NOI Calculator — How It Works
Our NOI calculator gives you an instant Net Operating Income breakdown for any rental or commercial property — no signup, no spreadsheet. Enter your property income and operating expenses, and your annual NOI, monthly NOI, operating expense ratio, and implied cap rate appear in real time.
This net operating income calculator updates every figure live as you type, the same way an investor or broker works through a deal on-site. Use it to screen rental properties, compare two buildings, or sanity-check a listing broker's pro forma before you make an offer.
How to Calculate NOI — Step by Step
Knowing how to calculate NOI is essential for any real estate investor, landlord, or analyst. The formula has three steps:
- Step 1 — Gross Operating Income: Add rental income and other income, then subtract vacancy and credit loss.
Example: $120,000 rent + $6,000 other − $5,000 vacancy = $121,000 - Step 2 — Total Operating Expenses: Add taxes, insurance, maintenance, management, and utilities.
Example: $14,000 + $6,000 + $9,000 + $9,600 + $4,400 = $43,000 - Step 3 — NOI: Subtract operating expenses from gross operating income.
Example: $121,000 − $43,000 = $78,000 NOI
The calculator above performs all three steps automatically. The simple NOI formula is: NOI = Gross Operating Income − Operating Expenses.
What is NOI in Real Estate?
NOI (Net Operating Income) is the single most important profitability metric in commercial and rental real estate. It measures how much money a property earns from its own operations — before any mortgage, income tax, or accounting deductions. Because it strips out financing, NOI lets you compare two properties on equal footing regardless of how each one is funded.
Crucially, NOI does not include these four items:
- Mortgage payments — principal and interest are financing, not operations.
- Depreciation — an accounting entry, not a cash expense.
- Income tax — depends on the owner, not the property.
- Capital expenditures — big one-time items like a new roof or HVAC.
Leaving these out is what makes NOI a clean measure of the property's own earning power.
How to Calculate NOI With Cap Rate
NOI and the capitalization rate are tied together by one core real estate formula:
Cap Rate = NOI ÷ Property Value
You can rearrange this formula three ways depending on what you know:
- Find NOI from value: NOI = Property Value × Cap Rate
- Find value from NOI: Property Value = NOI ÷ Cap Rate
- Find cap rate: Cap Rate = NOI ÷ Property Value
Example: a building worth $1,000,000 at a 7% cap rate produces $70,000 of NOI. Enter a property value in the calculator above and it will show the implied cap rate for your numbers automatically.
What Is a Good NOI and Operating Expense Ratio?
There is no single "good" NOI number — a $40,000 NOI is excellent on a $400,000 duplex but poor on a $5,000,000 apartment block. That is why investors judge NOI using two ratios instead:
- Cap rate (NOI ÷ value): commonly 4%–10%. Higher usually means more income per dollar invested, but often more risk.
- Operating expense ratio (expenses ÷ income): often 35%–50% for residential rentals. A lower ratio means the property keeps more of every rent dollar as profit.
The calculator shows your operating expense ratio automatically so you can benchmark a property against these ranges in seconds.