NOI Calculator
Calculate Net Operating Income to evaluate rental property performance. See detailed expense breakdowns and operating ratios.
Annual Income
Annual Operating Expenses
Enter annual amounts. Do NOT include mortgage payments - NOI is calculated before debt service.
NOI Analysis
Income Statement
Expense Breakdown
What is NOI Used For?
Cap Rate = NOI ÷ Property Value
DSCR = NOI ÷ Annual Debt Service
Value = NOI ÷ Cap Rate
Lenders use NOI to determine loan amounts
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Understanding Net Operating Income
Net Operating Income is the foundation of commercial real estate analysis. It tells you how much money a property generates from operations before financing and taxes.
NOI Formula
NOI = Effective Gross Income - Operating Expenses
Where Effective Gross Income = Gross Potential Rent + Other Income - Vacancy
How NOI is Used
- Cap Rate: Cap Rate = NOI ÷ Property Value
- Property Valuation: Value = NOI ÷ Cap Rate
- DSCR: DSCR = NOI ÷ Annual Debt Service
- Loan Sizing: Lenders use NOI to determine max loan amounts
Operating Expense Ratio
Operating Expense Ratio = Operating Expenses ÷ Effective Gross Income
Typical ratios range from 35-50% for residential and 25-45% for commercial, depending on property type and who pays utilities.
Frequently Asked Questions
What is NOI in real estate?▼
NOI (Net Operating Income) is a property's income after operating expenses but before mortgage payments, taxes, and depreciation. It's the key metric for evaluating commercial and rental property profitability.
How do you calculate NOI?▼
NOI = Gross Rental Income + Other Income - Vacancy Loss - Operating Expenses. Operating expenses include property taxes, insurance, maintenance, management, and utilities. Do NOT include mortgage payments.
Why is mortgage not included in NOI?▼
NOI measures property performance independent of financing. This allows investors to compare properties with different debt structures and calculate cap rate, which is based on unlevered returns.
What is a good NOI?▼
NOI itself isn't "good" or "bad" - it depends on the property value. What matters is cap rate (NOI ÷ Value) and whether NOI covers your debt service. A positive NOI is necessary; sufficient NOI to achieve your target returns is ideal.
What expenses are included in NOI?▼
Include: property taxes, insurance, repairs/maintenance, property management, utilities (if owner-paid), HOA fees, landscaping, advertising, legal fees, and other operating costs. Exclude: mortgage payments, depreciation, income taxes, capital expenditures.