Net operating income is a calculation used to analyze real estate investments that generate income. Net operating income equals all revenue generated from the property less all reasonably necessary operating expenses. NOI is similar to EBITDA for
companies as it excludes interest income and expense, income taxes, depreciation and amortization.
As an example calculation, if a property generates $200,000 of revenue and incurs $80,000 of operating expenses, then the net operating income would be $120,000. “Note that net operating income is not the same as net income or net cash flow.