Net Operating Income (NOI) Calculator — Real Estate
Net Operating Income (NOI) is the single most important figure in real estate analysis. Enter your property's potential gross income, expected vacancy rate and annual operating expenses — the calculator gives NOI, the expense ratio, and (if you enter a property value) the cap rate and gross rent multiplier.
%
Annual income after operating expenses, before debt service and taxes
- 1
Occupancy factor
1 − 5% ÷ 100 = 0.95The fraction of gross income collected after vacancy and credit losses. - 2
Effective gross income
120,000 × 0.95 = 114,000 - 3
Net operating income (NOI)
114,000 − 30,000 = 84,000
How does this calculator work?
NOI = Gross Rental Income × (1 − Vacancy %) − Operating Expenses (excluding debt service). Enter gross income, vacancy rate and operating costs to get NOI. Add the property value to compute the cap rate (NOI ÷ Value) — the core metric real-estate investors use to compare property returns.
Formula
How this is calculated
NOI starts with Potential Gross Income — the rent you would collect if every unit were occupied every day of the year. A vacancy and credit-loss allowance is subtracted (typically 5–10% in stable markets) to get Effective Gross Income, which reflects realistic occupancy. Operating expenses — property management fees, maintenance and repairs, insurance, property tax, and utilities — are then deducted to reach NOI. Critically, NOI does NOT subtract mortgage payments (debt service), depreciation, or income taxes; it measures property-level operating performance independently of how the property is financed.
The Cap Rate (capitalisation rate) divides NOI by the current market value of the property. It is the rate of return implied by the property if purchased outright for cash. Investors compare cap rates across properties and markets to judge relative value: a higher cap rate implies more income for the price (but often also more risk). Cap rates are region- and asset-class specific and change with market conditions — always verify local benchmark cap rates.
The Gross Rent Multiplier (GRM) is a quick screening ratio: property price divided by annual gross income. A lower GRM suggests a cheaper price relative to rents. GRM ignores expenses, so it is only a first-pass filter; NOI and cap rate give the more complete picture.
Frequently asked questions
No. NOI is calculated before debt service (mortgage principal and interest). Subtracting annual debt service from NOI gives Net Cash Flow. This separation lets investors compare properties regardless of their individual financing arrangements.
Cap rates vary widely by location, property type and market cycle — commonly 4–8% in most markets (higher in secondary cities, lower in prime urban areas). There is no single "good" NOI; it depends on the purchase price, financing costs and the investor's required return.
In corporate finance, Net Operating Income is essentially the same as EBIT (Earnings Before Interest and Tax): revenue minus COGS and operating expenses, before interest and taxes. The real-estate version adds a vacancy adjustment, but the underlying concept — income from operations before financing costs — is identical.
Also known as
TG we-Calculate Editorial Team. (2026). Net Operating Income (NOI) Calculator — Real Estate [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/net-operating-income-calculator
TG we-Calculate Editorial Team. "Net Operating Income (NOI) Calculator — Real Estate." TG we-Calculate. 2026. https://we-calculate.com/calculator/net-operating-income-calculator.
TG we-Calculate Editorial Team, "Net Operating Income (NOI) Calculator — Real Estate," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/net-operating-income-calculator
@misc{wecalculate_net_operating_income_calculator, title = {Net Operating Income (NOI) Calculator — Real Estate}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/net-operating-income-calculator}}, year = {2026}, note = {TG we-Calculate} }
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