Net Operating Income

Learn about net operating income (NOI) in Canadian real estate — what it is, how it’s calculated, and why it matters for investors and lenders.

Net Operating Income

August 08, 2025


What is Net Operating Income?

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.

Why Net Operating Income Matters in Real Estate

In Canadian real estate investing, NOI is a fundamental measure of a property's profitability and is used in valuation and lending decisions.



Key points:
  • Calculated as Gross Operating Income - Operating Expenses
  • Excludes mortgage payments and capital expenditures
  • Used to determine capitalization rates and property value



Understanding NOI helps investors evaluate performance and lenders assess loan eligibility.

Example of Net Operating Income in Action

The apartment building’s net operating income increased after reducing utility costs and raising rents.

Key Takeaways

  • Measures income after operating expenses
  • Excludes taxes, mortgage, and capital costs
  • Central to property valuation and investment analysis
  • Impacts lending and financing decisions
  • Indicates property cash flow performance

Related Terms

Additional Terms

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Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

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Escrow Holdback

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