Net Operating Income Calculator
Calculate NOI for real estate investment analysis and property valuation
Calculate Net Operating Income
Potential Gross Income
Total rentable area of the property
Annual rent per sqft
Parking, laundry, storage, etc.
Potential Gross Income
Effective Gross Income
Percentage of property occupied
Effective Gross Income
Operating Expenses
Total annual operating expenses
Net Operating Income Results
Income Summary
Expense Summary
Formula: NOI = Effective Gross Income - Operating Expenses
Note: NOI excludes debt service, depreciation, and capital expenditures
NOI Analysis
Example Calculation
Office Building Example
Property: 1,500 sq ft office space
Rental Rate: $300 per sq ft per year
Other Income: $2,000 parking fees
Occupancy Rate: 85%
Operating Expenses: $113,000 annually
NOI Calculation
1. Full Rental: 1,500 × $300 = $450,000
2. Potential Gross Income: $450,000 + $2,000 = $452,000
3. Vacancy Loss: $450,000 × (1 - 85%) = $67,500
4. Effective Gross Income: $452,000 - $67,500 = $384,500
5. Operating Expenses: $113,000
Net Operating Income: $384,500 - $113,000 = $271,500
NOI Formula Components
Potential Gross Income
Total rental income + other income
Effective Gross Income
PGI minus vacancy losses
Operating Expenses
Property taxes, management, maintenance
Net Operating Income
EGI minus operating expenses
NOI Investment Tips
Higher NOI indicates better investment potential
NOI is used to calculate cap rates and property values
Focus on sustainable NOI growth over time
Exclude debt payments and capital improvements
Understanding Net Operating Income (NOI)
What is Net Operating Income?
Net Operating Income (NOI) is the annual income generated by an income-producing property after deducting operating expenses. It's the most important metric for evaluating real estate investment performance and is used in property valuation.
Why is NOI Important?
- •Primary metric for property valuation
- •Used to calculate capitalization rates
- •Measures property's ability to generate income
- •Essential for loan qualification
NOI Formula
NOI = Effective Gross Income - Operating Expenses
Effective Gross Income: Potential income minus vacancy losses
Operating Expenses: Property taxes, insurance, maintenance, management fees
Excluded: Mortgage payments, depreciation, capital improvements
Key Insight: NOI focuses solely on the property's operating performance, excluding financing and owner-specific factors.
Common Operating Expenses
Property Taxes
Annual taxes assessed by local government based on property value.
Property Management
Fees for professional management services, typically 5-10% of rent.
Insurance
Property insurance, liability coverage, and potential loss protection.
Maintenance
Routine upkeep, landscaping, utilities, and regular servicing.
Repairs
Unexpected repairs and replacements of building systems.
Other Expenses
Legal fees, accounting, marketing, and administrative costs.