Net Operating Income, or NOI, is the income of the property from rent, fees, and all additional income, minus operating expenses (or "OpEx"). NOI is very important when determining the value of the property. In fact, NOI combined with the Cap Rate makes up the value of a commercial property.
The operating expenses of a property include marketing, payroll, maintenance, insurance, property taxes, administrative, and more. When we renovate a unit or add an amenity, that is considered a Capital Expenditure (or "CapEx"), meaning it does NOT qualify of an operating expense (which is a good thing). The NOI does not include the mortgage payment.
NOI is an important KPI (key performance indicator) for properties. When the NOI of a property increases, the value of the property increases. We keep a close eye on NOI and our business plan centers around maximizing this number.