NOI Calculator
Calculate net operating income for any rental property, from single-family homes to multi-unit buildings. Enter your rents, expenses, and vacancy rate to see the annual NOI and an implied cap rate.
Revenue vs Expenses
What Net Operating Income Tells You
Net Operating Income (NOI) is the core profitability metric for income-producing property. It answers a single, deal-defining question: after the day-to-day cost of running a property, how much income does the property itself generate — before any financing? Because NOI strips out the mortgage and other owner-specific costs, it lets you compare two properties on the same operating basis, and it feeds directly into the two numbers lenders and investors care about most: the cap rate and the debt-service coverage ratio (DSCR). This calculator helps you estimate NOI from rent, other income, vacancy, and operating expenses so you can sanity-check a listing before you go deeper.
How This Calculator Works
The calculator uses the standard NOI formula:
NOI = Gross Operating Income − Operating Expenses
Where Gross Operating Income (GOI) is your income after an allowance for vacancy:
GOI = (Gross rent + Other income) − Vacancy loss
Critically, operating expenses exclude:
- Mortgage / debt service — principal and interest depend on how you finance the deal, not on the property's operations.
- Income taxes — these depend on the owner's overall tax situation, not the property.
- Depreciation — an accounting entry, not a cash cost.
- Capital expenditures (capex) — large, infrequent replacements (roof, HVAC, major renovation) are handled separately, not in operating expenses.
Excluding these four items is what makes NOI comparable across properties and across buyers.
Worked illustrative example
The figures below are a labeled illustrative example, not market data.
- Gross rent: $30,000
- Other income (parking, laundry, storage): $2,000
- Potential gross income: $32,000
- Less vacancy (5% of rent): −$1,500
- Gross operating income (GOI): $30,500
- Operating expenses: −$11,000
- Net Operating Income (NOI): $19,500
In this illustration, notice the mortgage payment never appears. If this property were listed at $260,000, the implied cap rate would be $19,500 ÷ $260,000 = 7.5% (illustrative).
What Counts as an Operating Expense
Included (recurring costs to run the property):
- Property taxes
- Insurance
- Property management fees
- Repairs and maintenance
- Utilities paid by the owner (water, sewer, trash, common-area electric)
- HOA / condo dues, landscaping, snow removal, and similar recurring services
NOT included (excluded from NOI):
- Mortgage principal and interest (debt service)
- Income taxes
- Depreciation
- Capital expenditures — roof replacement, new HVAC, major remodels
- Tenant improvements and leasing commissions tied to a specific tenant
Rule of thumb: if the cost recurs to keep the property operating and doesn't depend on how you financed or own it, it's an operating expense. If it's a loan payment, a tax on your income, an accounting entry, or a big one-time capital project, it's out.
Why NOI Matters
NOI is a building block, not an endpoint. Two of the most-used real-estate metrics are derived from it:
- Cap rate = NOI ÷ Property value. This lets you compare the unleveraged yield of different properties and is how many investors back into a fair price. See the cap rate calculator.
- DSCR = NOI ÷ Annual debt service. Lenders use this to decide whether the property's income comfortably covers the loan. A common lender floor is roughly 1.20–1.25x for many residential-investment and commercial loans (varies by lender and asset type; confirm with your lender). Check the DSCR calculator.
Because NOI ignores financing, it isolates the property's operating performance — which is exactly what you want when deciding whether a deal is fundamentally sound before layering on a mortgage.
Frequently Asked Questions
Does NOI include the mortgage?
No. NOI is calculated before debt service. Mortgage principal and interest are excluded because they depend on your financing, not the property's operations. Subtracting debt service from NOI gets you closer to cash flow — a separate number.
Are capital expenditures (capex) included in NOI?
No. Large, infrequent replacements like a new roof or HVAC system are capital expenditures, not operating expenses, so they're excluded from NOI. Some investors set aside a separate capex reserve to plan for them.
What's the difference between NOI and cash flow?
NOI is income after operating expenses but before financing and capital costs. Cash flow is what's left after you also subtract debt service (and typically capex reserves). A property can have healthy NOI but thin or negative cash flow if the mortgage is large.
How do I estimate vacancy?
Vacancy is usually expressed as a percentage of gross rent to reflect time between tenants and non-payment. Investors often use a market-based assumption; local vacancy rates vary widely by metro and property type, so check current data for your area. This calculator lets you enter your own vacancy percentage rather than assuming one.
Does NOI include property management fees?
Yes. Management fees are a recurring operating expense and belong in NOI — even if you self-manage, many investors still budget a management line so the comparison stays realistic.
Is depreciation part of NOI?
No. Depreciation is an accounting (non-cash) entry used for taxes, not an operating expense, so it's excluded from NOI.