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Real Estate Net Operating Income Calculator

Reviewed by the CalculatorHub team, edited by James Graham. Standard NOI formula: Gross Income - Vacancy - Operating Expenses. Last verified 14 June 2026.

Net operating income (NOI) is the single most important number in commercial and residential investment real estate. It measures a property's income-generating ability before financing and taxes, making it the basis for cap rate calculations, property valuations, and lender underwriting. Enter your property's income and expense details below to calculate annual NOI and implied property value at your target cap rate.

Total potential rent if fully occupied (12 x monthly rent)
Parking, laundry, pet fees, storage, etc.
Lost rent from vacancies and non-payment (typically 5 to 8% of gross rent)
Management fees (typically 8 to 12% of collected rent)
Annual real estate taxes levied on the property
Landlord or commercial property insurance premium
Routine repairs, maintenance, and capital expenditure reserve
Water, trash, common area utilities paid by landlord
Accounting, legal, advertising, HOA, and miscellaneous costs
Used to estimate implied property value (Value = NOI / Cap Rate)
$59,000.00
$17,400.00
$41,600.00
$693,333.33

NOI formula

Effective Gross Income = Gross Rental Income + Other Income - Vacancy and Credit Loss

NOI = Effective Gross Income - Total Operating Expenses

Implied Value = NOI / Cap Rate

Operating expenses include management, taxes, insurance, maintenance, utilities, and other recurring costs. They do NOT include mortgage payments, interest, depreciation, income taxes, or capital improvements. This definition follows standard appraisal practice as taught by the Appraisal Institute and CCIM Institute.

NOI calculator: frequently asked questions

What is net operating income (NOI) in real estate?

Net operating income is the annual income generated by a property after deducting all operating expenses but before subtracting mortgage payments, income taxes, or depreciation. NOI = Gross Rental Income - Vacancy and Credit Loss - Operating Expenses. It is the foundation for cap rate, cash flow, and property valuation calculations.

What is the NOI formula?

NOI = Gross Potential Rental Income - Vacancy and Credit Loss - Operating Expenses. Operating expenses include property management, property taxes, insurance, maintenance, utilities, and administrative costs. They do NOT include mortgage principal, mortgage interest, depreciation, or income taxes.

Why does NOI exclude mortgage payments?

NOI is a property-level metric that measures the income generated by the real estate asset itself, independent of how it is financed. This makes it possible to compare properties on an equal basis regardless of leverage. Financing costs are factored in when calculating cash-on-cash return or DSCR (debt service coverage ratio).

How is NOI used to value property?

Property Value = NOI / Cap Rate. This income capitalization approach is the primary method used by commercial real estate appraisers to estimate market value. If a property generates $60,000 in NOI and the market cap rate is 6%, the estimated value is $1,000,000.

What is a good NOI for a rental property?

There is no single target NOI, as the metric depends on property size and location. The more relevant question is whether NOI divided by property value (the cap rate) meets your investment requirements. NOI is also used to calculate the debt service coverage ratio (DSCR): NOI / Annual Debt Service. Lenders typically require a DSCR of at least 1.20 to 1.25 for commercial properties.

Official sources

Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.