$120,000 gross, 5% vacancy, $35,000 expenses
- Vacancy cost = $6,000
- Effective gross income = $114,000
- NOI = $114,000 − $35,000 = $79,000
- Expense ratio ≈ 29.17%
finance calculator
Net Operating Income (NOI) Calculator
Compute NOI by subtracting vacancy and operating expenses from gross income for clear property underwriting.
Results
- Vacancy cost
- $6,000
- Effective gross income
- $114,000
- Net operating income
- $79,000
- Expense ratio
- 29.17%
How to use this calculator
- Enter annual gross rental and other income.
- Set a vacancy allowance and enter annual operating expenses.
- Review vacancy cost, effective gross income, NOI, and expense ratio.
Inputs explained
- Gross rental income
- Annual scheduled rent plus other recurring income before deductions.
- Vacancy allowance (%)
- Market vacancy factor to reduce gross income (use annual basis).
- Operating expenses
- Annual taxes, insurance, maintenance, repairs, management, and utilities you cover. Excludes mortgage payments and income taxes.
How it works
Effective gross income = Gross income × (1 − vacancy%).
NOI = Effective gross income − operating expenses (before debt service and income taxes).
Formula
Vacancy cost = Gross income × (Vacancy %) Effective gross income = Gross income − Vacancy cost NOI = Effective gross income − Operating expenses
When to use it
- Quick NOI pulls for cap rate, DSCR, and cash-on-cash return calculations.
- Testing how higher vacancy or trimmed expenses change lender metrics.
- Normalizing pro formas from brokers into your own expense/vacancy assumptions.
Tips & cautions
- Use realistic vacancy and fully loaded expenses (management, maintenance, reserves) to avoid overstating NOI.
- Keep debt service out of expenses—pair this with DSCR or cash-on-cash tools to see financing impact.
- If inputs are monthly, multiply by 12 first; this calculator expects annual figures.
- Does not include CapEx reserves unless you add them to operating expenses yourself.
- Ignores income taxes and financing—NOI is an unlevered figure.
- Sensitive to vacancy and expense accuracy; validate against T12 and market comps.
Worked examples
$90,000 gross, 8% vacancy, $30,000 expenses
- Vacancy cost = $7,200
- Effective gross income = $82,800
- NOI = $82,800 − $30,000 = $52,800
- Expense ratio ≈ 33.33%
Deep dive
This NOI calculator subtracts vacancy and operating expenses from gross rental income to give clear net operating income for underwriting.
Use the outputs to feed cap rate and DSCR calculators, and keep debt service separate so you can judge both unlevered and levered performance.
FAQs
- Does NOI include mortgage payments?
- No. NOI is pre-financing. Principal and interest belong in debt service for DSCR and cash-on-cash return.
- Should I include CapEx reserves?
- Lenders often expect a reserve. Add it to operating expenses if you want a conservative NOI.
- Monthly or annual numbers?
- Enter annual figures. If you have monthly data, multiply by 12 to avoid mixing units.
- Does NOI include property taxes and insurance?
- Yes—those belong in operating expenses along with maintenance, management, and utilities you pay.
- NOI vs EBITDA?
- NOI is real estate specific and excludes financing and income taxes. EBITDA is a business metric and handles different cost categories.
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Cap Rate Calculator
Calculate rental property cap rate from NOI and property value for quick deal screening.
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DSCR Calculator
Calculate debt service coverage ratio (DSCR) from NOI and annual debt service to check lender thresholds.
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Cash-on-Cash Return Calculator
Calculate annual and total cash-on-cash returns from upfront investment and cash flow.
For estimation only. Confirm vacancy, expenses, and income with current financials and a qualified real estate professional.