NOI = operating revenue − operating expenses, before debt service and capital costs. Calculate yours below and see exactly what belongs in it.
Operating profit before debt.
NOI is what a property earns from operations after operating expenses but before financing and capital costs. It's the number lenders, buyers, and appraisers build on, because it reflects the asset's earning power independent of how it's financed or who owns it.
NOI = total operating revenue − operating expenses. For a hotel: rooms, F&B, and other departmental revenue, minus departmental costs, undistributed operating expenses, a management fee, property taxes, insurance, and an FF&E reserve. Example: $4,000,000 revenue − $2,600,000 operating expenses = $1,400,000 NOI.
NOI does not subtract your mortgage payment (debt service), capital expenditures or one-time renovations like a PIP, depreciation, or income taxes. Leaving debt service out is the point — it lets you compare properties and size loans on operations alone.
Cash flow after debt service is NOI minus your loan payment — what actually reaches your pocket. EBITDA is a company-level measure; in real estate, NOI is the standard. A common mistake is overstating NOI by omitting the management fee and reserve a lender will insist on.