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.
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
September residential sales, not seasonally adjusted; the annual comparison uses CREA’s revised figures. Chart: 
Annual changes in the unadjusted national MLS® HPI and average sale price. The average is affected by the mix of transactions. Chart: 
Seasonally adjusted residential months of inventory by province. Local property types can differ substantially. Chart: 
Ontario and B.C. are the two provinces with forecast annual average-price declines in 2026. Chart: 
Annual average transaction prices in Canadian dollars. Forecast values are not December price targets. Chart: 
Five-year changes in seasonally adjusted composite MLS® HPI benchmarks, September 2021 to September 2026. Chart: 
