Measure a rental property's operating profitability before financing and taxes.
Gross Rental Income (USD/yr) — Income amount in USD/yr. Higher income improves affordability and lowers ratios; use gross before deductions. Example: 120000 USD/yr.
Vacancy Rate (%) — Rate as a percentage (%). Determines how quickly interest or growth accrues; even 0.5% changes matter over time. Example: 8 %.
Operating Expenses (USD/yr) — Operating expenses USD/yr. Excludes financing and taxes to isolate operational performance. Example: 30000 USD/yr.
Net Operating Income
$80,400.00
Net Operating Income — Monetary amount USD. Represents cash flow, cost, or value; compare across scenarios.
Effective Gross Income
$110,400.00
Effective Gross Income — Monetary amount USD. Represents cash flow, cost, or value; compare across scenarios.
Vacancy Loss
$9,600.00
Vacancy Loss — Monetary amount USD. Represents cash flow, cost, or value; compare across scenarios.
NOI Margin
72.83%
NOI Margin — Percentage %. Above 0 increases with input; compare to benchmarks or goals.
Gross Rental Income
$120,000.00
Gross Rental Income — Monetary amount USD. Represents cash flow, cost, or value; compare across scenarios.
Operating Expenses
$30,000.00
Operating Expenses — Monetary amount USD. Represents cash flow, cost, or value; compare across scenarios.
What this means
Start with gross rental income, subtract vacancy to get effective gross income, then subtract operating expenses such as maintenance, property tax, and insurance. Mortgage payments and income tax are excluded.
Net operating income (NOI) measures a property’s profitability from operations, before financing and taxes. It is the numerator of cap rate and the core of cash-on-cash analysis.
Formula
NOI = effective gross income − operating expenses | effective gross income = rent − vacancy loss
Worked examples
FAQ
Does NOI include mortgage payments?
No. Debt service is a financing decision, not an operating cost. Removing it lets you compare properties independent of how they are financed.
How does NOI feed cap rate?
Cap rate = NOI ÷ property value. Any change in NOI flows directly into value at a target cap rate.