Real estate & rental
Rental NOI Calculator
Net operating income line by line, the figure everything else in property analysis builds on.
Result
An arithmetic tool, not investment advice. Property returns depend on the local market, the condition of the building, financing terms and tax position, none of which a calculator can see. Verify the income and expense figures against actual statements rather than a seller's projection. NOI conventionally excludes mortgage payments, depreciation, income tax and capital expenditure. Excluding capital expenditure is the convention that causes the most trouble, because roofs and boilers are not optional. Vacancy, repairs and capital expenditure are the three line items most often left out of a listing's numbers, and together they routinely account for 20% to 30% of gross rent. A pro forma that omits them is a marketing document, not an analysis.
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About this calculator
Why is the mortgage not an operating expense?
Because NOI describes the property, not the owner's financing. Two owners of the same building with different loans have the same NOI.
How much should I reserve for capital items?
Commonly 5% to 10% of gross rent, more on an older building. Working it out properly means listing the major components, their remaining life and replacement cost.
The formula
NOI = effective gross income - operating expenses, before financing and before capital items
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