What is net operating income (NOI) for a rental?

NOI measures how well a property performs on its own, regardless of how it is financed. Start with rent and other income (such as fees and parking), subtract vacancy and credit losses, then subtract operating expenses: property taxes, insurance, repairs and maintenance, utilities you pay, management fees and similar costs.

Mortgage principal and interest, depreciation and capital improvements are left out. That is what makes NOI comparable between properties, and why investors use it to work out a capitalization (cap) rate: NOI divided by the property's value or price.

Cash flow is different: it subtracts the mortgage payment from NOI, so it shows what the owner actually keeps each month.