NOI Calculator — Net Operating Income

Net Operating Income is a property's total income minus its operating expenses. It measures the profitability of a real estate investment before accounting for financing costs, capital expenditures, depreciation, or income taxes. NOI is the single most important number in commercial real estate analysis — it drives cap rate, property valuation, DSCR, and return metrics.

Operating expenses include property taxes, insurance, property management fees, repairs and maintenance, utilities (if landlord-paid), janitorial services, landscaping, and common area maintenance (CAM). They do NOT include mortgage/debt payments, capital expenditures, tenant improvements, leasing commissions, depreciation, or income taxes.

NOI is income minus operating expenses (before financing). Cash flow is NOI minus debt service (mortgage payments). A property can have positive NOI but negative cash flow if the debt payments exceed the NOI. Cash flow depends on your loan terms; NOI does not — making NOI better for comparing properties regardless of how they are financed.

There is no universal "good" NOI — it depends on the property size, type, and market. What matters is the NOI margin (NOI ÷ Effective Gross Income) and how it compares to similar properties. Typical NOI margins range from 55–70% for NNN properties, 40–60% for gross lease offices, and 60–75% for multifamily. A declining NOI margin may signal rising expenses or falling occupancy.

Vacancy directly reduces your Effective Gross Income (EGI), which lowers NOI. If your gross potential income is $500,000 and vacancy is 10%, your EGI drops to $450,000. The vacancy allowance should reflect realistic market conditions, not just current occupancy — lenders and appraisers typically apply 5–10% vacancy even for fully-occupied properties.

It depends on the context. Actual (trailing 12-month) NOI reflects historical performance and is preferred by lenders for underwriting. Pro forma NOI projects future income and is used by investors evaluating acquisitions. When comparing properties, use the same NOI basis. Solsten lets you model both — actual data plus forward projections with inflation and lease rollovers.