Net Operating Income (NOI) Calculator
Calculate monthly and annual Net Operating Income (NOI) from rental income and operating expenses. Useful for real estate investors, property managers, and analysts assessing property profitability.
Total rent you expect to collect each month if the property is fully occupied.
Include parking fees, laundry, storage, or other recurring income. Leave as 0 if not applicable.
Percentage of potential income lost due to vacancies and non-paying tenants. Many investors assume 5–10%.
Include property taxes, insurance, maintenance, management fees, utilities you pay, HOA fees, and other operating costs. Exclude loan EMIs and income taxes.
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Net Operating Income (NOI) Calculator – Complete Guide for Real Estate Investors
Net Operating Income (NOI) is one of the most important financial metrics in real estate investing. It represents the income a property generates from operations after deducting operating expenses, but before accounting for financing costs, income taxes, or capital expenditures. Because NOI isolates the property's core performance, it is widely used by investors, lenders, appraisers, and analysts to evaluate income-producing real estate.
Whether you are analyzing a residential rental, a multi-family building, a commercial office, or a mixed-use property, understanding NOI is essential. This Net Operating Income Calculator allows you to estimate both monthly and annual NOI quickly and consistently, helping you make informed investment, pricing, and financing decisions.
What Is Net Operating Income (NOI)?
Net Operating Income is the income remaining after subtracting all regular operating expenses from a property's effective gross income. It reflects the cash flow generated by the property's day-to-day operations and excludes items related to how the property is financed or taxed.
NOI is not the same as cash flow after financing. Mortgage EMIs, loan interest, principal repayments, income tax, and capital improvements are deliberately excluded. This makes NOI a neutral metric that allows properties to be compared regardless of ownership structure or leverage.
Why NOI Matters in Real Estate
NOI is foundational to nearly every major real estate valuation and decision-making framework. Lenders use NOI to assess debt-servicing ability. Investors use it to compare properties and estimate returns. Appraisers use NOI as a core input in the income capitalization approach to valuation.
A growing NOI generally indicates improving operational performance, while a declining NOI may signal rising expenses, vacancy problems, or weakening rental demand. Because it reflects operational efficiency, NOI is often monitored closely even after a property is acquired.
Components Used to Calculate NOI
This NOI calculator follows industry-standard methodology by breaking the calculation into clear steps:
- Gross Scheduled Income: Total potential rental income plus other recurring income if the property were fully occupied.
- Vacancy & Credit Loss: Estimated income lost due to vacant units or non-payment.
- Effective Gross Income: Gross income minus vacancy and credit loss.
- Operating Expenses: Regular costs required to operate and maintain the property.
- Net Operating Income: Effective gross income minus operating expenses.
NOI Formula Explained
NOI = Effective Gross Income − Operating Expenses
Where:
- Effective Gross Income = (Rent + Other Income) − Vacancy Loss
- Operating Expenses include taxes, insurance, maintenance, management, utilities paid by the owner, and association dues
Example: NOI Calculation
Example Property:
Gross Monthly Rent: 40,000
Other Monthly Income: 2,000
Vacancy Rate: 5%
Monthly Operating Expenses: 15,000
- Gross Scheduled Income = 42,000
- Vacancy Loss (5%) = 2,100
- Effective Gross Income = 39,900
- Monthly NOI = 24,900
- Annual NOI = 298,800
This example demonstrates how vacancy and operating expenses materially impact a property's operating performance, even when headline rent appears strong.
What Expenses Are Included in NOI?
- Property taxes
- Insurance premiums
- Routine repairs and maintenance
- Property management fees
- Utilities paid by the owner
- HOA or association fees
What Is Excluded from NOI?
- Mortgage EMIs or loan payments
- Loan principal and interest
- Income taxes
- Capital expenditures (roof replacement, structural upgrades)
- Depreciation
NOI and Property Valuation
NOI plays a central role in property valuation through the capitalization rate (cap rate) method. Investors estimate property value by dividing NOI by an appropriate cap rate derived from market conditions and risk profile.
Property Value ≈ NOI ÷ Cap Rate
Because of this relationship, even small improvements in NOI can lead to large increases in estimated property value, especially for commercial and multi-family assets.
Why This NOI Calculator Is Useful
This calculator standardizes NOI computation, reduces errors, and saves time. It is suitable for residential landlords, commercial investors, analysts underwriting deals, students learning real estate finance, and lenders reviewing operating performance. Since calculations run locally in your browser, your data remains private and secure.
While NOI is a powerful metric, it should be used alongside other measures such as cash flow, cap rate, internal rate of return (IRR), and debt service coverage ratio (DSCR) for a complete investment analysis. This NOI Calculator provides a strong foundation for those deeper evaluations.
Frequently Asked Questions
What is Net Operating Income (NOI)?
Net Operating Income is the income a property generates after subtracting operating expenses, but before loan payments, taxes, and capital expenditures. It is a key measure of property performance.
What expenses are included in operating expenses?
Operating expenses typically include property taxes, insurance, maintenance, management fees, utilities paid by the owner, and association dues. They do not include loan EMIs or principal payments, income tax, or major capital projects.
Why are loan EMIs excluded from NOI?
NOI is designed to measure the performance of the property itself, independent of how it is financed. Excluding EMIs allows investors to compare properties on a like-for-like basis, regardless of mortgage structure.
Does this calculator store or transmit my data?
No. All calculations run locally in your browser, and no information is saved or sent to a server.