Effective Gross Income
Cash Flow Before Tax
Standard Income Metrics Most Popular Cash Flow Valuation

Net Operating Income

Income remaining after all operating expenses but before debt service.

Example Result

Sample Data
$20,344

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

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Net Operating Income Formula

Effective Gross Income - Total Operating Expenses
Effective Gross Income $32,490
- Total Operating Expenses $12,146
= Net Operating Income $20,344

What This Means

A sample property priced at $385,000 with $2,850/month rent has a net operating income of $20,344. NOI is the universal yardstick for property performance. It strips out financing variables so you can compare properties objectively regardless of how they are financed. Lenders, appraisers, and investors all rely heavily on NOI.

Where This Value Comes From

Net Operating Income is not entered directly — it is calculated from Effective Gross Income and Total Operating Expenses. See the formula breakdown above and the detailed inputs below.

Calculated From

Net Operating Income is calculated using these inputs:

Effective Gross Income
Actual expected income after vacancy and other income.
$32,490
Total Operating Expenses
Sum of all operating costs (taxes, insurance, management, maintenance, CapEx)
$12,146

Used to Calculate

Net Operating Income is used as an input for these calculations:

Cash Flow Before Tax
Income Metrics
-$4,246
Cap Rate
Return Metrics
5.28%
Yield on Cost
Return Metrics
5.13%
Operating Yield
Return Metrics
5.28%
Unlevered Yield
Return Metrics
5.28%
Debt Service Coverage Ratio
Debt Metrics
0.83x
Debt Yield
Debt Metrics
6.61%
Value Based on Cap Rate
Valuation Metrics
$385,000
Projected NOI (Year 1-5)
Cash Flow Projections
$20,344
Effective Tax Rate
Tax Benefits
0.00%

Platform Distribution

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Why It Matters

NOI is the universal yardstick for property performance. It strips out financing variables so you can compare properties objectively regardless of how they are financed. Lenders, appraisers, and investors all rely heavily on NOI.

Detailed Explanation

Net Operating Income (NOI) is the most important metric in commercial real estate. It measures the property's ability to generate income from operations by subtracting all operating expenses (taxes, insurance, maintenance, management, etc.) from Effective Gross Income, but excludes mortgage payments and capital expenditures.

Example

Sample Result
$23,463

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

Related Calculations

Gross Potential Rent

2

Total annual rental income assuming full occupancy.

$34,200 Example

Effective Gross Income

2

Actual expected income after vacancy and other income.

$32,490 Example

Cash Flow Before Tax

V

Cash remaining after operating expenses and debt service.

-$4,246 Example

Cash Flow After Tax

W

Cash remaining after all expenses, debt service, and estimated taxes.

-$4,246 Example

Revenue Per Unit

2

Effective gross income divided by the number of units.

$32,490 Example

Income Per Square Foot

2

Effective gross income divided by total square footage.

$21.66 Example

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