📋 Fundamentals
NOI
Calculator
Calculate Net Operating Income — the foundation of every commercial real estate deal. Full income and expense breakdown with cap rate derivation.
What is NOI? Net Operating Income = Effective Gross Income - Operating Expenses. It does NOT include mortgage payments, depreciation, or income taxes. NOI is used to calculate cap rate and is the primary valuation metric in commercial real estate.
🔧 Operating Expenses (Annual)
Net Operating Income (Annual)
$0
$0/month · 0% expense ratio
Gross Potential Income
$0
Before vacancy
Effective Gross Income
$0
After vacancy & concessions
Total Operating Expenses
$0
All opex (no mortgage)
Expense Ratio
0%
OpEx ÷ EGI (35-45% typical)
Cap Rate from NOI
Cap Rate—
Implied Value at 6% Cap—
Implied Value at 7% Cap—
Implied Value at 8% Cap—
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Frequently Asked Questions
What expenses are NOT included in NOI? ▾
NOI excludes mortgage payments (principal and interest), income taxes, depreciation, and capital expenditures. It's a pre-financing, pre-tax income measure. This makes NOI useful for comparing properties regardless of how they're financed. When lenders underwrite a deal, they use NOI to calculate DSCR (debt service coverage ratio).
What is a typical expense ratio for rental properties? ▾
For single-family rentals, a 35-45% expense ratio (operating expenses ÷ gross income) is typical when professionally managed. For multifamily, 40-50% is common. If someone quotes you an expense ratio below 30%, they're likely excluding management, CapEx reserves, or vacancy — which will catch up with you. Commercial properties vary widely by type.
How is NOI used in commercial real estate valuation? ▾
Commercial property value = NOI ÷ Cap Rate. If a 10-unit apartment building has a $120,000 NOI and the market cap rate is 6%, its value is $2,000,000. This is why increasing NOI (through rent increases or expense reduction) directly and immediately increases property value. A $10,000 NOI increase in a 6% cap market adds $167,000 in property value.