NOI excludes the mortgage payment — it is an operating metric.
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What does this calculator estimate?
Net operating income (NOI) is a property's annual income after operating expenses but before debt payments, income taxes, and capital expenditures. Example: $31,200 gross income − $12,480 operating expenses = $18,720 NOI per year.
- NOI excludes mortgage payments, income taxes, and capital expenditures — it measures the property's operating performance, not your cash flow.
- Lenders use NOI for DSCR underwriting; investors divide NOI by price or value to get the capitalization rate.
- This tool works in annual dollars: enter full-year figures for each line, not monthly.
What NOI does and does not include
NOI counts everything the property earns — rent, parking, laundry, storage, pet fees — minus the recurring costs of running it: taxes, insurance, utilities, maintenance, repairs, property management, and landscaping. It deliberately excludes the mortgage (debt service), income taxes, tenant improvements, and big one-off capital items like a new roof.
That exclusion is the point. Two investors can buy the same building with different loan terms, and NOI lets them compare the properties themselves on equal footing. It is the numerator of the cap rate (NOI ÷ price or value) and the input lenders stress-test for debt-service coverage.
Handling vacancy and credit loss
Most commercial NOI worksheets subtract vacancy from potential gross income to get effective gross income. This calculator keeps it simple: enter the rent you realistically collect. If you expect 5% vacancy on $30,000 of gross rent, enter $28,500 — or enter full rent and add the expected vacancy loss as a maintenance-line adjustment.
Either way the arithmetic is the same. What matters for accuracy is being consistent: don't enter full-market rent with zero vacancy unless the units genuinely stay full.
How investors use the number
- Cap rate: NOI ÷ purchase price. A $18,720 NOI on a $312,000 purchase is a 6.0% cap rate.
- Debt-service coverage: NOI ÷ annual loan payments. Lenders typically want 1.20–1.40×.
- Value estimation: at a known market cap rate, value ≈ NOI ÷ cap rate.
- Margin check: NOI ÷ gross income shows how much of each dollar survives expenses.
How this calculator works
Formula
NOI = gross operating income − operating expenses. The calculator sums your rental income and other income, then subtracts five annual expense lines: maintenance, property management, and utilities & insurance (plus property taxes if entered there).
Worked example
A small duplex rents for $28,800/yr with $2,400/yr laundry income. Expenses: $3,600 maintenance, $2,880 management, $1,800 utilities & insurance. NOI = $31,200 − $12,480 = $18,720/yr — a 60% operating margin.
Assumptions to verify
- All figures are annual; the tool does not convert monthly inputs.
- Expense lines are summed as entered — the labels group common costs but any operating expense can go in any line.
- Debt service, income taxes, and capital expenditures are outside NOI by definition and are not inputs.
Frequently asked questions
Is NOI the same as profit?
No. NOI comes before mortgage payments, income taxes, depreciation, and capital expenditures. Your taxable profit and bank balance can both differ substantially from NOI.
Do I enter monthly or yearly numbers?
Yearly. The result is an annual NOI figure — multiply a monthly rent by 12 before entering it, and use annual amounts for every expense line.
Where do property taxes go?
Enter them in the Utilities & insurance line (or Maintenance if you prefer) — the calculator sums every expense field you fill, so the total is what matters.
What is a good operating margin?
Residential rentals commonly run 55–70% before debt service; properties with high management or utility costs run lower. A sudden margin drop usually signals a maintenance spike or rising expenses, not a market shift.
Can NOI be negative?
Yes — a heavily vacant or mismanaged property can spend more than it collects. Negative NOI means the property costs you money every month even before the loan.
How does NOI relate to cap rate?
Cap rate is NOI divided by what the property costs or is worth. It converts NOI into a comparable return across properties, like a yield.
Why doesn't the calculator have a vacancy field?
To keep the tool to five lines. Vacancy is an estimate about the future; folding your realistic collected rent into the income fields gives the same NOI as a vacancy-adjusted worksheet.
Cite this tool
BoringToolsKit. “Net Operating Income Calculator.” boringtoolskit.com/net-operating-income-calculator/ (reviewed 2026-09-20). Free to reference in articles, syllabi, and answer posts with a link.
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