NOI is the pre-financing operating cash flow of a property. It captures the property's operating performance independent of the capital structure (debt or equity) used to acquire it. This makes NOI the cleanest comparison metric across properties with different financing.
NOI = Total Revenue (rents + ancillary) - Property Operating Expenses (utilities, insurance, property tax, repairs, management fees, marketing, supplies, salaries directly attributable to the property). It excludes interest expense, income taxes, depreciation, and capital expenditures.
For coliving, NOI calculation hinges on whether bundled service revenue (cleaning, food, community programming) and the cost of those services are counted as operating revenue/expense or as separate ancillary lines. Most operators include them — getting consistent treatment across properties is the harder part.
Formula
NOI = Total Revenue - Property Operating Expenses
Worked example: Property: €780,000 annual rent revenue + €120,000 ancillary services = €900,000 total revenue. OpEx: €150k utilities + €60k insurance + €120k property tax + €50k repairs + €90k management + €75k marketing = €545,000. NOI = €900,000 - €545,000 = €355,000 (39.4% NOI margin).
In the field
Pan-European coliving NOI margins typically 25–35% of revenue. London tighter (compliance-heavy: 20–28%). Lisbon/Madrid wider (lower OpEx: 28–40%). Austin among highest (low operating cost + permissive regulation: 32–45%).
Common pitfalls
- ×Excluding management fees from OpEx — distorts NOI for owner-operators vs. third-party-managed comparables.
- ×Including capex as an OpEx — capex is below the NOI line.
- ×Mixing ancillary revenue treatment between properties.
- ×Not normalizing for one-time costs (litigation settlements, eviction expenses) that don't reflect ongoing operations.