Net Operating Income
Calculator
Results
- Effective gross income
- 458,400
- Net operating income
- 280,400
- Monthly net operating income
- 23,366.666666
- Operating expense ratio (%)
- 38.830715
Property management results
| Effective gross income | 458,400 |
| Net operating income | 280,400 |
| Monthly net operating income | 23,366.666666 |
| Operating expense ratio (%) | 38.830715 |
formula-map diagram
- Effective gross income
- 458,400
- Net operating income
- 280,400
- Monthly net operating income
- 23,366.666666
- Operating expense ratio (%)
- 38.830715
Property management relationship
Formula
NOI = (gross potential rent − vacancy loss + other income) − operating expenses= 458400
Note
This is a simplified model: it applies the standard property-management definition to the numbers you entered. Rent affordability uses a flat share-of-income rule and ignores credit history, local screening criteria and household size. Proration assumes a plain daily rate; your lease or local law may prescribe a different convention (for example a fixed 30-day month). Security-deposit interest is simple interest at the rate you enter, while many jurisdictions set the rate, the compounding and the payout schedule by statute. Income, expense, reserve and escalation figures are straight-line and assume the amounts you enter hold steady; they ignore taxes, depreciation, financing changes, capital events, inflation and market turnover. Lease buyout compares the contractual penalty with the remaining rent only and is not a reading of your lease. These results are general information, not legal, tax or investment advice: check your lease and local tenancy law and consult a qualified professional before acting.
More in Property management
See all →Frequently asked questions
What is included and excluded from net operating income (NOI)?+
NOI equals effective gross income minus operating expenses — think property taxes, insurance, management fees, utilities, repairs, and maintenance. It excludes mortgage payments, capital expenditures, depreciation, and income taxes, because NOI is meant to represent the property's earning power independent of how it's financed.
Why is NOI calculated before debt service?+
NOI is designed to be a financing-neutral measure so that properties bought with different loan amounts or all cash can be compared on equal footing. Debt service is applied afterward to determine cash flow, and lenders use NOI (not cash flow) to size the loan through the debt service coverage ratio.
How does NOI relate to a property's value?+
In income-property valuation, NOI is divided by a market capitalization rate to estimate value (Value = NOI / Cap Rate). This means a $10,000 change in annual NOI, at a 6% cap rate, shifts implied value by roughly $167,000, which is why controlling operating expenses has an outsized effect on sale price.
Should a capital expenditure reserve be subtracted when calculating NOI?+
Under the standard appraisal definition, no — capex reserves are a below-the-line item, not an operating expense, and NOI is reported before reserves. Some lenders and investors do subtract a reserve to get a more conservative 'NOI after reserves' figure for underwriting, so check which convention a given report is using.
Why might two people calculate different NOI for the same property?+
Differences usually come from what's classified as an operating expense versus a capital item, whether a vacancy allowance is normalized to market or left at actual trailing figures, and whether one-time expenses are added back. Always compare the underlying income and expense line items, not just the final NOI number.