NOI Calculator (Net Operating Income)
Calculate Net Operating Income for a rental property and derive cap rate and expense ratio.
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How to use this calculator
- 1
Enter your gross annual rental income and any other income from the property.
- 2
Set the vacancy and credit loss percentage based on local market conditions.
- 3
Enter total annual operating expenses (taxes, insurance, maintenance, management — NOT mortgage).
- 4
Add the property value to calculate cap rate alongside NOI.
Frequently asked questions
What is included in operating expenses for NOI?
Operating expenses include property taxes, insurance, maintenance and repairs, property management fees, utilities (if paid by owner), landscaping, and other recurring costs. Mortgage payments (debt service) are NOT included in NOI — NOI measures property performance before financing.
What is a good cap rate?
Cap rates vary by market and property type. In expensive coastal cities, cap rates of 3–5% are common. In secondary markets, 6–8% is typical. In higher-risk or rural markets, 8–12%+ is possible. A higher cap rate means more income relative to price, but often indicates more risk or less appreciation potential.
How is NOI used to value a property?
Commercial real estate is often valued using the income capitalisation approach: Property Value = NOI ÷ Cap Rate. If market cap rates for similar properties are 6% and your NOI is $30,000, the indicated value is $500,000. This is why increasing NOI directly increases property value.
Net Operating Income (NOI) Calculator
NOI vs cash flow: what is the difference?
NOI measures property income before debt service (mortgage payments). Cash flow is what remains after paying the mortgage. Lenders, appraisers, and investors use NOI because it reflects the property's earning power independent of how it is financed. You might buy the same property with cash or with 80% leverage — the NOI stays the same; the cash flow changes dramatically.
How to increase NOI
NOI improves by increasing income or reducing operating expenses. On the income side: raise rents to market rate, reduce vacancy through better marketing and tenant retention, add ancillary income (parking, storage, laundry). On the expense side: appeal property tax assessments, shop insurance annually, implement preventive maintenance to reduce emergency repair costs, and renegotiate management contracts.
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →