To calculate this information, it is necessary to have all data available (as much as possible). It allows the investor to compare several properties with the same metrics, making it easier to see the difference in each. Often, this information can help prospective investors determine which property available to them may offer the highest return or fit within their property investment strategy best. When an investor uses this calculation, it will help provide insight as to the property owner if renting out the property is worth the expense of purchasing it as well as maintaining it over time. The key to using NOI is to understand its value. Typically, it does not include principal and interest payments on loans, depreciation, capital expenditures, or amortization. It is often presented on a property’s income and cash flow statement. As a result, the investor knows right away if this is the type of investment that fits the investor’s portfolio or not. It takes into consideration all of the income and expenditure opportunities for the property in one single calculation. This is what makes net operating income so valuable. It would also consider all maintenance fees for the property and any other associated costs, such as the attorney the investor uses or the insurance on the property. That may include tenant rent as well as any income from the sale of goods. For example, if there is a consideration for purchasing a convenience mart, this calculation would take into consideration all potential avenues of income from that convenience mart.
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