NOI is rental income minus operating expenses, before the mortgage. It drives cap rate and property value. Enter monthly rent and monthly operating expenses.
NOI = gross operating income − operating expenses (insurance, tax, management, maintenance, vacancy). It excludes the mortgage and income tax — those come after NOI.
NOI is the income a property produces after operating costs but before financing and taxes. It is the numerator of the cap rate (NOI ÷ price) and the figure lenders and appraisers use to value income property. Raising rent or trimming controllable expenses both lift NOI — and with it, the property's value.
A small apartment building brings in $6,000/month in rent. Monthly operating expenses — property tax ($700), insurance ($150), management (8% of rent, $480), repairs/maintenance ($400) and a vacancy allowance ($300) — total $2,030. Monthly NOI = $6,000 − $2,030 = $3,970, so annual NOI = $47,640. If comparable properties in the area sell at a 6% cap rate, this building's estimated value = $47,640 ÷ 0.06 ≈ $794,000, independent of whatever mortgage the current owner happens to have.
Operating costs only: property tax, insurance, management, repairs, maintenance, utilities you pay, and a vacancy allowance. Mortgage payments and income tax are excluded.
So the property can be compared independently of how it's financed. Two investors with different loans see the same NOI but different cash flow.
Divide NOI by the market cap rate to estimate value: value = NOI ÷ cap rate. A higher NOI at the same cap rate means a higher value.
RentFlow totals income and operating expenses per unit so your NOI and cap rate stay current. Free to start.
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