What is net operating income?
NOI is annual rental revenue minus all operating costs — platform fees, cleaning, management, utilities, insurance, property tax and maintenance — before debt service and income tax.
Formula
NOI = annual revenue − variable costs − fixed costs
Example
€30,000 revenue − €7,500 variable − €4,500 fixed = €18,000 NOI.
Why it matters
NOI is the numerator of net yield and the cash available to service a mortgage; it is what a lender looks at first.
Frequently asked questions
Is NOI the same as profit?
No. NOI excludes financing costs, income tax and depreciation.
What operating cost ratio is normal?
35–50% of revenue for short-term rentals, depending on management model.