines, etc. In terms of operating expenses, these aren’t only maintenance fees, but everything from insurance to professional help. Accuracy of an NOI calculation can only be achieved if the right components are used correctly in its calculation. The property’s gross income, for example, should not be simply estimated, as this would give a false NOI.