The simplest way to measure how much your property truly earns after all running costs are paid.
Definition of Net Operating Income (NOI) in Real Estate
Net Operating Income (NOI) is the total annual income a property earns after subtracting all operating costs but before factoring in taxes or loan payments. It reveals how efficiently an asset generates income purely from operations, stripped of financing or tax variables.
For rental investors, NOI represents the clearest view of a property’s earning potential. A consistent or rising NOI signals healthy tenant demand, controlled expenses, and long-term financial strength.
Why It Matters
Understanding NOI gives investors clarity on real profitability:
- Reveals true income: Shows what remains after maintenance and management costs
- Guides valuations: Lenders and buyers use NOI to estimate property worth
- Shapes yield: Helps calculate rental returns accurately
- Supports decisions: Useful for comparing projects and forecasting cash flow
Without tracking NOI, investors risk overestimating returns or underestimating expenses.
How It Works
The formula is straightforward: NOI = Gross Rental Income – Operating Expenses
Operating expenses typically include:
- Maintenance charges and repairs
- Property management fees
- Utilities paid by the owner
- Insurance and local taxes
NOI excludes loan repayments, income tax, and capital expenses such as renovations. A stable NOI across years is a sign of strong property fundamentals.
How BrickFi Uses This
Performance driven by data, not assumptions. BrickFi integrates NOI metrics into its property evaluation models.
- The Investment Score adjusts for operating expenses to show realistic yield potential
- The Brick360 Report lists expected expense ratios to help buyers forecast returns
This helps investors see not just the top line, but the bottom line that actually builds wealth.
Buyer Action
Steps to assess NOI effectively:
- List all recurring costs before estimating returns
- Compare NOI across similar properties in the same area
- Recheck NOI annually to track performance
- Use NOI to negotiate price or rental adjustments
Related Terms
Yield | Maintenance Charges | Investment Score | Brick360 Report
Key Takeaway
NOI turns property ownership into measurable performance. When tracked correctly, it shows whether your investment is growing your wealth or draining it.
Where BrickFi Comes In
BrickFi helps you go beyond surface-level returns. With transparent NOI insights and data-backed scoring, you invest knowing what your property truly earns, not what it appears to.
