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.
Built & reviewed by Eric, Founder against the cited primary sources shown in the methodology above. 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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