Net Operating Income Calculator for Commercial Real Estate
Updated August 21, 2026
Net operating income (NOI) is a property's annual income after vacancy and ordinary operating expenses, but before debt service, income taxes, depreciation and capital expenditures. Use the calculator below: effective gross income minus operating expenses equals NOI.
Calculate net operating income
$300,000 gross income − $15,000 vacancy − $120,000 operating expenses
What is net operating income in commercial real estate?
NOI measures the income produced by the real estate itself. Start with annual gross income, subtract vacancy and credit loss to reach effective gross income, then subtract recurring operating expenses such as property taxes, insurance, utilities, repairs, payroll and management.
Mortgage payments are not operating expenses. Neither are depreciation, income taxes, owner-specific financing costs or one-time capital projects. Keeping those items below NOI lets two buyers compare the same property's operations even when their financing differs.
What is the NOI formula?
NOI = Gross operating income − Vacancy and credit loss − Operating expenses. For example, a property with $300,000 of gross income, 5% vacancy ($15,000) and $120,000 of operating expenses has $165,000 of NOI.
That NOI can then be divided by the purchase price to calculate the going-in cap rate. The Deal Analyzer goes further by modeling financing, rent and expense growth, capital needs, cash-on-cash return and a ten-year sale.
How should buyers verify a seller's NOI?
Rebuild NOI from the rent roll and trailing-12 operating statement rather than relying only on a marketing summary. Check whether vacancy, concessions, management fees, repairs, payroll, utilities, insurance and property taxes reflect the way you expect to operate the asset.
Caproll listings standardize NOI and cap-rate calculations from the financial inputs disclosed on the listing, while the interactive underwriting tools let buyers replace seller assumptions with their own.
Frequently asked questions
Does NOI include mortgage payments?
No. Debt service is excluded from NOI because it depends on each buyer's financing. NOI measures property operations before financing.
Does NOI include capital expenditures?
No. One-time capital projects are normally modeled below NOI. Recurring repairs and maintenance are operating expenses; major replacements and renovations are capital expenditures.
How do you calculate NOI from occupancy?
Multiply potential gross income by the expected collected percentage, add other property income, and subtract operating expenses. A 5% vacancy assumption means using 95% of potential gross income before expenses.
Why does NOI matter to a buyer?
NOI is the numerator in the cap-rate formula and the starting point for debt coverage, cash flow and valuation. Small errors in NOI can materially change value and financing capacity.
