Net Operating Income (NOI)

Frequently asked questions

What is a good NOI for a rental property?

There is no universal benchmark for NOI in dollar terms since it scales with property size. The key is the NOI relative to property value, which gives you the cap rate. A property generating AED 80,000 to 100,000 in NOI per AED 1.5 million of value is considered solid in Dubai. What matters most is whether NOI is growing year over year as rents increase and expenses are kept under control.

How do you calculate NOI?

Start with gross rental income, subtract vacancy losses (typically 5 to 10% of potential income), then subtract operating expenses including service charges, maintenance, insurance, management fees, and utilities paid by the landlord. For example: AED 130,000 gross rent minus AED 8,000 vacancy allowance minus AED 32,000 operating expenses equals AED 90,000 NOI. Mortgage payments, taxes, and depreciation are excluded.

What is the difference between NOI and net rental yield?

NOI is an absolute dollar (or dirham) amount representing annual income after expenses. Net rental yield expresses that same concept as a percentage of property value. If NOI is AED 90,000 and the property is worth AED 1,500,000, the net yield is 6%. NOI is used in valuation and cap rate calculations; net yield is used for comparing percentage returns across different-sized properties.

Does NOI include property taxes?

This depends on the convention in your market. In the US, NOI typically excludes income taxes but may include property taxes as an operating expense. In the UAE, there is no annual property tax, so this is not a factor for most investors. IONROI tracks all expense categories separately, so you can clearly see what is included in your NOI calculation and ensure it matches your reporting requirements.