RealInvestorX
Rental deal math
NOI calculator: net operating income for a rental
Net operating income (NOI) is what a property earns from operations before any loan payment. It feeds cap rate, DSCR and most valuation shortcuts.
The formula
NOI = gross rent - vacancy - operating expensesWorked example
- Gross rent $2,400 x 12 = $28,800.
- Vacancy at 5% = $1,440. Operating expenses: taxes $3,600, insurance $1,500, maintenance $2,880, management $2,304 = $10,284.
- NOI = $28,800 - $1,440 - $10,284 = $17,076 a year.
Illustrative inputs for learning, not market data or a forecast. Replace every number with figures from your own deal.
How to use it
Leave out loan payments, depreciation, income taxes and capital improvements. They matter to your return but not to the property's operating income, which is why NOI lets you compare buildings regardless of financing.
Frequently asked questions
Is mortgage interest an operating expense?
No. Financing costs sit below NOI.
Do I include management if I self-manage?
Yes, as an allowance. A buyer or lender will usually underwrite it, and your time is not free.
How is NOI used?
Divide by price for cap rate, or divide by annual loan payments for DSCR.
Run this on a real dealSee pricing for plan details.