Net Operating Income (commonly just called “NOI”) is a real estate valuation metric that determines the revenue and profitability of a real estate investment property after subtracting necessary operating expenses. Our NOI Calculator is a convenient tool for real estate investors to easily understand and calculate NOI of investment properties.
Calculate Net Operating Income (NOI) for a Rental Property
Please input the required fields (*) below to calculate a property’s Net Operating Income (NOI).
This calculator is meant for educational purposes only. The calculation generated from the calculator does not, and is not intended to, constitute financial advice. As such, all information, content, and materials available on this site are for general informational purposes only. Please review our Editorial Standards for more info.
Net Operating Income (NOI) Formula
The standard mathematical formula for calculating Net Operating Income (NOI) is noted below. Note that you will first need to determine total property income and operating expense values first to input into the rental property calculator for computation.
1. Gross Operating Income – A property’s gross operating income can be calculated as the property’s annual gross scheduled income, less vacancy loss (the amount of rental income that the property owner loses when the space is unoccupied by the tenants) and credit loss (the estimated dollar amount of lost rental income due to vacant units and non-payment of rent.)
2. Other Income – Income generated by a rental property other than rental unit income. Examples of other income can include revenue from parking, laundry, late-fees, application processing, and more.
3. Operating Expenses – Operating expenses include the costs of running and maintaining the building, including insurance premiums, legal fees, utilities, property taxes, repair costs, and janitorial fees.
Understanding NOI – Income and Expenses
Net Operating Income (NOI) is a fundamental calculation in real estate that represents the profitability of an investment property. It is calculated by subtracting the total operating expenses of the property from the total income generated by it. This figure gives property investors a clear picture of the property’s cash-generating ability, excluding financing and capital expenditures.
- Rental income from tenants
- Parking rentals, laundry, and storage
- Vending machines or other on-site amenities
- Forfeited deposits (if applicable & legal)
- Late payment fees from tenants
- Pet fees or rent (if pets are allowed)
- Application fees for tenant screenings
- Lease termination fees
- Property management fees
- Maintenance and repair costs
- Property taxes
- Insurance premiums
- Utilities (if not paid by tenants)
- Advertising and marketing costs
- Legal and accounting fees
- Pest control and landscaping services
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Net Operating Income (NOI) Calculator FAQ
Why is NOI Important for Rental Property Investors?
NOI provides a clear picture of a property’s profitability from its core operations, without the influence of financing structures. This makes it a valuable metric for comparing the performance of different properties, assessing the effectiveness of property management, and determining the value of a property based on income.
Which Expenses are not Included When Calculating NOI?
NOI only accounts for operating expenses. Therefore, financing costs like mortgage payments, capital expenditures (major property upgrades or replacements), and depreciation are not deducted when determining NOI.
Can NOI be Negative? If so, What Does That Indicate?
Yes, NOI can be negative if operating expenses exceed rental income. A negative NOI suggests that a property is not generating enough income to cover its operational costs, which could be due to factors like high vacancy rates, excessive expenses, or below-market rental rates. A consistent negative NOI might indicate that changes are needed in the property’s management or strategy.