Net operating income: Building Net Operating Income from Property Operations
NOI subtracts operating expenses from effective gross income. It creates an operating measure that can feed a cap-rate or debt-coverage calculation.
Use the Net operating income Calculator to enter your own figures and compare the result with the worked example below.
Net operating income formula
NOI = Effective gross income − Operating expenses
Worked example
| Item | Example value |
|---|---|
| Effective gross income | 24000 USD |
| Operating expenses excluding debt service and income tax | 6000 USD |
| Net operating income | 18,000 USD |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Keep debt service, income tax and capital expenditures separate where the NOI convention requires. Document any unusual exclusions.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see CFPB: Building a budget. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
Featured photograph: Pexels.