NOI for a Small Rental with $60,000 Annual Gross Rent
A small rental property with $60,000 in gross rent, 5% vacancy, and $20,000 in operating expenses produces approximately $37,000 in NOI.
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.
Calculate net operating income for a small residential rental with $60,000 in gross potential rent and $20,000 in annual operating expenses.
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.