Net Operating Income Calculator
Calculate NOI from rental income minus operating expenses.
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This calculator helps you determine the net operating income for a rental property. Here is how to use it:
- Enter your monthly rent. This is the gross rent you collect from tenants each month. If you have not yet rented the property, use comparable rental listings in the area to estimate.
- Add other monthly income. This includes any additional income from the property such as laundry fees, parking fees, storage rentals, or pet rent. Enter 0 if there is no additional income.
- Set the vacancy rate. A 5% vacancy rate assumes roughly 2-3 weeks of vacancy per year during tenant turnover. Increase this for areas with higher turnover or seasonal demand.
- Enter monthly operating expenses. Include property tax, insurance, maintenance, property management, utilities, and any other recurring costs. Do not include mortgage payments, as NOI is calculated before debt service.
Results update instantly as you type. The breakdown grid shows gross income, effective income after vacancy, total expenses, and the expense ratio. Use the Share button to send a pre-filled link, or Copy to grab the result.
About Net Operating Income
Net operating income (NOI) is one of the most important metrics in real estate investing. It measures how much income a property generates after paying all operating expenses, but before accounting for mortgage payments, capital expenditures, or income taxes. Lenders and investors rely on NOI to evaluate a property's ability to generate cash flow and to calculate cap rate.
A higher NOI means more income available to cover debt service or return to investors. The expense ratio shows what percentage of effective income goes to operating costs. A lower expense ratio indicates a more efficiently managed property. Typical expense ratios for residential rentals range from 35% to 50%.
All calculations run entirely in your browser. We never see or store your financial data.
Frequently Asked Questions
What is net operating income in real estate?
Net operating income (NOI) is the annual income a property produces after subtracting all operating expenses from effective gross income. Operating expenses include property tax, insurance, maintenance, management fees, and utilities. NOI does not include mortgage payments, capital improvements, or income taxes. It is the core metric used to determine a property's value and cap rate.
Does NOI include mortgage payments?
No. NOI is calculated before debt service (mortgage payments). This is intentional because it allows investors and lenders to evaluate the property's income-producing ability independent of how it is financed. Different buyers may have different loan terms, so NOI provides a level comparison. To see income after the mortgage, use a cash flow calculator instead.
What is a good expense ratio for rental property?
For residential rental properties, an expense ratio between 35% and 50% is typical. Properties with newer construction, fewer amenities, or tenant-paid utilities tend to have lower expense ratios. Older properties, multi-unit buildings with common areas, or properties where the owner pays utilities tend to have higher ratios. An expense ratio above 50% may signal high maintenance costs or inefficient management.
How is NOI used to calculate cap rate?
Cap rate equals NOI divided by the property's purchase price or market value, expressed as a percentage. For example, if a property has an NOI of $16,200 and is priced at $300,000, the cap rate is 5.4%. Cap rate is the standard metric for comparing investment properties because it normalizes returns across different price points and markets.