NOI Calculator (Net Operating Income)

Work a property’s operating statement down to net operating income, line by line, with the cap rate and debt yield that NOI implies.

Income

Gross Scheduled Rent

Other Income

Vacancy & Credit Loss

Operating Expenses

Property Taxes

Insurance

Utilities

Repairs & Maintenance

Management (% of EGI)

Payroll & Other

Replacement Reserves

Optional: Value and Loan

Property Value or Price

Loan Amount

Net Operating Income

$227,764

$18,980 a month

Effective Gross Income

$353,400

After $18,600 vacancy

Operating Expenses

$118,136

33.4% of EGI

NOI Margin

64.4%

NOI ÷ EGI

Cap Rate

6.51%

NOI ÷ value

Debt Yield

9.90%

NOI ÷ loan

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How it is calculated

NOI = Effective Gross Income − Operating Expenses

Start with the rent the property would collect fully leased, add other income, and take off vacancy and credit loss to get effective gross income. Subtract every cost of running the property: taxes, insurance, utilities, repairs, management, payroll and services. Lenders also take off replacement reserves. What is left is NOI. Mortgage payments, depreciation and income tax never come out of it.

Potential gross: Scheduled rent at full occupancy plus parking, laundry, storage and other income.
Vacancy: Rent lost to empty units and tenants who do not pay, as a percentage of potential gross.
Effective gross: Potential gross income less vacancy and credit loss.
Operating expenses: The recurring costs of running the property. Not debt service, depreciation or capital projects.
Reserves: An annual allowance for roofs, boilers and other replacements. Lenders deduct it; many listings do not.

A worked deal example

$360,000 of scheduled rent and $12,000 of other income a year, with 5.0% allowed for vacancy and credit loss.

Effective gross income: $353,400
Operating expenses: $118,136
Reserves: $7,500
NOI: $227,764

Potential gross income of $372,000 less $18,600 of vacancy leaves $353,400 of effective gross income. Operating expenses take $118,136 (management at 4.0% is $14,136 of that), 33.4% of effective gross. After $7,500 of replacement reserves, NOI is $227,764, or $18,980 a month. At a value of $3,500,000 that is a 6.51% cap rate. Against a $2,300,000 loan it is a 9.90% debt yield.

Key Deal Takeaway NOI $227,764 — 64.4% margin

Frequently asked questions

How do you calculate NOI?

Take the income the property collects and subtract the cost of running it. On the default building, $372,000 of potential income less 5% vacancy is $353,400 of effective gross income. Operating expenses of $118,136 and $7,500 of reserves leave NOI of $227,764. Work in annual figures, and use the income and expenses the property actually produces rather than a seller’s projection.

What is not included in NOI?

Mortgage principal and interest, depreciation, income taxes, and one-off capital spending such as a new roof or a renovation. Tenant improvements and leasing commissions are usually kept below NOI as well. NOI measures what the property earns before any financing, which is why two buyers with different loans see the same NOI on the same building. Replacement reserves are the exception that varies: lenders deduct them, while many offering memorandums do not.

How do you get the cap rate from NOI?

Divide NOI by the price or value. A building selling for $2,000,000 with an NOI of $150,000 is at a 7.50% cap rate. Turned around, value is NOI divided by the cap rate, so every dollar of NOI is worth about $15.38 of value at a 6.5% cap rate. Enter a value above to see the cap rate for your NOI, or use the cap rate calculator to solve for value, loan or cap rate.

What is a good NOI margin?

It depends on who pays the expenses. On apartments and other gross-lease property where the owner pays taxes, insurance and upkeep, NOI is commonly 50% to 65% of effective gross income. On triple-net retail or industrial, where tenants reimburse most costs, it can run above 90%. The default building here keeps 64.4%. A margin well above peers for the same property type is often a sign that expenses are understated.

Should replacement reserves come out of NOI?

For a lender, yes: they underwrite NOI after reserves, so a listing that leaves them out shows a higher NOI than the loan will be sized on. On the default building the $7,500 of reserves is worth about $115,385 of value at a 6.5% cap rate. When you compare a listing’s NOI with your own, check which one it is.

What goes into NOI, and what stays out

NOI is the property’s income before any financing. Everything a buyer would pay to run the building comes out; everything that depends on who owns it, or how they paid for it, stays out.

Items above and below the NOI line
Item	In NOI?	Why
Rent and other income	Yes	Less vacancy and credit loss
Property taxes, insurance	Yes	Recurring costs of owning the building
Utilities, repairs, maintenance	Yes	Owner-paid share only
Management, payroll, services	Yes	Charge market management even if you self-manage
Replacement reserves	Lenders: yes	Often left out of listings
Mortgage principal and interest	No	Financing, not operations
Depreciation, income tax	No	Depend on the owner, not the property
Capital projects, TI and leasing commissions	Usually no	One-off spending, kept below the line

When you compare a listing with your own figures, check management and reserves first: they are the two lines most often left out.

One NOI, three numbers that matter

The same NOI sets what the property is worth and how much a lender will advance against it. Value is NOI divided by the cap rate, so a small change in NOI moves value by many times that amount. The table shows this building’s $227,764 NOI at a range of cap rates, and what another $10,000 a year of NOI adds.

Value of $227,764 NOI at common cap rates
Cap rate	Value	Value of +$10,000 NOI
5.00%	$4,555,280	$200,000
5.50%	$4,141,164	$181,818
6.00%	$3,796,067	$166,667
6.50%	$3,504,062	$153,846
7.00%	$3,253,771	$142,857
7.50%	$3,036,853	$133,333
8.00%	$2,847,050	$125,000

Lenders then size the loan off the same figure: by coverage, which the DSCR Solver runs, and by debt yield, NOI over the loan amount. To run the purchase with financing and see cash-on-cash, use the Commercial Real Estate Investment Calculator.

Estimates only. This calculator is an educational tool, not financial advice, a loan offer, or a commitment to lend. Actual payments, loan sizing and closing costs depend on your lender's underwriting, the day-count convention in your loan documents, and fees not modeled here. Confirm any figure with your lender or advisor before acting on it. For an official reference, see Commercial Real Estate Lending (Comptroller’s Handbook, Office of the Comptroller of the Currency).

Published by RealPropTools · Commercial real estate underwriting tools Updated November 4, 2026