What does "Net Operating Income (NOI)" represent?

"Net Operating Income (NOI)" represents the total income generated from a property after subtracting all operating expenses associated with that property. This figure provides a clear view of the profitability of a real estate investment before accounting for financing costs, taxes, or depreciation. In calculating NOI, one typically assesses all income sources, such as rent and service fees, and deducts operating expenses like property management fees, maintenance costs, and property taxes. This net figure is crucial for investors as it aids in evaluating the performance and potential returns of a property.

The other options do not accurately define NOI. The total value of a property after depreciation pertains to the asset's value rather than its income, while the net income of a seller after selling costs deals with the proceeds from a sale rather than operational performance. Finally, projected annual income may encompass various factors beyond just operating income, making it a broader concept than NOI.