What term refers to the financial return generated from an investment property?

The term that refers to the financial return generated from an investment property is net operating income (NOI). Net operating income is calculated by taking the total income generated from the property — which includes rents and other income — and subtracting all operating expenses necessary to maintain the property, excluding financing costs or taxes. This measure gives a clear picture of the property's profitability before accounting for any debt service or financing.

Gross income refers to the total revenue generated from the property before any expenses are deducted, which does not accurately reflect the property's profitability. The capitalization rate, or cap rate, is a metric used to evaluate the potential return on an investment property based on its net operating income, rather than representing the return itself. Return on investment (ROI) measures the profitability of an investment relative to its cost but does not specifically pertain to the operational income of the property. Therefore, net operating income is the most accurate term for assessing the financial return generated directly from an investment property's operations.