Financial Glossary
What Is Included in NOI
Net operating income (NOI) includes all revenue a property generates, such as rent, site fees, and ancillary income, minus the operating expenses needed to run it, including property taxes, insurance, utilities, maintenance, management, and payroll. It deliberately excludes financing costs like mortgage payments, income taxes, depreciation, and capital expenditures, because NOI is meant to measure the property's earning power independent of how it is financed or owned. The result isolates the income the asset itself produces.
Problem & Application
For campground, RV park, and short-term rental owners, getting NOI right is the difference between a property that looks profitable and one that actually is, since lenders and buyers value the asset off this number. Owners frequently inflate NOI by leaving out real operating costs or by sneaking debt service and owner perks into the wrong line. A clean, consistently defined NOI is what holds up in a sale, a refinance, or a cap-rate valuation.
In Short
NOI counts property-level income and operating costs but excludes financing, taxes, and capital spending, which keeps it focused on the asset's true earning power.