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Step-By-Step Guide to Calculating Net Operating Income

By
Julian Bloch
 | 
July 6, 2020

In order to calculate the Net Operating Income (NOI) you have to add the total income of an investment asset and subtract the operating expenses. In the case of apartments, commercial real estate agents add the total rental income plus any extra income (laundry, pet fees, etc.) and subtract the operating expenses to arrive at the Net Operating Income or NOI for short.

NOTE: The Net Operating Income does not include mortgage payments, major repairs, or depreciation.

Here are 4 easy steps to calculate the NOI of a four-unit apartment with no extra income.

Step 1

Review the rent roll and other Income streams and add them up.

Step 2

Multiply the monthly Income by 12 to get the annual income.

Step 3

Add up the annual expenses.

Step 4

Subtract the expenses from the annual income.

Commercial real estate will appreciate in value over time if the owner is constantly working to increase the net operating income. In order to increase your NOI, let’s put a game plan together and strategize – click here and we will make a plan for your building.

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