NOI is used to analyze the profitability of income-generating real estate investments. NOI equals all revenue from the property, minus all reasonably necessary operating expenses.
How this is calculated
NOI is calculated differently according to the relationship of value and expenses for the use type.
For Residential for Rent:
NOI = Net sq m or NSF x NOI / Net sq m or NSF
NOI / Net sq m or NSF = Annual Rent / Net sq m or NSF - Opex / Net sq m or NSF
For Residential for Sale: Not applicable
For Hotels:
NOI = Total Annual RevPAR x Keys - Opex / Net sq m or NSF x Net sq m or NSF
For Other use types:
NOI = (Annual Rent / Net sq m or NSF x Occupancy Rate - Opex / Net sq m or NSF) x Net sq m or NSF