Rental analysis
NOI Calculator
Net operating income is what a property earns from operations — all income minus operating expenses, before any mortgage. It's the number cap rates, appraisals, and lender underwriting are built on. Itemize your lines; every step is shown.
Income
Annual operating expenses not the mortgage — see methodology
Informational only, not professional advice. This calculator computes a standard formula from the numbers you enter — it doesn't know your market, your property's condition, or your tax situation.
Methodology
Net operating income is defined as all revenue a property generates minus all reasonably necessary operating expenses (Investopedia: Net Operating Income). This calculator builds it in three steps:
- Gross scheduled income = (monthly rent + other monthly income) × 12
- Effective gross income = gross scheduled income − vacancy loss (gross × vacancy rate)
- Net operating income = effective gross income − sum of annual operating expenses
The operating expense ratio shown alongside the result is total operating expenses divided by effective gross income (Investopedia: Operating Expense Ratio) — a sanity check on whether your expense estimate is plausible for the property type.
Assumptions and limitations
- NOI deliberately excludes debt service, capital expenditures, depreciation, and income taxes. If you want the number after the mortgage, that's cash flow, not NOI.
- Appraisers typically include a management expense even for self-managed properties, since your time isn't free and a buyer would have to pay for it. Setting management to $0 overstates NOI relative to an appraisal.
- The vacancy rate is your assumption, not a fact — actual vacancy varies by market and property.
- Expense line items are annual totals you supply. Underestimating repairs and maintenance is the most common way this number flatters a property.
Last reviewed: July 2026
Frequently asked questions
What expenses are excluded from NOI?
NOI excludes mortgage principal and interest (debt service), capital expenditures like a roof or HVAC replacement, depreciation, and income taxes. It only subtracts the recurring costs of operating the property — taxes, insurance, management, maintenance, owner-paid utilities, and HOA dues. Excluding financing is what makes NOI comparable across buyers with different loans.
Is NOI calculated monthly or annually?
By convention NOI is an annual figure — appraisers, lenders, and cap rate math all use twelve-month NOI. This calculator computes the annual number and also shows it divided by twelve, since landlords often budget monthly. If you see a monthly NOI quoted somewhere, multiply by twelve before using it in a cap rate.
What is the difference between NOI and cash flow?
NOI is what the property earns from operations before financing: income minus operating expenses. Cash flow is what actually lands in your account: NOI minus mortgage payments and minus reserves you set aside for capital expenditures. A property can have healthy NOI and negative cash flow if the debt service is large enough.
What operating expense ratio should I expect?
For long-term single-family and small multifamily rentals, operating expenses commonly run 35–45% of effective gross income, and the rough "50% rule" screen assumes half of rent goes to operating costs over the long run. Ratios vary widely with property age, taxes, and who pays utilities — treat any ratio as a sanity check on your line items, not a substitute for them.
Related tools
Net operating income as a percentage of purchase price — the standard first-pass measure of what a rental earns before financing, with every step shown.
Open tool →Cash-on-Cash Return CalculatorAnnual pre-tax cash flow after the mortgage, as a percentage of the cash you actually invested — cap rate's levered counterpart.
Open tool →Rental Cash Flow CalculatorThe full monthly pro-forma — gross rent through vacancy, operating expenses, and the mortgage to the cash in your pocket, monthly and annual, with every line shown.
Open tool →DSCR CalculatorDebt service coverage ratio — net operating income divided by debt service, the number rental and DSCR-loan lenders use to size a loan, with common thresholds shown.
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