NOI calculator
Calculate a rental property's net operating income (NOI): the income left after vacancy and operating expenses, before the mortgage. It also shows the operating expense ratio.
Your results
EstimateNet operating income (annual): $23,400.00
- Net operating income (monthly)
- $1,950.00
- Effective gross income
- $35,400.00
- Total operating expenses
- $12,000.00
- Operating expense ratio
- 33.90%
Results are estimates for planning only. They are not legal, tax or investment advice, and they apply no state or local rules. Check your lease, your local laws and a qualified professional before you rely on a number.
How net operating income is calculated
NOI = (gross rent - vacancy loss + other income) - operating expenses
Start with the rent the property would earn fully leased, subtract the rent you expect to lose to vacancy, and add other income such as parking or laundry. That is effective gross income.
Then subtract operating expenses: property taxes, insurance, maintenance and repairs, management, owner-paid utilities and similar costs. Mortgage payments, capital improvements, depreciation and income taxes stay out of NOI.
The operating expense ratio is total operating expenses divided by effective gross income, which shows how much of each dollar of income goes to running the property.
Worked example
A rental earns $36,000 a year in rent and $1,200 in other income, with 5% vacancy and $12,000 in operating expenses.
- Vacancy loss: $36,000 x 5% = $1,800.
- Effective gross income: $36,000 - $1,800 + $1,200 = $35,400.
- NOI: $35,400 - $12,000 = $23,400 a year, or $1,950 a month.
- Operating expense ratio: $12,000 / $35,400 = 33.90%.
The estimated NOI is $23,400.00 a year.
Frequently asked questions
What is net operating income?
Net operating income is a property's yearly income after vacancy and operating expenses, before loan payments and income taxes.
Is the mortgage an operating expense?
No. NOI leaves out principal and interest so it reflects the property itself, whatever the financing. Subtract the mortgage from NOI to get cash flow.
What goes into operating expenses?
Recurring costs of running the property: property taxes, insurance, maintenance and repairs, property management, owner-paid utilities, landscaping, HOA dues and similar costs. Large improvements such as a new roof are usually treated as capital expenses.
What is the operating expense ratio?
It is total operating expenses divided by effective gross income. A ratio of 34% means 34 cents of each dollar collected goes to operating the property.
Your real income and expenses, from your bank feed
KeyRing pulls transactions from your bank feed and matches each one to a property, with suggestions you confirm, so the numbers behind your NOI come from what actually happened. Your first subscription starts with a 14-day free trial.