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Finance Calc Kit
Real estate

Net Operating Income

Find net operating income, gross operating income, or operating expenses using NOI = GOI - OE. Evaluate rental property profitability before debt service.

Property income and expenses

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$

Net operating income

$108,000.00

Step-by-step calculation

Open to see the formula and substituted values.

  1. Net operating income formula

    NOI=GOI−OE\text{NOI} = \text{GOI} - \text{OE}

    $180,000.00 - $72,000.00 = $108,000.00.

  2. Interpretation

    The property generates $108,000.00 in net income before debt service, depreciation, and income taxes.

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How net operating income works

Net operating income (NOI) measures how much income a rental property generates after operating expenses but before mortgage payments, depreciation, and income taxes. Lenders, appraisers, and investors use NOI as the foundation for cap rate, debt coverage, and property valuation.

Once you have NOI, convert it to a cap rate or property value with the capitalization rate calculator. To see what share of gross income goes to expenses, use the operating expense ratio calculator. For monthly housing costs after you finance a purchase, model PITI with the mortgage calculator with taxes and insurance. For a full investment view with cap rate, cash flow, and cash-on-cash return, use the real estate calculator.

NOI formula

NOI=GOI−OE\text{NOI} = \text{GOI} - \text{OE}

Gross operating income (GOI) is total rental and ancillary income before vacancy and operating expenses. Operating expenses (OE) include property taxes, insurance, maintenance, utilities paid by the owner, and property management. NOI excludes mortgage interest, capital expenditures, and income taxes.

Worked example

  1. Gross operating income: $180,000 per year
  2. Operating expenses: $72,000 per year
  3. NOI: $180,000 - $72,000 = $108,000

The property keeps $108,000 before debt service. If the market cap rate is 8%, that NOI supports a value of about $1,350,000.

What counts as an operating expense

  • Property taxes and hazard insurance
  • Repairs, maintenance, and landscaping
  • Property management and leasing fees
  • Utilities paid by the landlord

Mortgage principal and interest, income taxes, and major capital improvements are not part of NOI under standard real estate accounting.

Frequently asked questions

What is the difference between GOI and gross rent?
Gross operating income includes all operating revenue such as rent, laundry, parking, and fees. Gross rent often refers to scheduled rent before vacancy and concessions. Use the income definition that matches your pro forma.
Does NOI include vacancy loss?
Yes. Effective gross income subtracts vacancy and credit loss from scheduled rent before operating expenses. Many investors enter GOI after vacancy so NOI reflects realistic collections.
Can NOI be negative?
Yes. If operating expenses exceed gross income, NOI is negative. That signals the property is not covering its day-to-day costs before debt service.
How is NOI used in cap rate analysis?
Cap rate equals NOI divided by property value. Higher NOI at the same price means a higher cap rate and stronger unlevered yield.
Can I solve for GOI or operating expenses?
Yes. Select the solve target and enter the other two values. The calculator rearranges NOI = GOI - OE for any missing variable.
Are the results stored?
No. All math runs locally in your browser. URL parameters let you share your scenario.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.