Net Operating Income (NOI) Calculator

Enter Calculation

Gross Operating Income ($)

Operating Expenses ($)

Results

Net Operating Income

$75,000

per year

Gross Operating Income	$120,000
Operating Expenses	$45,000
Operating Margin	62.5%

What Is Net Operating Income (NOI)?

Net Operating Income (NOI) is a core metric in commercial and rental real estate that measures the profitability of an income-producing property before financing and taxes. It is calculated by subtracting all operating expenses from the gross operating income the property generates. NOI is used by investors and lenders to evaluate deals, calculate capitalization (cap) rates, and estimate property value.

How to Use This Calculator

Enter your gross operating income — the total rent and other income collected after accounting for vacancy and credit losses. Then enter your annual operating expenses, which include property management, insurance, property taxes, maintenance, utilities, and repairs. The calculator instantly returns your NOI and operating margin.

The Formula Explained

The formula is simple: $$\text{NOI} = \text{Gross Operating Income} - \text{Operating Expenses}$$ Importantly, NOI excludes mortgage principal and interest, depreciation, capital expenditures, and income taxes. These items relate to financing and accounting rather than the property's day-to-day operating performance, so leaving them out lets you compare properties on equal footing.

NOI equals gross operating income minus operating expenses.

Worked Example

Suppose a small apartment building collects $120,000 in gross operating income per year and incurs $45,000 in operating expenses. The NOI is $$\$120{,}000 - \$45{,}000 = \$75{,}000$$ The operating margin is $$\$75{,}000 \div \$120{,}000 = 62.5\%$$ If the property's market value is $1,000,000, the cap rate would be $$\$75{,}000 \div \$1{,}000{,}000 = 7.5\%$$

Income flows down through deductions to arrive at the final NOI figure.

FAQ

Does NOI include the mortgage payment? No. NOI is calculated before debt service, so mortgage principal and interest are not subtracted.

What counts as operating expenses? Recurring costs to run the property: management fees, insurance, property taxes, utilities, repairs, and maintenance. Capital improvements are not included.

Can NOI be negative? Yes. If operating expenses exceed gross operating income, NOI is negative, signaling the property is losing money on operations.