Net Operating Income (NOI) Calculator
Find a property's income after operating expenses, before financing.
Results update as you type.
This calculator is for illustrative purposes only. Actual rates, fees and terms vary by lender. Consult a qualified financial adviser before making borrowing decisions.
How it works
Net operating income, almost always written as NOI, is the bedrock number in commercial and rental real estate. A net operating income calculator subtracts a property's operating expenses from its gross operating income to reveal the profit the building produces from operations alone, before any mortgage payment or income tax. Nearly every other valuation metric, from cap rate to debt coverage, is built on top of this single figure, which is why getting it right matters so much. Gross operating income is the money the property actually brings in: rent collected after allowing for vacancy, plus extras like parking, laundry, or storage fees. Operating expenses are the recurring costs of keeping it running: property taxes, insurance, maintenance and repairs, management fees, and utilities the owner covers. Crucially, NOI excludes financing costs and capital expenditures, because those depend on the buyer and distort a property-to-property comparison. The calculation works because it separates the performance of the asset from the way any particular owner finances or is taxed on it. Two investors with very different loans see the same NOI on the same building, which is what makes it a fair basis for valuation. Lenders use it to size loans and check debt coverage, appraisers use it to derive value from cap rates, and investors use it as the starting point for judging whether a deal's operations can support its price and its debt.
NOI = gross operating income − operating expenses
Subtracting operating expenses from gross operating income isolates the profit a property generates from its operations alone, before any mortgage or income tax. Gross operating income is the rent actually collected after vacancy plus any other property income, and operating expenses cover the recurring costs of running the building. What remains is the cash the asset itself produces, the figure lenders and appraisers use to value income property and the numerator behind cap rate.
Source:Standard real estate formula
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter gross operating income and operating expenses.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Net operating income updates instantly as you type — no button to press.
Frequently asked questions
What expenses are included in NOI?
Operating expenses cover the recurring costs of running the property: property taxes, insurance, maintenance and repairs, property management fees, utilities the owner pays, and reasonable reserves. They exclude mortgage principal and interest, income taxes, depreciation, and large one-off capital improvements like a new roof. Keeping this line consistent is essential, because including financing or capital costs would understate NOI and make comparisons between properties unreliable.
Why does NOI exclude mortgage payments?
NOI measures the property's own earning power, independent of how any buyer finances it. Two investors might purchase the same building with completely different loans, yet the building's operations are identical. By leaving out mortgage principal and interest, NOI stays a clean, comparable figure that lenders and appraisers can use to value the asset itself. Your leveraged return is captured separately by metrics like cash-on-cash return.
How does NOI relate to cap rate?
NOI is the numerator of the cap rate formula: cap rate equals NOI divided by property value. That makes NOI the foundation of income-property valuation, because appraisers estimate value by dividing NOI by a market cap rate. A small change in NOI moves the implied value significantly, which is why owners focus on raising income and trimming operating expenses to increase both NOI and the property's worth.
What is gross operating income exactly?
Gross operating income is the total revenue the property realistically collects: scheduled rent minus a vacancy and credit-loss allowance, plus other income such as parking, laundry, storage, or pet fees. It is not the theoretical rent if every unit were always full, but the effective income you can count on. Starting from a realistic collected figure rather than a best-case number keeps the resulting NOI honest and useful.
Can NOI be negative?
Yes. If a property's operating expenses exceed its gross operating income, NOI turns negative, meaning the building loses money from operations before any mortgage is even considered. That is a serious warning sign, often pointing to high vacancy, runaway costs, or under-market rents. This calculator will show a negative result in those cases, signalling that the property's operations need to be fixed before it can support debt or produce a return.