Non-Operating Income

Non-operating income is money a business earns outside its core operations, such as interest on cash balances, gains from selling an asset or a one-time settlement. For a rental property, it stays out of net operating income. NOI should only measure what the building earns by renting space.

Recurring income from the property itself does count. Laundry machines, parking, pet fees, storage and late fees are all other income and belong above the NOI line. Interest on the security deposit account, a lawsuit settlement or an insurance payout for a fire do not recur, so they are left out.

Buyers care because each dollar of NOI gets capitalized. At a 6.5% cap rate, a one-time $5,000 payout counted as income would add about $77,000 of apparent value to a property that will not earn it again.