What does 'NOI' stand for in property management?

In the context of property management, 'NOI' stands for Net Operating Income. This financial metric is crucial for assessing the profitability of income-generating properties. NOI is calculated by subtracting operating expenses from gross operating income. Operating expenses typically include costs related to repairs, maintenance, property management fees, utilities, and insurance but exclude financing costs and capital expenditures.

Understanding NOI is essential for property managers and investors as it provides insights into a property's ability to generate profit before deducting debt service and taxes. A positive NOI indicates that a property is generating more income than it costs to operate, which is vital for determining its overall value and investment potential. It helps in making informed decisions regarding property purchases, performance evaluations, and investment strategies.