NOI Calculator (Net Operating Income)
Find your property's net operating income — the number every other CRE metric is built on.
Net Operating Income (NOI) Calculator
Enter potential income, vacancy, and itemized operating expenses
1. Gross Income & Vacancy
Loss: $15,600
2. Operating Expenses Breakdown
NOI Financial Summary
Monthly Avg: $16,867 / mo
What Is NOI and Why It Matters
NOI is the foundation metric in commercial real estate. Almost every other calculation — cap rate, cash-on-cash return, loan payment — starts with NOI. It represents how much income a property actually generates from operations, before you factor in your mortgage payment or income taxes. Lenders, appraisers, and buyers all look at NOI first because it isolates the property's performance from how any particular owner chose to finance it.
The Formula
NOI = Effective Gross Income (EGI) − Operating Expenses
EGI = Gross Income − Vacancy & Credit LossWorked Commercial Property Example
Consider a hypothetical 24-unit multifamily property purchased for $2,800,000. To calculate its NOI, we only look at property-level operations:
- Gross potential income: $336,000
- Vacancy loss: 5% ($16,800)
- Effective gross income (EGI): $319,200
- Operating expenses: $92,000
Calculation: NOI = $319,200 (EGI) - $92,000 (OpEx) = $227,200
Note that we explicitly ignore the mortgage here. Once you have this $227,200 NOI, your typical next step is to use it to calculate the property's Cap Rate or measure your loan's DSCR.
Critical NOI Calculation Pitfalls & Exclusions
1. Never Deduct Mortgage Payments: NOI strictly measures pure property operating cash flow before debt service. Debt payments are deducted only when calculating net cash flow.
2. Operating Expenses vs. Capital Improvements: Routine maintenance belongs in OpEx; structural roof replacement or elevator overhaul is CapEx and capitalized over time.
Frequently Asked Questions
Does NOI include mortgage payments?
No. NOI is calculated before debt service. Your loan payment is subtracted later, when you calculate cash flow — not NOI.
What counts as an operating expense?
Property taxes, insurance, repairs and maintenance, property management fees, utilities the landlord pays, and reserves for replacement. Capital improvements (like a new roof) and mortgage payments are excluded.
Why do lenders care so much about NOI?
Lenders use NOI to calculate debt service coverage ratio (DSCR) — essentially, whether the property generates enough income to comfortably cover the loan payment. Low or shrinking NOI is a red flag in underwriting.
How is NOI different from cash flow?
NOI is before debt service; cash flow is after. Cash flow = NOI − annual debt service (and sometimes − capital reserves).
How to Estimate NOI Guide (Even Without Financials)
A practical framework for reconstructing NOI when seller numbers are incomplete or nonexistent.
Carry This NOI into a Complete Deal Analysis
Combine NOI with purchase price, financing, and invested cash to calculate Cap Rate, Cash-on-Cash, DSCR, and Break-Even Ratio, then stress-test vacancy and interest rates.