NOI Calculator
Net operating income for a rental property
- Cap rateNOI ÷ price
- 6.66%
- Effective incomeafter vacancy
- $30,780
- Operating expenses35% of income
- $10,802
Free to check. Based on the rent, not your tax returns.
Estimates, not a loan offer. We may earn a commission when you click. It does not change your estimate. How we calculate · How we make money
| Per year | |
|---|---|
| Gross rent + other income | $32,400 |
| Vacancy | −$1,620 |
| Effective income | $30,780 |
| Property tax | −$3,600 |
| Insurance | −$1,500 |
| HOA | $0 |
| Repairs | −$1,620 |
| Capital expenses | −$1,620 |
| Management | −$2,462 |
| Utilities | $0 |
| Net operating income | $19,978 |
NOI is what investor lenders look at
DSCR lenders size loans on a property's income. See what financing this property could support.
Free to check. Based on the rent, not your tax returns.
What net operating income means
Net operating income (NOI) is what a property earns in a year after vacancy and operating expenses, but before mortgage payments, depreciation and income taxes. Because it leaves out financing, NOI lets you compare properties on their own merits, and it's the starting point for cap rate, DSCR and most valuations.
NOI = (rent + other income − vacancy) − operating expenses
In the example, $2,700 a month of rent is $32,400 a year. After 5% vacancy, effective income is $30,780. Taxes, insurance, repairs, capital expenses and management total about $10,800, leaving NOI of about $19,980. On a $300,000 price, that's a cap rate of about 6.66%.
What counts as an operating expense
- Included: property tax, insurance, HOA dues, repairs and maintenance, a reserve for capital expenses like roofs and HVAC, property management, owner-paid utilities, landscaping and legal or accounting costs for the property.
- Not included: mortgage principal and interest, depreciation, income taxes and one-time renovation costs.
Using NOI
- Cap rate = NOI ÷ price. See the cap rate calculator.
- Value from a market cap rate = NOI ÷ cap rate. At a 6.5% market cap rate, $19,980 of NOI suggests a value of about $307,000.
- DSCR = NOI ÷ annual debt service, the NOI-based version commercial lenders use. See the DSCR calculator.
Sellers' NOI figures often leave out vacancy, management or capital reserves. Rebuild the numbers yourself from the rent roll and actual bills before you rely on them.
Frequently asked questions
What is net operating income?
The income a property produces in a year after vacancy and operating expenses, before mortgage payments, depreciation and income taxes.
How do you calculate net operating income?
Start with gross rent and other income, subtract vacancy, then subtract operating expenses: property tax, insurance, HOA, repairs, capital reserves, management and owner-paid utilities. $30,780 of effective income minus $10,800 of expenses is NOI of about $19,980.
Is NOI the same as net income or cash flow?
No. NOI is before the mortgage. Cash flow is NOI minus mortgage payments. Net income for taxes also subtracts depreciation and interest.
Does NOI include the mortgage payment?
No. Leaving financing out lets you compare properties regardless of how they're bought. To include the mortgage, use the rental property calculator.
Free rental property spreadsheet
The same formulas in Excel or Google Sheets, plus a 10-year projection with equity, total profit and IRR. No email needed.