Free tool · Net operating income
NOI calculator.
Enter gross rent, vacancy, other income, and operating expenses — see effective gross income and NOI, the number every valuation and loan keys off. No login.
The property (annual)
At 100% occupancy.
RUBS, fees, parking, laundry.
Excludes debt service & capex.
Net operating income
$1,022,000
Expense ratio
43%
How NOI is built
Net operating income is a property's annual income after operating costs but before debt service, income taxes, and capital expenditures. Start from gross potential rent — every unit at market, fully occupied — subtract vacancy and credit loss to get to what's actually collected, add other income like RUBS, fees, and parking to reach effective gross income, then subtract operating expenses. What's left is NOI.
What belongs in operating expenses is where NOI goes wrong. Include property taxes (re-underwritten at your basis, not the seller's), insurance, utilities, payroll, repairs and maintenance, management, and G&A. Exclude the mortgage payment, capital improvements, and replacement reserves — those sit below the NOI line. Getting one of those on the wrong side moves the valuation at your cap rate by many times the dollar error.
Does NOI include the mortgage payment?
No. NOI is income before financing. Debt service sits below the NOI line, which is why the same property has one NOI but a different cash flow for every buyer depending on their loan.
Are capital expenditures part of NOI?
No. Capex and replacement reserves are excluded from operating expenses. Some lenders and appraisers deduct a reserve to get to net cash flow (NCF), a stricter figure used for coverage tests.
How does NOI drive value?
Value = NOI ÷ cap rate. Because you divide by a small number, a $10,000 error in NOI moves the value by roughly $150,000 at a 6.5% cap — which is why the expense line-up matters so much.
A single-year operating statement: gross rent, less vacancy, plus other income, less operating expenses (excluding debt service, capex, and reserves). New to the metric? Read how to calculate NOI. Not investment advice.
See it on a real deal.
In Nivora this runs off your actual rent roll and T-12 — the full monthly model, reconciled to the penny. See it live on a fictional sample deal.