NOI (Net Operating Income) Calculator
Calculate a rental property's net operating income (NOI) from gross rent, vacancy, other income, and operating expenses, plus its NOI margin.
How to use this tool
- Enter gross potential rent — annual rent at full occupancy.
- Set a realistic vacancy and credit-loss percentage.
- Add any other income (parking, laundry, fees).
- Enter annual operating expenses, EXCLUDING mortgage and capital improvements.
- Read the NOI and NOI margin.
Net operating income tells you what a rental property actually earns before financing. Enter rent, vacancy, other income, and expenses to get NOI and the NOI margin — the figures lenders and appraisers underwrite to.
Formula
Net operating income is the property's income after vacancy and operating expenses, but before financing and income tax:
GOI = Gross potential rent × (1 − Vacancy%) + Other income
NOI = GOI − Operating expenses
NOI margin = (NOI ÷ GOI) × 100
How it works
Net operating income is the bedrock metric of income-property analysis. It captures everything the asset earns and spends to operate — but deliberately stops before debt service and income taxes, so two investors can compare the same building regardless of how each one finances it. NOI also drives valuation: divide it by a market cap rate and you get an income-based estimate of value.
The calculation starts from gross potential rent — the rent at full occupancy — then deducts a vacancy and credit-loss allowance and adds ancillary income such as parking, laundry, and fees. From that gross operating income it subtracts operating expenses: property taxes, insurance, management, repairs and maintenance, utilities, and reserves. It does not subtract mortgage payments, depreciation, or capital improvements, which is the most common mistake new investors make.
Reviewed by the AbraCalc Real Estate Desk. Use realistic, trailing-12-month operating numbers rather than a seller's pro-forma. This calculator provides general information, not investment advice; verify figures and assumptions against your own underwriting before acting.
Worked example
$120,000 potential rent, 5% vacancy, $3,000 other income, $40,000 expenses
- Effective rent = $120,000 × (1 − 0.05) = $114,000.
- Gross operating income = $114,000 + $3,000 other = $117,000.
- NOI = $117,000 − $40,000 operating expenses = $77,000.
- NOI margin = $77,000 ÷ $117,000 × 100 = 65.81%.
NOI $77,000.00 | Gross operating income $117,000.00 | NOI margin 65.81%
NOI and margin at $100,000 gross operating income, by expense level
| Operating expenses | NOI | NOI margin |
|---|---|---|
| $30,000 | $70,000 | 70.0% |
| $40,000 | $60,000 | 60.0% |
| $50,000 | $50,000 | 50.0% |
| $60,000 | $40,000 | 40.0% |
Key terms
- Net operating income (NOI)
- Gross operating income minus operating expenses; income before debt service and taxes.
- Gross potential rent (GPR)
- The rent the property would collect at 100% occupancy and full market rents.
- Gross operating income (GOI)
- Effective rent after vacancy and credit loss, plus other income.
- Operating expenses
- Recurring costs to run the property — taxes, insurance, management, maintenance, utilities — excluding mortgage and capital expenditures.
Frequently asked questions
- What is included in operating expenses?
- Property taxes, insurance, property management, repairs and maintenance, utilities you pay, and replacement reserves. Exclude the mortgage payment, depreciation, and capital expenditures — those are not operating expenses.
- Does NOI include the mortgage?
- No. NOI is calculated before debt service so that the property can be compared and valued independently of how it is financed. Subtract the mortgage from NOI to get pre-tax cash flow.
- How is NOI used to value a property?
- Divide NOI by the market capitalization rate to estimate value: Value = NOI ÷ Cap rate. A higher NOI or a lower cap rate implies a higher value.