How to Use This NOI Calculator
Enter your total annual gross rental income and your total annual operating expenses. Operating expenses include property tax, insurance, maintenance, repairs, property management fees, utilities (if you pay them), and any other costs of running the property. Do NOT include mortgage payments or depreciation: those are not operating expenses. The calculator shows your NOI instantly.
NOI Formula
Net Operating Income is the annual income generated by a property after deducting operating expenses. It excludes mortgage payments and depreciation. NOI is the foundation for cap rate, DSCR, and other metrics.
Worked Example
You own a rental property that collects $2,800/month in rent, totaling $33,600/year. Your annual operating expenses are: property tax $3,600, insurance $1,800, maintenance $2,400, property management (8%) $2,688, and utilities $1,200. Total operating expenses: $11,688. Your NOI is $33,600 - $11,688 = $21,912 per year.
What is a Good NOI?
There's no universal 'good' NOI because it depends entirely on property value and your investment goals. Instead, use NOI to calculate cap rate (NOI / Property Value) and DSCR (NOI / Annual Mortgage Payments): those ratios give you context. As a rule of thumb: your NOI should comfortably exceed your annual mortgage payments (DSCR > 1.2). If NOI is negative, the property is losing money from operations before you even make mortgage payments.
Factors That Affect NOI
NOI is driven by two levers: income and expenses. On the income side, rental rates, occupancy rate, and additional income streams (laundry, parking, late fees) all matter. On the expense side, the big items are typically property taxes, insurance, and maintenance/repairs. Property management fees (usually 8-10% of collected rent) are significant if you don't self-manage. To improve NOI, you can raise rents (if the market supports it), reduce vacancy, or optimize expenses. One common mistake is underestimating maintenance costs: budget at least 1% of property value per year.
This calculator is for informational purposes only and does not constitute financial or tax advice. Consult a qualified CPA for guidance specific to your situation.